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Auditor Report of Lactose (India) Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Lactose (India) Limited ("the Company"), 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 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 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 of 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 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 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 controls 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's 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 the paragraphs 3 and 4 of the Order.

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 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 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 and 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.

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

Annexure referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" in our Independent Auditor's Report to the members of the Lactose (India) Limited for the year ended 31st March, 2015.As required by the Companies (Auditors Report) Order, 2015 and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

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

b) All the assets are physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size of the Company and the nature of assets. In accordance with the programme, certain fixed assets were physically verified during the year. The frequency of verification is reasonable and no material discrepancies have been noticed on such physical verification.

(ii) a) The inventories have been physically verified by the management during the year at reasonable intervals.

b) The procedures of physical verification of the 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 has maintained proper records of its inventories. No material discrepancies were noticed on physical verification as compared to book records.

(iii) The Company has not granted any loans to the parties covered in the register maintained under Section 189 of the Act. Hence paragraph 3 (iii) of the said Order is not applicable to the Company.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) The Company has not accepted any deposits from the public.

(vi) The Central Government has not prescribed for maintenance of cost records under section 148 (1) of the Companies Act, 2013 for the Company.

(vii) a) On the basis of our examination of the records of the Company, the 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 have been regularly deposited with the appropriate authorities except there is slight delay in few cases of depositing TDS, Service Tax and Provident Fund. There are no undisputed amount payable in respect of such statutory dues which have remained outstanding as at 31st March, 2015 for a period more than six months from the date they became payable.

b) There are no dues of Income Tax, Sales Tax Wealth Tax, Service Tax, Custom duty , Excise Duty, VAT and Cess which have not been deposited on account of any dispute with the appropriate authorities.

c) There is no amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses during the financial year and in the immediately preceding financial year.

(ix) The Company has not defaulted in repayment of its dues to banks and financial institutions.

(x) The Company has not given any guarantee for loans taken by others from banks and financial institutions.

(xi) The Company has applied the term loans during the year for the purpose they were obtained.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of any fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For S G C O & Co. Chartered Accountants Firm Regn. No.:112081W

K.M. Tulsian Partner Mem. No. : 38430

Place: Mumbai Date: 28th May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Lactose (India) Limited ("the Company"), 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 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 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 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 procedure to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud and 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 an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating and 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 Profit and Loss Account, 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 (Auditor''s Report) Order, 2003 ("the Order") 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 the 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 accounts 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, Statement of Profit & 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 section 133 of the Companies Act 2013; and

(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 is disqualified as on March 31,2014, from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956;

Annexure to Auditors Report

Annexure referred to in Paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date on accounts of Lactose (India) Limited for the year ended 3151 March 2014.As required by the Companies (Auditors Report) Order, 2003 and amendments thereto and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

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

b) The Company has a programme for physical verification of fixed assets on a rotational basis, which in our opinion is reasonable having regard to the size of the Company and the nature of its business. Accordingly, physical verification of certain fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.

c) During the year, there is no substantial disposal of fixed assets, which affects going concern assumption.

(ii) a) The inventories have been physically verified by the management at the year end.

b) The procedures of physical verification of the 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 has maintained proper records of its inventories. No material discrepancies were noticed on physical verification as compared to book records.

(iii) a) The Company has not granted loan to any party covered in the register maintained under section 301 of the Act.

b) In view of our comments in para (iii) (a) above, clauses 4 (iii) (b), (c) and (d) of the said Order are not applicable.

c) The Company has taken unsecured loans from three parties covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs. 1,77,08,526 and the year-end balance was Rs. 1,77,08,526.

d) In our opinion, the rate of interest and other terms & conditions of such loans are prima facie, not prejudicial to the interest of the Company.

e) There is no stipulation with regard to repayment of principal amount, hence clause 4 (iii) (g) of the said Order is not applicable.

(iv) There are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems.

(v) a) Based on the audit procedures performed by us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained in that section.

b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has an internal audit system which is conducted by independent firm of chartered accountants. In our opinion and according to the information and explanation given to us, the internal audit system is commensurate with the size of the Company and the nature of its business.

(viii) As per explanation & information given to us, the Company has maintained the cost record as prescribed by the Central Government under clause (d) of subsection (1) of Section 209 of the Act. However the same have not been reviewed by us.

(ix) a) Accordingly to the records of the Company, the undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, to the extent applicable, have generally been regularly deposited with the appropriate authorities except few delays have been observed in respect of payment of Profession Tax, TDS and Service Tax. There are no undisputed amount payable in respect of such statutory dues, which have remained outstanding as at 31st March, 2014 for a period more than six months from the date they became payable except profession tax amounting to Rs. 27,670 which have been subsequently paid.

b) There are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, excise duty cess which have not been deposited on account of any dispute with the appropriate authorities.

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

(xi) According to the information & explanations given to us the Company has not defaulted in repayment of dues to banks & financial institutions.

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

(xiii) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

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

(xvi) In our opinion and according to the information and explanation given to us, the term loans raised during the year by the Company have been applied for the purpose for which the said loans were obtained.

(xvii) On an overall examination of the balance sheet of the Company, we are of the opinion that short-term funds to the extent of Rs. 2,78,84,670/- have been used for long-term investments.

(xviii) The Company has made a preferential issue of Convertible Warrants to the parties covered in the register maintained under Section 301 of the Act. The same has been made in conformity with the guidelines issued by the Securities and Exchange Board of India relating to such preferential allotment and on that basis not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised money through a public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of any fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For S G C O & Co. Chartered Accountants Firm Regn. No.:112081W

K.M. Tulsian Partner Mem. No. : 38430

Place: Mumbai Date: 29th May, 2014


Mar 31, 2012

We have audited the attached Balance Sheet of Lactose (India) Limited as at 31st March 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. 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.

1 We conducted our audit in accordance with the 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 statement. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion,

2 As required by the Companies (Auditors Report) Order, 2003 and amendments thereto issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

3 Further to our comments in the Annexure referred to in paragraph 2 above, 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 accounts 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 & Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

d) In our opinion and to the best of our information and , according to the explanation given to us, the said Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt by this report comply with the Accounting Standards referred to in Section 211- (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on 3151 March, 2012 and taken on record by the Board, we report that none of the director is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to Note No. 33, regarding the payments received from Kerry Ingredients Private Limited amounting to Rs. 11,04,53,113 purportedly for the details mentioned in the note as informed to us by the management.

The management has not provided us with any corroborative evidences and supporting to substantiate the nature of these receipts. In absence of the same, we are unable to comment on the accounting by the Company and its consequent effect on the Profit/ Loss and Assets / Liabilities for the year including its classification under Revised Schedule VI.

g) Balances of trade receivables, trade payables, loans and advances are subject to confirmation, reconciliation and consequential adjustment, if any. We are unable to comment upon the resultant effect on the assets, liabilities and profit for the year.

h) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes appearing thereon, subject to Para 3 (f) above 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:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012,

ii) In the case of the Statement of Profit and Loss, of the Profit of the Company for the year ended on that date, and ,

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

Annexure to Auditors Report

Annexure referred to in Paragraph 2 of the Auditors Report for the year ended 31st March 2012.As required by the Companies (Auditors Report) Order, 2003 and amendments thereto and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

(i) a) The Company has maintained proper records

showing full particulars including quantitative details and situation of fixed assets except quantitative details in respect of Furniture and Fixtures.

b) The Company has a programmed for physical verification of fixed assets on a rotational basis, which in our opinion is reasonable having regard to the size of the Company and the nature of its business. Accordingly, physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.

c) During the year, there is no substantial disposal of fixed assets, which affects going concern assumption.

(ii) a) The inventories have been physically verified by the management at the year end.

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

c) The Company has maintained proper records of its inventories. No material discrepancies were noticed on physical verification as compared to book records.

(iii) a) The Company has granted unsecured loans to one party covered in the register maintained under section 301 of the Companies Act, 1956 on call basis. The maximum amount outstanding during the year was Rs. 35,02,758 and the year-end balance was Rs. 35,02,758

b) The rate of interest and other terms & conditions on the basis of which these Loans have been granted are prima facie, not prejudicial to-the interest of the Company.

c) In view of our comments in para (iii) (a) and (b) above, clauses 4 (iii) (c) and (d) of the said Order are not applicable.

d) The Company has taken unsecured loans from three parties covered in the register maintained under Section 301 of the Companies Act, 1956 on call basis. The maximum amount outstanding during the year was Rs. 32,53,050 and the year-end balance was Rs. 24,25,152.

e) In our opinion, the rate of interest, wherever paid and other terms & conditions of such loans are prima facie, not prejudicial to the interest of the Company. .

f) In view of our comments in Para (iii) (d) and (e) above, clause 4 (iii) (g) of the said Order is not applicable to the Company.

(iv) There are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems. ~

(v) a) Based on the audit procedures performed by us,

we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained in that section, b) The transactions made in pursuance of such contracts ax arrangements have been made at prices which are reasonable having regard Jo the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company does not have a formal internal audit system commensurate with its size and nature of business but its financial and other internal checks, ensures proper recording of financial transactions.

(viii) The Company has not maintained the cost records as prescribed under Section 209 (1) (d) of the Companies Act, 1956 for the Company.

(ix) a. Accordingly to the records of the Company, theundisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess have generally been regularly deposited with the appropriate authorities. There are no undisputed amount payable in respect of such statutory dues, which have remained outstanding as at 31st March, 2012 for a- period more than six months from the date they became payable. There are no dues of Income Tax, Sales Tax Wealth Tax, Service Tax, Custom duty, excise duty cess which have not been deposited on account of any dispute with the appropriate authorities.

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

(xi) According to the information & explanations given to us the Company has not defaulted in repayment of dues to banks & financial institutions.

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

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

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

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

(xvi) The Company has applied the term loans during the year for the purpose they were obtained.

(xvii) 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 investments.

(xviii) The Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised money through a public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of any 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 Singrodia Goyal & Co.

Chartered Accountants

Firm Regn. No.:112081W

K.M. Tulsian

Partner

Mem. No.: 38430

Place: Mumbai

Date: 28th May 2012

 
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