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Auditor Report of Milkfood Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of MILKFOOD LIMITED ("the Company"), which comprise the Balance Sheet as at 31 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 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 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 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.

Emphasis of Matter not amounting to qualification

Attention is drawn to the Note No.5 (1) regarding classification of security deposits from suppliers; 5 (2a) & (2b) regarding security deposits from consignees/Advance from customers. Note No. 11(A)(i) regarding impairment of assets. Note no. 19 (1) regarding amount due from employees/others. Note no. 19 (2) regarding amount due from promoters. Note no. 19 (3) regarding Carbon credit receivable. Our opinion is not qualified in respect of these matters.

(a) In case of balance sheet, of the state of affairs of the company as at 31st March 2015.

(b) In the case of statement of profit & loss, of the reported profit of the company for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows of the company 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 in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure a statement on the matters specified in 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 31 March, 2015 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 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 has disclosed the impact of pending Litigations on its financial position in its financial statements by way of contingent liability.

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 to the Auditor's Report

(Referred to in paragraph 1 under 'Report on Other Legal & Regulatory Requirements' section of our report of even date)

(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) The Company has a programme of verification of fixed assets to cover all the items in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the said programme, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, inventories have been physically verified during the year by the Management at reasonable intervals, other than stock lying with third parties where certificates confirming physical inventory have been received.

(b) In our opinion and according to the information and explanations 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.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(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, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services, During the course of our audit we have not observed any continuing failure to correct major weaknesses in such internal control system except that internal control procedures in the case of advances need to be strengthened. At the yearend an amount of Rs 1.45 Cr is outstanding for a period exceeding twelve months. These interest free advances to staff/others are certified by the management and good for recovery.

(v) According to the information and explanation given to us, the company has not accepted any deposits during the year. Company is of the view that provision of Section 74(1)(b) of the Act are complied with in pursuance of Rule 19 of the Acceptance of Deposits Rules, 2014. It is also confirmed by the company that no order has been passed by the Company Law Board/ RBI or any other authority.

(i) It is informed by the Company that it is not required to maintain the cost records in terms of section 148 of the Companies Act, 2013.

(ii) According to the information and explanation given to us in respect of statutory dues;

(a) The company has generally been 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 other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of the aforesaid statutory dues in arrears as at 31.03.2015 for a period of more than six months from the date they became payable.

(b) There were no dues of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess which have not been deposited as at 31.03.2015 on account of any dispute except as follows:

Sl. Name of Statute Nature of Dues Amount No. Rs./Lacs

1 Delhi Sales Act, 1975 Stock Transfer etc. 1.86 1984-85

2 Delhi sales Act, 1975 Regular demand 1983-84 11.36

3 Income Tax Act, 1961 Regular demand for 5.08 Assessment year 2008-09

4 Income Tax Act, 1961 Regular demand for 2.17 Assessment year 2007-08

5 U.P Vat Act, 2008 Regular demand for 4.03 Assessment year 2010-11

Sl. Name of Statute Forum where dispute No. is pending

1 Delhi Sales Act, 1975 Appeal before sales Tax Appellate Tribunal, Delhi

2 Delhi sales Act, 1975 Appeal before sales Tax Appellate Tribunal, Delhi

3 Income Tax Act, 1961 Before ITAT-Delhi

4 Income Tax Act, 1961 Application u/s 154 for rectification before Assessing officer.

5 U.P Vat Act, 2008 Before Addl. Commissioner (Appeals), Moradabad.

Information is provided by the Management. The relevant confirmations from the advocates are awaited.

(c) There are no amounts that are due to be transferred to the investor education and protection fund by the company in accordance with the relevant provisions of the Companies Act, 1956 ( 1 of 1956 ) and Rules made there under.

(iii) The company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(iv) In our opinion and according to the information and explanation given to us, the company has not defaulted in the repayment of dues to financial institutions and banks. The company has not issued any debentures.

(v) Company has given guarantee of Rs. 400 Lakhs in respect of Loans taken by the Body Corporate (Supplier of Milk to the company) for the loan taken by the latter from the bank. In our opinion, the terms and conditions are not prejudicial to the interest of the company.

(vi) In our opinion and according to the information and explanation given to us, the term loans have been applied by the company during the year for the purposes for which they were obtained.

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

For MADAN & ASSOCIATES Chartered Accountants (FRN : 000185N)

(M K Madan) Place of Signature : Delhi (Proprietor) Date : 30.05.2015 (MN: 082214)


Mar 31, 2014

We have audited the accompanying financial statements of Milkfood 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"). and in accordance with the accounting principles generally accepted in India. 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.

Auditors'' 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 an opinion on the effectiveness of the company''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 explanation 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.

Emphasis of Matter, not amounting to qualification.

Attention is drawn to the Note No.5.2(i) regarding classification of trade payables, Note No. 9(7) regarding advances received from Customers, Note No.11 A 1(i) regarding impairment of assets, Note No.11A 2 regarding reversal of depreciation, Note No.13 1, Note No.19 1 (i&ii) regarding amount due from promoters/suppliers, Note No.19 2 regarding Carbon credit receivable, Note No.21 3 (i&ii) regarding exceptional items and extra ordinary income, Note No.23 (a) regarding provision of gratuity and Leave encashment. Our opinion is not qualified in respect of these matters.

(a) in case of the balance Sheet, of the state of affairs of the company as at 31st March,2014

(b) in the case of the Statement of Profit and Loss, of the reported profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company 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 in terms of Section 227(4A) 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

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

Annexure to Auditors'' Report

Referred to in paragraph 1 of our report of even date to the members of Milkfood Limited on the accounts as at and for the year ended March 31,2014.

1. (a) The company has maintained Fixed Assets Register containing quantitative details/location of the Assets.

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of two years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. It has been certified by the plant heads that physical verification has been done and there are no significant discrepancies between book records and physical verification.

(c) In our opinion and according to the information and explanations given to us, substantial part of fixed assets has not been disposed of by the company during the year.

2. (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) on the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. The company has not taken /granted loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. 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 with regard to purchase of inventory, fixed assets and sale of goods. Further, on the basis of our examination of the books and records of the company and according to the information and explanations given to us, we have neither come across, nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures and adjustments thereof except that internal control procedures in the case of advances need to be strengthened. At the year end an amount of Rs. 1.63 crore is outstanding for a period exceeding twelve months. These interest free advances to staff are certified by the management and good for recoverey.

5. In our opinion and according to explanations given to us and as certified the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. In our opinion and according to the information and explanations given to us, the transactions of purchases/ sales made with the parties in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lakh rupees 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.

7. In our opinion and according to the information and explanations given to us and read with Note (4.4) of Note.4 the company has complied with the directives issued by the RBI and provisions of sections 58 A and 58 AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from the public. According to information and explanations given to us no order has been passed by the National Company Law Tribunal or Company Law Board or RBI or any Court or any other Tribunal relevant to sections 58A, 58AA or the other relevant provisions of the Act.

8. Company has appointed external firm of Chartered Accountants to carry out the internal audit. In our opinion, internal audit is commensurate with the size and nature of its business.

9. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. However we have not made a detailed examination of cost records.

10. (a) According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education & protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, customs duty, excise-duty, service tax, cess and other statutory dues applicable to it with the appropriate authorities except service tax of Rs 1.25 lacs which has since been deposited.

(b) According to the information and explanations given to us and the records of the company examined by us, the particulars of major dues of sales-tax, income-tax, customs duty, wealth tax, excise duty and cess as at March 31, 2014 which have not been deposited on account of a dispute, are as follows:-

Sl. Name of Statute Nature of Dues Amount No. Rs./Lacs

1 Delhi Sales Tax Act, 1975 Stock Transfer etc.1984-85 1.86

2 Income Tax act, 1961 Regular Demand under 16.17 section 147/143 (3), 2006-07

3 Income Tax Act 1961 Regular Demand u/s 143 (3) 5.08 A.Y. 2008-09

4. Income Tax act, 1961 Regular Demand for 2.17 Assessment Year 2007-08

5 U.P. Vat Act 2008 Regular Demand for 5.68 Assessment Year 2009-10

6 U.P. Vat Act 2008 Regular Demand for 4.03 Assessment Year 2010-11

Sl. Name of Statute Forum where dispute No. is pending

1 Delhi Sales Tax Act, 1975 Appeal before Sales Tax Appellate Tribunal, Delhi.

2 Income Tax act, 1961 Before CIT (Appeals) Delhi

3 Income Tax Act 1961 Before ITAT-Delhi

4. Income Tax act, 1961 Application U/S 154 for rectification before Assessing officer.

5 U.P. Vat Act 2008 Before Addl. Commissioner (Appeals), Moradabad.

6 U.P. Vat Act 2008 Before Addl. Commissioner (Appeals), Moradabad.

11. The company has NIL accumulated losses as at March 31, 2014 and it has not incurred any cash losses during the financial year ended on that date and in the immediately preceding financial year.

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

13. The provisions of any special statute applicable to chit fund/ nidhi / mutual benefit fund/ societies are not applicable to the company.

14. In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion, and according to the information and explanations given to us, the company has applied term loans for the purposes for which the loans were obtained.

17. On overall examination of Balance Sheet, we report that funds raised on short Term basis, prima facie not been used during the year for long term investments.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The company has not issued any debenture during the year, accordingly, no security has been created.

20. The company has not raised any money by public issues during the year.

21. 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 fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For Madan & Associates, Chartered Accountants Firm Registration No 000185N

M.K. MADAN (Proprietor) Place: New Delhi Membership Number Date :9th June'' 2014 FCA 82214


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of Milkfood Limited, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows 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") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 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 fnancial statements. We believe that the audit evidence we have obtained is suffcient 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 explanation given to us, the aforesaid fnancial 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.

Emphasis of matter we draw attention to the Note No.5.1 regarding trade payables /advances from customers, Note No.11A 2(i) regarding operations of Casein Plant and impairment of assets, Note No.11A(3) regarding assets held at Gurgaon, Note No.11A (5) regarding capital work in progress, Note No.11A 4 (ii) regarding addition to plant and machinery Note No.12(1) regarding investment, Note No.19 (1 to 4) on advances, our opinion is not qualifed of these matters Subject to note no 6(1) regarding provision of gratuity and leave encashment of Rs 242.36 lacs of which Rs 29.56 lacs relate to current year and

Note No 11A 4(i) regarding depreciation of Rs 84.02 lacs.

We further report that had the remarks given by us in above para regarding non provision of gratuity, leave encashment and depreciation been considered, Proft of the year would have been Rs.(46.18) Lacs ( against the reported fgure of Rs 67.40 Lacs) the reserve and surplus would have been Rs.2431.51 Lacs (against the reported fgure of Rs.2758 Lacs).non current liabilities would have been Rs.7707.80Lacs ( as against reported fgure of Rs.7575.65 Lacs current liabilities would have been Rs.9733.31 Lacs (as against reported fgure of Rs. 9623.11 Lacs ) and fxed assets would have been Rs. 9279.69 Lacs ( as against reported fgure of Rs.9363.71 Lacs).

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

(b) in the case of the Statement of Proft and Loss, of the reported proft of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fows of the Company 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 in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specifed 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 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 except that gratuity and leave encashment are accounted for on payment basis.

(c) The Balance Sheet, the Statement of Proft 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 Balance Sheet, the Statement of Proft and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act except that gratuity and leave encashment are accounted for on payment basis.

(e) On the basis of the written representations received from the directors as on 31 March, 2013 taken on record by the Board of Directors, none of the directors is disqualifed as on 31March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

Referred to in paragraph 1 of our report of even date to the members of Milkfood Limited on the accounts as at and for the year ended March 31, 2013.

1. (a) The Company has maintained list of fxed assets acquired by it. However the same is required to be updated substantially with regard to quantitative detail/location, identifcation etc. in respect of Patiala unit.

(b) The fxed assets are physically verifed by the management according to a phased programme designed to cover all the items over a period of two years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. It has been certifed by the plant heads that physical verifcation has been done but reconciliation of the same with book records is in progress. Adjustment entry if any shall be made on completion of exercise.

(c) In our opinion and according to the information and explanations given to us, substantial part of fxed assets has not been disposed of by the company during the year.

2. (a) The inventory has been physically verifed during the year by the management. In our opinion, the frequency of verifcation is reasonable.

(b) The procedures of physical verifcation 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) on the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verifcation between the physical stocks and the book records were not material.

3. The company has not taken /granted loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. 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 with regard to purchase of inventory, fxed assets and sale of goods. Further, on the basis of our examination of the books and records of the company and according to the information and explanations given to us, we have neither come across, nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures and adjustments thereof except that internal control procedures in the case of advances need to be strengthened.

5. In our opinion and according to explanations given to us and as certifed the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. In our opinion and according to the information and explanations given to us, the transactions of purchases/ sales made with the parties in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of fve lakh rupees 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.

7. In our opinion and according to the information and explanations given to us and read with Note (5.3) of Note.4 the company has complied with the directives issued by the RBI and provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from the public. According to information and explanations given to us no order has been passed by the National Company Law Tribunal or Company Law Board or RBI or any Court or any other Tribunal relevant to sections 58A, 58AA or the other relevant provisions of the Act. Excess deposit of Rs 18.89 lacs as on 31.03.2013 have since been refunded as certifed by the management.

8. It has been informed to us that Company has inbuilt mechanism of internal checks and all the Plants have been visited by Internal Chartered Accountant to verify the operational systems and for safety of its Assets and other matters required by the Management. In our opinion the Internal Audit needs to be further strengthened in terms of scope, coverage and reporting.

9. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (cost Accounting records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. However we have not made a detailed examination of cost records with a view to determine whether they are accurate or complete.

10. (a) According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education & protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, customs duty, excise-duty, service tax, cess and other statutory dues applicable to it with the appropriate authorities except service tax of Rs 1.93 lacs for which company has fled an application with authorities under the Amnesty scheme.

11. The company has NIL accumulated losses as at March 31, 2013 and it has not incurred any cash losses during the fnancial year ended on that date and in the immediately preceding fnancial year.

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

13. The provisions of any special statute applicable to chit fund/ nidhi / mutual beneft fund/ societies are not applicable to the company.

14. In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or fnancial institutions during the year.

16. In our opinion, and according to the information and explanations given to us, the company has applied term loans for the purposes for which the loans were obtained.

17. On overall examination of Balance Sheet, we report that funds raised on short term basis, prima facie not been used during the year for long term investments.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The company has not issued any debenture during the year, accordingly, no security has been created.

20. The company has not raised any money by public issues during the year.

21. 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 fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For MADAN & ASSOCIATES,

Chartered Accountants

Reg. No. 000185N

M.K. MADAN

Place: New Delhi (Proprietor)

Date: 30th May, 2013 Membership Number FCA 82214


Mar 31, 2011

1. We have audited the attached Balance Sheet of Milkfood Limited as at 31st March, 2011 and also the Profit and Loss Account 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.

2. We have 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 mis-statement. 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 (Auditor's Report) Order, 2003 issued by the Central 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 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.

(ii) 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 these books except that gratuity and leave encashment are accounted for on payment basis.

(iii) The Balance sheet, Profit and loss account and Cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance sheet, Profit and loss account and Cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3 C) of section 211 of the Companies Act, 1956 except that gratuity and leave encashment are accounted for on payment basis.

(v) On the basis of written representations received from the directors as on 31st March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of 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 explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and read with Note No.3 (Schedule 18 A) regarding depreciation on Fixed Assets. Note No.7(iii) (Schedule 18 A) regarding accounting of income, Note 12 (Schedule 18 A) regarding Managerial Remuneration. Note No. 11 (a) & (b) (Schedule 18 B) regarding assets at Gurgaon. Note No.12 (Schedule 18 B) regarding investment. Note No.14 (Schedule 18 B) regarding impairment of Assets and subject to Note No.7 of Schedule 18B regarding non provision of gratuity amounting to Rs.220.57 lacs of which Rs.35.85 lacs relate to current year.

(a) in the case of the Balance sheet, of the state of affairs of the company as at 31st March 2011;

(b) in the case of the Profit and loss account, of the loss 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. give a true and fair view in conformity with the accounting principles generally accepted in India;

(d) We further report that had the remarks given by us in para (vi) above regarding non provision of gratuity been considered, the loss for the year would have been Rs.499.72 lacs (against the reported figure of Rs.463.87 Lacs), the reserve and surplus would have been Rs.2411.75 Lacs (against the reported figure of Rs.2632.32 Lacs). Net Current Assets would have been Rs.4093.79 Lacs ( as against reported figure of Rs.4314.36 Lacs).

Annexure to the Auditors' Report

Referred to in paragraph 3 of our report of even date to the members of Milkfood Limited on the accounts as at and for the year ended March 31, 2011.

1. (a) The Company has maintained list of fixed assets acquired by it. However the same is required to be updated substantially with regard to quantitative detail/location, identification etc.

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of two years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. During the year no physical verification of the fixed assets is done.

(c) In our opinion and according to the information and explanations given to us, substantial part of fixed assets has not been disposed of by the company during the year.

2. (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) on the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. (a) The company has not taken /granted loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. 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 with regard to purchase of inventory, fixed assets and sale of goods. Further, on the basis of our examination of the books and records of the company and according to the information and explanations given to us, we have neither come across, nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures and adjustments thereof except that internal control procedures in the case of advances to staff need to be strengthened.

5. In our opinion and according to explanations given to us and as certified the transactions that need to be entered into the register maintained under section 301 have been so entered.

6. In our opinion and according to the information and explanations given to us, the transactions of purchases/ sales made with the parties in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lakh rupees 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.

7. In our opinion and according to the information and explanations given to us and read with note no.5 of schedule 18B the company has complied with the directives issued by the RBI and provisions of sections 58 A and 58 AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from the public. According to information and explanations given to us no order has been passed by the National Company Law Tribunal or Company Law Board or RBI or any Court or any other Tribunal relevant to sections 58A, 58AA or the other relevant provisions of the Act.

8. It has been informed to us that Company has inbuilt mechanism of internal checks and all the Plants have been visited by Internal Chartered Accountant to verify the operational systems and for safety of its Assets and other matters required by the Management. In our opinion the Internal Audit needs to be formalized and further strengthened in terms of scope, coverage and reporting.

9. In terms of Notification No.GSR 661(E) dated 8th October 2004 regarding Cost Accounting Records (Milk Food) (Amendment) Rules, 2004 - requirement of maintaining records as prescribed under section 209 (1) (d) of the Companies Act, 1956 has been dispensed with.

10. (a) According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education & protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, customs duty, excise-duty, cess and other statutory dues applicable to it with the appropriate authorities

(b) According to the information and explanations given to us and the records of the company examined by us, the particulars of major dues of sales-tax, income-tax, customs duty, wealth tax, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute, are as follows:-

Sl. Name of Statute Nature of Dues Amount Forum where dispute No. Rs/Lacs is pending

1. Delhi Sales Tax Penalty under 19.73 Appeal before Act, 1975 Sales Tax Delhi High Court (1982-83)

2 Delhi Sales Tax Disallowance of 37.02 Appeal before Act, 1975 ST-1 Forms 1983 1.86 Delhi High Court -84/ Stock Tran -sfer etc. 1984 Appeal before -85 Sales Tax Appellate Tribunal, Delhi.

3 Income Tax Act, Regular Demand 12.59 Before CIT(Appeals) 1961 under section143 Delhi (3),2007-08

4 Income Tax Act, Regular Demand 12.31 Before CIT(Appeals) 1961 under section143 Delhi (3), A.Y. 2008-09 5 U.P. Vat Act Regular Demand 4.84 Before Addl. for Assessment Commissioner Year 2008-09 (Appeals), Moradabad.

11. The company has NIL accumulated losses as at March 31, 2011 and it has not incurred any cash losses during the financial year ended on that date and in the immediately preceding financial year.

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

13. The provisions of any special statute applicable to chit fund/ nidhi / mutual benefit fund/ societies are not applicable to the company.

14. In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion, and according to the information and explanations given to us, the company has applied term loans for the purposes for which the loans were obtained.

17. On Global examination of Balance Sheet, in our opinion, no short term funds raised have been used for long term purposes.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The company has not issued any debenture during the year, accordingly, no securities has been created.

20. The company has not raised any money by public issues during the year.

21. 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 fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For Madan & Associates, Chartered Accountants Reg. No.: 000185 N



M.K. MADAN (Proprietor) Membership No. FCA 82214

New Delhi Dated : 26th August, 2011

 
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