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Auditor Report of Heritage Foods Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Heritage Foods Limited, which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss,the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements:

The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash fl ows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility:

Our responsibility is to express an opinion on these standalone fi nancial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10)of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial

statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India,

i) in the case of the standalone Balance Sheet, state of affairs of the company as at 31 March 2015;

ii) in the case of the standalone Statement of Profit and Loss, profi t of the company for the year ended on that date; and

iii) in the case of the standalone Cash Flow Statement, cash flows of the company for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

As required by 'the Companies (Auditor's Report) Order, 2015', issued by the Central Government of India in terms of sub– section (II)of section 143 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position, except as listed in the notes to accounts (note: 29).

ii. The Company did not have any material foreseeable losses on long-term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Auditor's Report

The Annexure referred to in our Report of even date to the members of Heritage Foods Limited on the accounts of the company for the year ended 31st March, 2015.

i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

(b) These fixed assets have been physically verified by the management during the year and discrepancies noticed on such verifi cation have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of the assets.

c) No substantial part of fixed assets has been disposed off during the year.

ii. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us, considering the size of the company and nature of business of various divisions of the company with regard to purchase of inventory and fixed assets and with regard to sale of goods and services, the internal control system commensurate with the size of the company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73 and 74 of the Act and the rules framed there under to the extent notified .

vi. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been specified under sub– section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues with the appropriate authorities. There are no undisputed statutory dues outstanding for more than six months as on 31.3.2015.

b) According to the information and explanations given to us, following are the disputed dues relating to income tax, wealth tax, cess and sales tax, which have not been deposited as at 31st march, 2015

Nature of Amount Period to State which the Forum where the dispute

Nature of Dispute In Lakhs) amounts relate (A.Y) pending

A.P.G.S.T Levy of purchase tax on purchase of milk 83.75 2001-02 High Court ACT 1957

C.S.T ACT Levy of purchase tax on purchase of milk 37.34 2002-03 A.P.S.TA.T (Tribunal) C.S.T ACT Levy of purchase tax on purchase of milk 1.42 1998-99 High court

AP VAT Input tax credit disallowance and others 40.25 2009-10 Appellate deputy commi- ssioner

AP VAT Input tax credit disallowance and others 1.79 2008-09 High Court

TN VAT Act Input tax credit disallowed 24.38 2013-14 CTO

(c) The amount required to be transferred to Investor Education and Protection Fund has been transferred within the stipulated time in accordance with the provisions of the Companies Act, 2013 (Companies Act, 1956) and the rules made there under.

viii. The company does not have any accumulated losses as at the end of the financial year under reference and the company has not incurred cash loss in the financial year under reference and in the financial year immediately preceding such financial year.

ix. The Company has not defaulted in repayment of dues to any fi nancial institution or bank or debenture holders as at the balance sheet date.

x. The company has not given any guarantee for loans taken by others from banks or financial institutions.

xi. In our opinion, the term loans taken by the Company were applied for the purpose for which they were obtained.

xii Based on the audit procedures performed and the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Raju and Prasad

Chartered Accountants

FRN: 003475S



Y Bala Krishna Reddy

Hyderabad Partner

26th May, 2015 M. No. 223701


Mar 31, 2014

We have audited the accompanying financial statements of M/s Heritage Foods Limited, which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956(“the Act) read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing opinion on the effectiveness of entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other legal and Regulatory Requirements:

1. As required by the Companies (Auditors'' Report) Order, 2003, as amended by the companies (Auditor'' Report) Order 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 (“the Act) read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to the Auditors'' report

The Annexure referred to in our Report of even date to the members of Heritage Foods Limited on the accounts of the company for the year ended 31st March, 2014.

i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) These fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of the assets.

c) No substantial part of fixed assets has been disposed off during the year.

ii. a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. a) The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the companies act 1956 or to companies under the same management as defined in section 370(1-B) of the companies act,1956. Consequently, clauses (iii) (b), (iii) (c) and (iii)(d) are not applicable.

e) The company has not taken any loans secured or unsecured loan from companies, firms or parties covered in the register maintained under section 301 of the companies act 1956. Accordingly, paragraphs 4(iii)(e) to 4(iii)(g) of the order are not applicable.

iv. In our opinion and according to the information and explanations given to us, considering the size of the company and nature of business of various divisions of the company with regard to purchase of inventory and fixed assets and with regard to sale of goods and services, the internal control system commensurate with the size of the company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

vi. The company has not accepted deposits from the public governed by section 58A and 58AA of the Companies Act, 1956 for the year under reference.

vii. In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business.

viii. The Central Government has prescribed maintenance of Cost records under section 209 (1) (d) of the Companies Act, 1956, in respect of its products manufactured during the year. We are of the opinion that, prima facie, the prescribed accounts and records are properly prepared and maintained. We have not, however, carried out detailed examination of the same.

ix. a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities including Provident Fund, Investor Education and Protections Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax and Other Statutory dues applicable to it. There are no undisputed statutory dues outstanding for more than six months as on 31.3.2014.

b) According to the information and explanations given to us following are the disputed dues relating to income tax, wealth tax, cess and sales tax, which have not been deposited as at 31st march, 2014:

Name of the Statue Nature of the Dispute Amount (Rs. In Lakhs)

The A.P.G.S.T General sales tax 7.41 ACT 1957

The A.P.G.S.T General sales tax 83.75 ACT 1957

AP VAT ACT Input tax credit disallowance 127.06

The C.S.T ACT General sales tax 37.34

AP C.S.T ACT Filing Of "C" Forms 1.42

AP VAT Input tax credit disallowance and others 62.04

Name of the Period to which the Forum where the Statue amounts relate (A.Y) disputes is pending.

The A.P.G.S.T 2000-01 2002-03 Commercial Tax Officer. ACT 1957

The A.P.G.S.T 2001-02 Writ petition filed with ACT 1957 H.C (WP No: 3814/2014).

AP VAT ACT 2007-08 A.P.S.T.A.T (Tribunal)

The C.S.T ACT 2002-03 A.P.S.T.A.T (Tribunal)

AP C.S.T ACT 1998-99 Appeal Pending before AP H.C (WP No: 3818 /2014).

AP VAT 2008-09 2009-10 Additional Commissioner

x. The company does not have any accumulated losses as at the end of the financial year under reference and the company has not incurred cash loss in the financial year under reference and in the financial year immediately preceding such financial year.

xi. The Company has not defaulted in the repayment of its dues to financial institutions or banks.

xii. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the company is not a chit fund or nidhi / mutual benefit fund / society. Therefore the provisions of clause 4 (xiii) of the companies (Auditors'' Report) Order, 2003 are not applicable to the company.

xiv. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Investments have been held by the company in its own name.

xv. The company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. In our opinion, the term loans taken by the Company were applied for the purpose for which they were taken.

xvii. In our opinion and according to explanations and information given to us, funds raised on short-term basis have not been used for long term investment.

xviii. According to the information and explanation given to us, during the year the company has not made any preferential allotment of equity shares/warrants to parties and companies covered in the register maintained under section 301 of the companies act, 1956.

xix. The company has not issued any debentures

xx. The company, during the year, has not raised money by public issues.

xxi. Based on the audit procedures performed and the information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For Raju & Prasad

Chartered Accountants (FRN: 003475S)

M. Siva Ram Prasad Place : Hyderabad Partner Date : 23-05-2014 M No. 018943


Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s. HERITAGE FOODS (INDIA) LIMITED, as at 31st March, 2012 and also the statement of Profit and Loss for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An Audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order 2003, as amended by the Companies (Auditors' Report) Order 2004, issued by the Government of India, in terms of sub-section (4A) of Section 227 of the Companies Act 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii. In our opinion the Company as required by law has kept proper books of account so far as it appears from our examination of the books and proper returns adequate for the purpose of our audit have been received from the units not visited by us.

iii. The Balance Sheet and statements of Profit and Loss dealt with by this report are in agreement with the books of account maintained.

iv. In our opinion the Balance sheet, statement of Profit and Loss and the cash flow statement comply with the accounting standards referred to in Sec.211 (3C) of the Companies Act.1956.

v. On the basis of written representation given to us, no director of the Company, as at 31st March 2012 and taken on record by the Board of Directors we report that none of the Directors as on 31st March, 2012 is disqualified from being appointed as a director under clause (g) of Sub- Section (1) of Section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of Balance Sheet, of the state of affairs of the Company, as at 31st March, 2012.

b. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date and

c. in the case of Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) These fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of the assets.

c) No substantial part of fixed assets has been disposed off during the year.

ii) a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii) a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 or to companies under the same management as defined in Section 370(1-B) of the Companies Act, 1956. Consequently, Clauses (iii)(b), (iii)(c) and (iii)(d) are not applicable.

e) The company had taken unsecured loan from a company, covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1 Crore and the year-end balance of loan is Rs. 1 Crore.

f) In our opinion, the rate of interest and other terms and conditions on which loan taken from the above company are not, prima facie, prejudicial to the interest of the company.

g) As per the agreed terms, no repayment of loan was required during the F.Y 2011-12. The company has been regular in the payment of interest.

iv) In our opinion and according to the information and explanation given to us, Considering the size of the company and nature of business of various divisions of the company with regard to purchase of inventory and fixed assets and with regard to sale of goods and services, the internal control system commensurate with the size of the company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted deposits from the public governed by Section 58A and 58AA of the Companies Act, 1956 for the year under reference.

vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

viii) The Central Government has prescribed maintenance of Cost records under Section 209 (1) (d) of the Companies Act, 1956, in respect of its products manufactured during the year. We are of the opinion that, prima facie, the prescribed accounts and records are properly prepared and maintained. We have not, however, carried out detailed examination of the same.

ix) a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities including Provident Fund, Investor Education and Protections Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax and Other Statutory dues applicable to it. There are no undisputed statutory dues outstanding for more than six months as on 31.03.2012.

b) According to the information and explanations given to us following are the disputed dues relating to income tax, wealth tax, cess and sales tax, which have not been deposited as at 31st March, 2012:

Name of the statue Nature of the dispute Amount (Rs.in lakhs)

The A.P.G.S.T Act, 1957 General sales tax 7.41

The A.P.GST ACT, 1957 General sales tax 95.11

The C.S.T ACT General sales tax 37.34

The C.S.T ACT FILING OF C Forms 1.42

AP VAT ACT ITC 127.06

Exemption Claim Central Excise Tariff Act, 1985 vide Tariff No. 3.99 21069099

Name of the statue Period to which the. Forum where the disputes is pending amounts relate (F.Y)

The A.P.G.S.T Act, 1957 1999-00 to 2004-05 Writ Petition filed with A.P.H.C (15493, 15497).

The A.P.GST ACT, 1957 2001-02 Writ petition filed with Tribunal (1267/ 2007 2001-02)

The C.S.T ACT 2002-03 A.P.S.T.A.T (952/2008 2002-03)

The C.S.T ACT 1998-99 A.P.S.T.A.T. (1266/2007 1998-99)

AP VAT ACT 2007-08 A.P.S.T.A.T (419/2011 2007-08)

Central Excise Tariff Act, 1985 Central Excise Tariff Act, 1985 (V/19/15/ 14/2012/ 2011-12 ADJN/533A)

x) The Company does not have any accumulated losses as at the end of the financial year under reference and the company has not incurred cash loss in the financial year under reference and in the financial year immediately proceeding such financial year.

xi) The Company has not defaulted in the repayment of its dues to financial institutions or banks.

xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or nidhi / mutual benefit fund / society. Therefore the provisions of Clause 4 (xiii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Investments have been held by the company in its own name.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) In our opinion, the term loans taken by the Company were applied for the purpose for which they were taken.

xvii) In our opinion and according to explanations and information given to us, funds raised on short-term basis have not been used for long term investment.

xviii) According to the information and explanation given to us, during the year the Company has not made any preferential allotment of equity shares/warrants to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix) The company has not issued any debentures

xx) The Company, during the year, has not raised money by public issues.

xxi) According to explanations and information given to us no material frauds on or by the Company has been noticed during the year.

Place: Hyderabad For Raju & Prasad,

Date: 29th May 2012 Chartered Accountants

(FRN:003475S)

S.Ranganathan

PARTNER

Membership No: 22738


Mar 31, 2011

1. We have audited the attached Balance Sheet of M/s. HERITAGE FOODS (INDIA) LIMITED, as at 31st March 2011 and also the Profit and Loss Account for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An Audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order 2003, as amended by the Companies (Auditors' Report) Order 2004, issued by the Government of India, in terms of sub- section (4A) of Section 227 of the Companies Act 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii. In our opinion the Company as required by law has kept proper books of account so far as it appears from our examination of the books and proper returns adequate for the purpose of our audit have been received from the units not visited by us.

iii. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account maintained.

iv. In our opinion the Balance sheet, Profit and Loss account and the cash flow statement comply with the accounting standards referred to in Sec.211 (3C) of the Companies Act.1956.

v. On the basis of written representation given to us, no director of the Company, as at 31st March 2011 and taken on record by the Board of Directors we report that none of the Director as on 31st march 2011 is disqualified from being appointed as a director under clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956.

vi. As per the information and explanation given by the company there is no cess payable within the meaning of Sec 441A of the Companies Act as on 31st March, 2011.

vii. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of Balance Sheet, of the state of affairs of the Company, as at 31st March 2011.

b. In the case of the Profi t and Loss account, of the profit for the year ended on that date and

c. In the case of Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT (Referred to in paragraph 3 of our report of even date)

i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) These fixed assets have been physically verified by the management during the year and discrepancies noticed on such verifi cation have been properly dealt with in the books of account. In our opinion, the frequency of verifi cation is reasonable having regard to the size of the company and the nature of the assets.

c) No substantial part of fixed assets has been disposed off during the year.

ii) a) The inventory has been Physically verified during the year by the management. In our opinion, the frequency of verifi cation is reasonable.

b) The procedures of physical verifi cation of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verifi cation between the physical stocks and the book records were not material.

iii) a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956 or to companies under the same management as defined in Section 370(1-B) of the Companies Act,1956. Consequently, clauses (iii)(b), (iii) (c) and (iii)(d) are not applicable.

b) The Company has not taken any loans secured or unsecured from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 or to companies under the same management as defined in Section 370(1-B) of the Companies Act,1956. Consequently, clauses (iii) (f) and (iii) (g) are not applicable.

iv) In our opinion and according to the information and explanation given to us, Considering the size of the company and nature of business of various divisions of the company with regard to purchase of inventory and fixed assets and with regard to sale of goods and services, the internal control system commensurate with the size of the company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted deposits from the public governed by Section 58A and 58AA of the Companies Act, 1956 for the year under reference.

vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

viii) As per the information and explanation given by the Company and in terms of the letter dated 11/09/09 from MCA, Cost Audit Branch, we report that the maintenance of cost records is not applicable to the company.

ix) a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities including Provident Fund, Investor Education and Protections Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax and Other Statutory dues applicable to it. There are no undisputed statutory dues outstanding for more than six months as on 31.03.2011.

b) According to the information and explanations given to us following are the disputed dues relating to income tax, wealth tax, cess and sales tax, which have not been deposited as at 31st March, 2011:

Name of the Nature of the Amount Period to which the statue dispute (Rs.in amounts relate (F.Y) lakhs)

Income Tax Income Tax 266.50 2004-05 & 2005-06 Act, 1961

Income Tax Income Tax 18.49 2006-07 Act, 1961

The General Sales 12.80 1999-00 to 2004-05 A.P.G.S.T Tax Act, 1957

The A.P.GST General Sales 95.11 2001-02 ACT, 1957 Tax

The C.S.T Central Sales 18.78 2001-02 ACT Tax

AP VAT ACT Input Tax 114.00 2007-08 Credit disallowance

The C.S.T FILING OF C 37.34 2002-03 ACT Forms

The C.S.T FILING OF C 0.71 1998-99 ACT Forms

Name of the Forum where the disputes is pending statue

Income Tax Departmental appeal before Income Act, 1961 Tax Appellate Tribunal

Income Tax Company's appeal before CIT (Appeals) Act, 1961

The A.P.G.S.T Sales Tax Appellate Tribunal, Andhra Act, 1957 Pradesh.

The A.P.GST Writ petition fi led with High Court. G.O has Act, 1957 been issued by the Govt. of A.P removing rule 6a purchase tax on milk, the G.O will be given effect to the appeal at the time of hearing.

The C.S.T ACT Sales Tax Appellate Tribunal, Andhra

Pradesh

AP VAT ACT A.P.S.T.A.T (Tribunal)

The C.S.T ACT A.P.S.T.A.T. (Tribunal)

The C.S.T ACT Appeal Pending before STAT



x) The Company does not have any accumulated losses as at the end of the financial year under reference and the company has not incurred cash loss in the financial year under reference and in the financial year immediately preceding such financial year.

xi) The Company has not defaulted in the repayment of its dues to financial institutions or banks.

xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or nidhi / mutual benefit fund / society. Therefore the provisions of Clause 4 (xiii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Investments have been held by the company in its own name.

xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) In our opinion, the term loans taken by the Company were applied for the purpose for which they were taken.

xvii) In our opinion and according to explanations and information given to us, funds raised on short-term basis have not been used for long term investment.

xviii) According to the information and explanation given to us, during the year the Company has not made any preferential allotment of equity shares/warrants to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix) The Company has not issued any debentures

xx) The Company, during the year, has not raised money by public issues.

xxi) In our opinion and according to explanations and information given to us no material frauds on or by the Company has been noticed during the year.

For RAJU & PRASAD, Chartered Accountants, (FRN: 003475S)

S.Ranganathan Partner Membership No: 22738

Place : Hyderabad Date : 19th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. HERITAGE FOODS (INDIA) LIMITED, as at 31st March 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An Audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report) Order 2004, issued by the Government of India, in terms of sub-section (4A) of section 227 of the Companies Act 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii. In our opinion the Company as required by law has kept proper books of account so far as it appears from our examination of the books and proper returns adequate

for the purpose of our audit have been received from the units not visited by us.

iii. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account maintained.

iv. In our opinion the Balance sheet, Profit and Loss account and the cash flow statement comply with the accounting standards referred to in Sec.211 (3C) of the Companies Act.1956.

v. On the basis of written representation given to us, no director of the company, as at 31st March 2010 and taken on record by the Board of Directors we report that none of the Director as on 31st March 2010 is disqualified from being appointed as a director under clause (g) of Sub-Section 274 of the Companies Act, 1956.

vi. As per the information and explanation given by the company there is no cess payable within the meaning of Sec 441A of the Companies Act as on 31st March, 2010.

vii. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of Balance Sheet, of the state of affairs of the Company, as at 31st March 2010.

b. In the case of the Profit and Loss account, of the profit for the year ended on that date and

c. In the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date)

i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) These fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of the assets.

c) No substantial part of fixed assets has been disposed off during the year.

ii. a) The inventory has been Physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. a) The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956 or to companies under the same management as defined in section 370(1-B) of the Companies Act,1956. Consequently, clauses (iii)(b), (iii)(c) and (iii)(d) are not applicable. In respect of advances granted to subsidiary company towards incorporation and other expenses, the same are not material in nature and the terms granting these advance are not prejudicial to

the interest of the company. No interest is payable on these advances and we are informed that these advances are not immediately repayable.

b) The company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956 or to companies under the same management as defined in section 370(1-B) of the Companies Act,1956. Consequently, clauses (iii) (f) and (iii) (g) are not applicable.

iv. In our opinion and according to the information and explanation given to us, considering the size of the company and nature of business of various divisions of the company with regard to purchase of inventory and fixed assets and with regard to sale of goods and services, the internal control system commensurate with the size of the company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in

pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

vi. The company has not accepted deposits from the public governed by section 58A and 58AA of the Companies Act, 1956 for the year under reference.

vii. In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business.

viii. As per the information and explanation given by the company and in terms of the letter dated 11th Sept. 2009 from Ministry of Corporate Affairs, Cost Audit Branch, we report that the maintenance of cost records are not applicable to the company.

ix. a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities including Provident Fund, Investor Education and Protections Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax and Other Statutory dues applicable to it.

b) According to the information and explanations given to us following are the disputed dues relating to income tax, wealth tax, cess and sales tax, which have not been deposited as at 31st march, 2010:

Name of the statutes Nature of the Amount (Rs.in dispute Lakhs) Income Tax Act, 1961 Income tax 266.50 Income Tax Act, 1961 Income Tax 18.49 The A.P.G.S.T Act, General sales tax 12.80 1957 The A.P.GST ACT, General sales tax 95.11 1957 The C.S.T Act Central sales tax 18.78

Name of the statutes Period to which Forum where the the amounts disputes is relate(F.Y) pending Income Tax Act, 1961 2004-05 & 2005-06 Departmental appeal before Income tax appellate tribunal Income Tax Act, 1961 2006-07 Companys appeal before CIT (Appeals) The A.P.G.S.T Act, Sales Tax Appellate 1957 1999-00 to 2004-05Tribunal, Andhra Pradesh The A.P.GST Act, Writ petition filed with 1957 2001-02 High Court. G.O has been issued by the GOVT/A.P removing rule 6a purchase tax on milk, the G.O will be given effect to the appeal at the time of hearing. The C.S.T Act 2001-02 Sales Tax Appellate Tribunal, Andhra Pradesh

x. The company does not have any accumulated losses as at the end of the financial year under reference and the company has not incurred cash loss in the financial year under reference and there was a cash loss of Rs.11,15,44,064/- (loss before depreciation and amortization) in the financial year immediately preceding such financial year.

xi. The company has not defaulted in the repayment of its dues to financial institutions or banks.

xii. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the company is not a chit fund or nidhi / mutual benefit fund / society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xiv. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Investments have been held by the company in its own name.

xv. The company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. In our opinion, the term loans taken by the Company were applied for the purpose for which they were taken.

xvii. In our opinion and according to explanations and information given to us, funds raised on short-term basis have not been used for long term investment.

xviii.According to the information and explanation given to us, during the year the company has not made any preferential allotment of equity shares/warrants to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. The company has not issued any debentures.

xx. The company, during the year, has not raised money by public issues.

xxi. In our opinion and according to explanations and information given to us no frauds on or by the company has been noticed during the year.

For RAJU & PRASAD Chartered Accountants Firm No.: 003475S S.Ranganathan Place :Hyderabad Partner Date :27th May 2010 Membership No. 22738

 
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