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Auditor Report of Himalya International Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Himalya International Limited ("the Company") which comprise the balance sheet as at 31 March 2015, the statement of profit and loss and the 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

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act,2013 ("the Act") with respect to 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 principles generally accepted in India, including the Accounting Standards referred to in 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 provision of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, selection and application of appropriate accounting policies, making judgements 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 account 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 financial 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 there under.

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 control 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 qualified 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, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid stand alone 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its 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 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paras 3 and 4 of the said Order, to the extent applicable.

2. 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 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 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 written representations received from the directors as on 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 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 Auditors 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 has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note 28.4 to the financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, and as required on long-term contracts including derivative contracts.

iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' of our Independent Auditor's' Report of even date to the members of Himalya International Limited on the financial statements for the year ended 31st March, 2015

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) In respect of its fixed assets:

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

(b) As explained to us, fixed assets have been physically verified by the management during the year in accordance with the phased programme of verification adopted by the management which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventory:

(a) As explained to us, the inventories of finished goods, semi-finished goods, stores, spare parts and raw materials were physically verified at regular intervals by the Management.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

© In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted to the parties covered in register maintained under section 189 of the Companies Act 2013:

(a) According to the information and explanations given to us, the Company has granted loans to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 as under.

Name of the company Nature of loan Balance as a Maximum Amount 31.03.2015 Due during FY

APJ Laboratories Ltd. Advance against 56,179 58,030 purchase

Doon Valley Foods Pvt Ltd. Advance against 1,279 47,015 purchase

(a) The principal amounts and interest are being received regularly as per stipulations.

(b) There is Nil overdue amount as regards aforesaid loans.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. During the course of our Audit, we have not observed any continuing failure to correct major weaknesses in internal control.

(v) The Company has not received any public deposits during the year.

(vi) As informed to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of the activities carried on by the Company.

(vii) In respect of statutory dues:

(a) According to the records of the Company and information and explanations given to us, the Company has not been regular in depositing

undisputed statutory dues. Pending amounts are as under:

Particulars Amount Due Rs. '000

Tax Deducted at Source 5,126

Employees State Insurance 846

Employees provident Fund 2,189

(b) According to the information and explanations given to us, the disputed amounts payable in respect of Excise Duty dues as at 31 March, 2015 for a period of more than six months from the date they became payable, is as under:

Particulars of dues Amount Rs. '000' Period to which Forum where amount relates dispute is pending

Excise Duty 378 1999-2000 Tribunal

(c) There were no amounts which required to be transferred by the Company to the Investor Education and Protection Fund.

(viii) The Company does not have the accumulated losses at the end of financial year. The Company has incurred a Cash loss of Rs.26.93 Crore during the financial year covered by our Audit and Rs. Nil in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders. The loans were renewed & restructured under the Joint Lending Forum and there is no repayment of Term Loan till 31.12.2015, also the interest on loan is not to be paid till 31.12.2015 and is to be converted into FITL.

(x) In our opinion, and according to the information and the explanation given to us, the Company has given guarantee in connection with loans taken by others from banks or financial institutions, amounting to Rs 5.75 Crore issued to Allahabad Bank, Chandigarh, in case of current outstanding of Rs 1.25 Crore of Doon Valley Foods Pvt. Ltd. In our opinion, and according to the information and the explanation given to us, the terms and conditions of the guarantees given are not prejudicial to the interest of the Company.

(xi) The term loans taken by the Company have been applied for the purpose for which they were raised.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For Anujeet Dandona & Co. Chartered Accountants Firm Registration No.006118C

(Anujeet Singh) Proprietor, FCA. Membership No.73662

Place: Dehradun Dated: 30.05.2015


Mar 31, 2014

We have audited the accompanying financial statements of Himalya International Limited ("the Company!]) which comprise the balance sheet as at 31 March 2014, the statement of profit and loss and the cash flow statement for the year thenvended 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 sectipn 211 Of the Companies Act, 1956 ("the Act") read with the 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 duetofraudorerror.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Wexonducted 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 Jo 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 an opinion on the effectiveness of the 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§ufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

The Company had finished goods valued at Rs. 2471.15 Lakhs lying at a warehouse in the United States of America. These goods were destroyed in a fire which broke out in the warehouse on September 2,2013. These goods were not covered by any insurance taken out by the Company. The Company has preferred a claim against the warehouse, which has not been accepted. The management is of the opinion that it will realise the value of stqcks from the warehouse owner,once the insurers of the warehouse owner, settle the claim of the latter. Currently, the cause of fire is under investigation. In view of the absence of an accepted and actionable claim, we are unable to express an opinion on the recoverability of the claim of Rs. 2471.15 Lakhs shown as "Considered Good" by the Company. [Also see Note 20 forming-part of the financial statements under review] Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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 lndia:

(I) ln the case of the balance sheet,of the state of affairs of the Company as at 31March 2014;

(ii) in the case of the statement of profit and loss, of the loss for the year ended on that date; and

(iii) in the case of the cash flow statement,of the cash flows for the year ended on that date. Emphasis of Matter Withoutqualifyingouropinion, we draw attention to:

The Company had on 07.10.2011 set up a joint venture company with Simplot Inc of USA by the name of Himalya Simplot Private Limited (or "JV") and invested a sum of Rs. 11,49,36,000 in 22,79,966 equity shares of Rs-. 10 each of this JV. As a measure of abundance prudence, the Company has created a provision for diminution of the entire value of this investment in the year under review and charged this to the statement of profit and ioss as an Extra-ordinary item on the grounds that the JV has ceased operations ,it is insolvent and cannot be revived. In the absence of audited financial statements of the JV or other corroborative evidence, we are unable to confirm that there is a permanent diminution in the value of the investment and are unable to express an opinion on the provision made for such a permanent diminution of Rs. 11,49,36,000 and its impact on the profit for the year. Also see Note l3 forming part of the financial statements underre view]

(ii) The Company has written off of expired finished goods valued at Rs. 1576.66 Lakhs during the year under review. These finished goods had been produced in earlieryearsforthe joint venture, Himalya Simplot Private Limited, but were lying with the Company as the joint venture had not placed orders and taken delivery. {Also see Note 16 forming part of the financial statements under review] (

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor^ Report) Order, 2003 ("the Order"), as amended, issued by the Central Goyernment 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,were portthat:

a. we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of ouraudit; .

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 balancl sheet, statement of profit and loss and cash flow statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the balance sheet; statement of profit and loss and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Sectionl 33 of the Companies Act,2013; and

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

Referred to in paragraph 3 of our report of even date .

(I( a) TheCompanyhas maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets duringtheyear.

(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 tothesizeof 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 granted loans to other companies, firms or other parties covered in the register maintained under section 301 of the companies Act,1956as under:

(Rs''000'')

Name of the company Nature of loan Balance as Maximum Amount on 31.03.2014 Due APJ Laboratories Ltd. Advance against purchase 58030 58030

Doon Valley Foods Pvt Ltd. Advance against purchase 47015 47015

(i) The terms of the loans are not prejudicial to the interest of the company.

(ii) There payment of principal and interest,wherever applicable,is as per terms and conditions.

(iii) Not applicable in terms of observationat (iii)(a)supra.

(b) Further, The company has taken Joans from other companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956 as under: .

(Rs''000'')

Name of the company Nature of loan Balance as on 31.03.2014 Maximum Amount Due

Himalya Carbonates Pvt Ltd. Short term advance 1748 1748

(i) The terms of the loans are not prejudicial to the interest of the company.

(ii) The repayment of principal and interest, wherever applicable, is as per terms and conditions.

(iii) Not applicable interms of observation at (iii)(a)supra.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchases of inventory, fixed assets and with regardtothesaleofgoods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses

(iv)Internal controls.

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

In bur opinion and according to the information and explanation 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 in value of Rs. 5 lacs, in respect of any party duringtheyear, have been made, keeping in view surrounding circumstances, and quantum of transaction, at prices which are reasonable having regard to the prices prevailing in the market at the relevant time for similartransactions ''

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any loans/deposits from public falling within the provisions of sections 58 A and 58 AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. ''

(vii) lnour opinion,the company has an internal audit system commensurate with the size and nature of itsbusiness. :

(viii) The Central Government Rules forthe maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 are notapplicableto the Company.

(ix) (a) The company is regular in depositing, with appropriate authorities, undisputed statutory dues including income tax, sales tax, and other statutory dues applicable to it, except TDSamounting to Rs. 62,22,000/-,payable fortheF.Yr 2013-14, which has not been deposited.

(b) According to the information and explanationsgiven to us, no undisputed amounts payable in respect of income tax/ sales tax/excise duty which were in arrears, as at 31/03/14 for a period of more than six months from the date they became payable

(c) According to the record of the company, the details of disputed dues of income tax, Excise Duty and stamp duty are as under:

Particulars of dues Amount Rs000 ''Period to which Forum where dispute RELATES amount pending

Income Tax 49,488 AY 2007-08 CIT (Appeal)

Income Tax 25,455 AY2008-09 CIT (Appeal)

Income Tax 1,01,866 AY 2009-10 CIT (Appeal)

Income Tax 31,626 AY 2010-11 CIT (Appeal)

Income Tax 34,564 AY 2011-12 CIT (Appeal)

eXXISE Duty 378 Tribunal

(x) The Company has no accumulated losses at the end of the financial year and It has not incurred cash losses in the current year and immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given to us, in our opinion the company has not defaulted in repayment of dues to a financial institution, except overdue interest of Rs 48 Lakhs payable to Exim Bank as on 31.03.2014,which was paid on 07.05.2014.

(xii) The clause is not applicable to the company since the company has notgranted any 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 a nidhi mutual benefit, fund/ society. Therefore, the provisions of the clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xv) In our opinion, the clause is not applicable to the company since the company has not given guarantees for loans taken by others from banksorfinancial institutions.

(xvi) ln our opinion,the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to usandon an overall, examination ofthe balance sheet of the company, we report that the no funds raised on short- term basis have been used for long-term investment. No long - term funds have been used to finance short-term assets except Pemnanemtworking capital.

(xviii) According to the information and explanations given to us, the company had made the Preferential ailotment of shares to parties and companies covered in the register maintained under Section 301 of the Act i.e. as under:

Name ofthe allottee Number of shares Amount received

Promoter Group (Himalya International Inc) 896100 9857100

(xix) According to the information and explanations given to us, during the year covered by our audit report, the company has not issued any debentures.

(xx) The company has not raised any money by public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

Statement of Significant Accounting Policies 2 The notes referred to above and notes to accounts form an integral part of the balance sheet As per our report of even date

For Anujeet Dandona&Co. Firm Registration No.006118C Chartered Accountants

(Anujeet Singh) Proprietor , FCA. M No.73662

Place; Dehradun Dated: 29.07.2014


Mar 31, 2010

1. We have audited the attached Balance Sheet of Himalya International Limited as at 3 V March 2010 and the Manufacturing and Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perforin the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures irr the financial statements. Art audit also includes assessing the accounting principles u^d 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 issued by the Central (iovernment of India in terms of sub-section (4 A) of section 227 of the Companies Act. 1956. we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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 purposes of our audit:

(if) In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books.

(iii) The Balance Sheet and the Manufacturing and Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account, of the company.

(iv) In our opinion, the Balance Sheet and Manufacturing Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31s1 March 20ip from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) Subject to above and read together with other notes appearing in schedule 18, the said statement of accounts, in our opinion and to the best of our information and according to the explanations given to us, 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 the 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 of the year ended on that date.

Himalya International Limited, New Delhi. 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) All the assets have not been physically verified by the management during the fear but there is a regular programme of verification which, in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year the company has not sold off any part of fixed assets.

(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 granted loans to other companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956 as under:

APJ Laboratories Ltd. Rs.10828557/-

Himalya Carbonate (P) Ltd. Rs. 1, 90,865/-

(i) The terms of the loans are not prejudicial to the interest of the company.

(ii) The repayment of principle and interest, wherever applicable, is as per terms and conditions. (iii) Not applicable in terms of observation at (iii) (a) supra.

(b) Further, The company has not taken loans from other companies listed in the register maintained under section 301 of the Companies Act, 1956, and or from the companies under the same management as defined under section 370(IB) of the companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in; internal controls.

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

(b) In our opinion and according to the information and explanation 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 in value of Rs. 5 lacs, in respect of any party during the year, have , been made, keeping in view surrounding circumstances, and quantum of transaction, at prices which are reasonable having regard to the prices prevailing in the market at the relevant time for similar transactions. Purchases of Raw Material have been made from Doon Valley Foods Pvt. Ltd. amounting to Rs. 51,71.886/-.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any loans/ deposits from public falling within the provisions of sections 58 A and 58 AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

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

(viii) The Central Government Rules for the maintenance of cost records under section 209 (1) (d) of the (: Companies Act, 1956 are not applicable to the Company.

(ix) (a) The company is not regular in depositing with appropriate authorities undisputed statutory .dues including income tax, sales tax, and other statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax/ sales tax/ excise duty which were in arrears, as at 31/03/10 for a period of more than six months from the date they became payable.

(x) The Company has no accumulated losses at the end of the financial year and It has not incurred cash losses in the current year and immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given to us, in our opinion the company has not defaulted in repayment of dues to a financial institution.

(xii) The clause is not applicable to the company since the company has not granted any 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 a nidhi mutual benefit fund/ society. Therefore, the provisions of the 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. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xv) In our opinion, the clause is not applicable to the company since the company has not given guarantees for loans taken by others from banks or financial institutions.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short- term basis have been used for long-term investment. No long - term funds have been used to finance short-term assets except Permanent working capital.

xviii) According to the information and explanations given to us, the company had made the Preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act i.e. as under.

Name of the Parties No.ofShares Man Mohan Malik 170000

Sangita Malik 490000

Purnima Malik 1290000

Himalya Carbonate Pvt. Ltd. 685000 Arjun Malik 750000

Sidharth Kakkar 800000

Anandita Kakkar 800000

(xix) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

(xx) The company has not raised any money by public issue during the year.

However during the year the company has raised an amount Rs. 24.65 crore by conversion of shares warrants to share issued on preferential basis to certain parties.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or repotted during the course of our audit.

For ANUJEET DANDONA & Co.

Chartered Accountants

(ANUJEET SINGH)

FCA.

M No.73662

Dated: 31.05.2010 Place: Dehradun

 
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