Auditor Report of Vadilal Industries Ltd.

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Vadilal Industries Limited (“the Company”),which comprise the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

In conducting 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 and the Order issued under section 143(11) of the Act.

We conducted our audit of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. 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 standalone Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Other Matters

The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 1, 2016 prepared in accordance with Ind AS included in these Ind AS financial statements has been audited by the predecessor auditor. The report of the predecessor auditor on comparative financial information and the said opening balance sheet dated May 26, 2018 expressed an unmodified opinion.

Our opinion on the Standalone Ind AS Financial Statements and our report on Other Legal and Regulatory Requirements below, is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors of the Company as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

g) 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, as amended, 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 standalone Ind AS financial statements.

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company except '' 0.15 Lacs which is held in abeyance pending legal dispute.

2. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

TO THE INDEPENDENT AUDITOR''S REPORT OF VADILAL INDUSTRIES LIMITED (Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Vadilal Industries Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the criteria for internal financial control over financial reporting established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

TO THE INDEPENDENT AUDITOR''S REPORT OF VADILAL INDUSTRIES LIMITED (Referred to in paragraph (2) under ‘Report on Other Legal and Regulatory Requirements'' section 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) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except for the following :-

Particulars of the land and building	Gross Block (as at March 31, 2018)	Net Block (as at March 31, 2018)	Remarks (give reasons for the exception)
Freehold land located at Dwarka admeasuring 58,096 Sq. Mtrs.	Rs. 348.58 Lacs	Rs.348.58 Lacs	The title deeds are not readily available.
Freehold land located at Bareily admeasuring 94 Sq. Mtrs.	Rs.8.82 Lacs	Rs.8.82 Lacs	The title deeds are not readily available.
House Building Located at, "Pushpak Bungalows", Hill Darshan Co. Op. Housing Society Limited, Ahmedabad admeasuring 200 Sq. Yd.	Rs.13.39 Lacs	Rs.8.86 Lacs	The title deed is in dispute.
Residential Flat in Maruti Centre, Ahmedabad admeasuring carpet area 4,750 Sq. Ft.	Rs.13.34 Lacs	Rs.4.86 Lacs	The title deeds are not readily available.
Investment property located at Mahalaya Complex, Ahmedabad admeasuring 1,360 Sq. Ft.	Rs.20.69 Lacs	Rs.19.74 Lacs	The title deed is not yet on name of the Company

Immovable properties of freehold and leasehold land and buildings whose title deeds have been pledged as security for loans are held in the name of the Company based on the confirmation directly received by us from lender.

In respect of following immovable property of land that has been taken on lease along with buildings constructed thereon and disclosed as fixed asset in the financial statements, final lease deed is yet to be executed on the name of the Company:

Particulars of the land and building	Gross Block (as at March 31, 2018)	Net Block (as at March 31, 2018)
Leasehold land admeasuring 8,575 Sq. Mtrs. and building constructed thereon located at Bareily, Uttar Pradesh.	Rs.643.15 Lacs	Rs.643.15 Lacs

(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(iv) According to the information and explanations given to us, the Company has granted loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which:

a. The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Company''s interest.

b. The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to the deposits accepted. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

(vi) The maintenance of cost records has not been specified by Central Government under section 148(1) of the Companies Act, 2013.

(vii) According to the information and explanations 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, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Goods and Service tax, cess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Goods and Service tax, cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.

(c) There are no dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax which have not been deposited as on March 31, 2018 on account of disputes, except as given below:

Name of Statute	Nature of Dues	Forum where Dispute is Pending	Period to which the Amount Relates	Amount Involved (Rs.in Lacs)	Amount Unpaid (Rs.in Lacs)
Central Sales tax act and Sales tax act of	Sales tax and penalty	HIGH COURT	1998-99	39.07	23.24
various states	Additional tax demand	JT.COMM., S. TAX	2000-01	12.49	12.49
	Sales tax demand	DY. COMM., S. TAX	2000-01	20.74	15.74
	Sales tax demand	DY. COMM., S. TAX	2001-02	1.55	1.55
	Sales tax demand	SALES TAX TRIBUNAL	2002-03	2.10	0.60
	Sales tax asst dues	JT. COMM., S. TAX	2003-04	2.39	2.39
	Purchase tax	JT. COMM., S. TAX	2003-04	0.46	0.46
	Sales tax	SALES TAX TRIBUNAL	2004-05	3.67	3.67
	Sales tax and penalty	SALES TAX TRIBUNAL	2010-11	24.81	14.81
	Sales tax	ADDITIONAL COMM. GRADE 2	2012-13	2.39	1.44
	Sales tax	ADDITIONAL COMM. GRADE 2	2013-14	3.08	1.54
	Sales tax	ADDITIONAL COMM. GRADE 2	2015-16	11.74	6.00
	Sales tax	ADDITIONAL COMM. GRADE 2	2016-17	45.84	30.26
Income Tax	Income Tax	ITAT	1996-97	1.93	1.93
	Income Tax	AO	2006-07	1.37	1.37
	Income Tax	AO	2007-08	28.77	28.77
	Income Tax	CIT(A)8	2013-14	0.88	0.88
Nayab Nirnayak Adhikari	Food Safety Penalty	HIGH COURT ALLAHABAD	1998-2011	2.85	-
Employees'' State Insurance	Employee State Insurance	ESI CORP AHMEDABAD	1997-96 TO 1999-00	4.86	4.11

(viii)In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions and banks. The Company has not borrowed from Government and also the Company has not issued debentures.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The Company has utilised the money raised by way of term loans during the year for the purpose for which they were raised.

(x) 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 by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

(xiii)In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the act, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the act are not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Deloitte Haskins and Sells LLP

Chartered Accountants

(Firm’s Registration No. 117366W/W-100018)

(Kartikeya Raval)

Place : Ahmedabad (Partner)

Date : May 28, 2018 (Membership No. 106189)

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Mar 31, 2015

We have audited the accompanying standalone financial statements of Vadilal Industries 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 significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone 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 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 as adequate Internal Financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

Emphasis of Matter

a. Attention is invited to Note No. 27.3 of the standalone financial statement regarding petition which is under process with Company Law Board for repayment of fixed deposit accepted under The Companies Act, 1956.

b. Attention is invited to Note No. 27.6 of the standalone financial statements, where in as per the reasons stated by the management, Trade receivables of Rs. 356.70 lacs outstanding at the year end from Company's Overseas Subsidiary are considered realisable/ recoverable.

c. Attention is invited to Note No. 27.14 of the standalone financial statements, whereas the company has recognised Mat Credit entitlement for current financial year of Rs.58.50 Lacs and upto 31st March 2015 of Rs. 551.85 Lacs.

Our opinion is not modified in respect of these matters.

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 Paragraphs 3 and 4 of the 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 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 appears from our examination of those books

c) The Balance Sheet, the 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, 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 standalone financial statements as referred to in Note 27.1.

II. The Company did not have any long-term contracts, including derivate contracts for which there were any material foreseeable losses.

III. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company except Rs. 0.15 Lacs which is held in abeyance due to legal case pending.

ANNEXURE TO THE AUDITORS REPORT

ANNEXURE REFERRED TO IN INDEPENDENT AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF VADILAL INDUSTRIES LIMITED, ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2015.

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

(b) As explained to us, the company has not conducted physical verification of fixed assets during the year. In absence of physical verification of fixed assets material discrepancies if any, could not be ascertained.

ii) (a) Physical verification at reasonable intervals has been carried out by the management in respect of inventory except inventory lying with the outside parties, have been confirmed by them as at year end. In our opinion, the frequency of verification is reasonable.

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

(c) The Company has maintained proper records of inventory except in case of processed food division, where due to migration from Oracle to SAP on September 01, 2014, inventory as on migration date was not updated batch wise/ year wise in SAP. The discrepancies noticed on such physical verification as compared to book records were not material.

iii) Accordingly to the information and explanations given to us, the Group has not granted secured or unsecured loans to companies, firms or other party covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, paragraphs 3(iii) (a) and (b) of the order are not applicable

iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items sold are of a special nature and comparable alternative prices are not available, 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 inventory and fixed assets and for the sale of goods and services. During the course of our audit, except as stated in para (ii) (c) herein above, we have neither come across nor we have been informed of any major weakness in internal controls procedures.

v) The company has accepted deposits from public during the year under audit and the directives issued by Reserve Bank of India and provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under have been generally complied with except a petition is under process with Company Law Board for repayment of fixed deposit accepted under The Companies Act, 1956. (Refer note no. 27.3 of standalone financials statement).

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vi) We have been informed by the management, no cost records have been prescribed by Central Government under section 148(1) of the Companies Act, 2013 in respect of any of the Company's products or services.

vii) (a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees' state insurance, investor education and protection fund, sales-tax, income- tax, wealth tax, service tax, duty of customs, duty of excise, cess and other material statutory dues as applicable with the appropriate authorities.

According to the information and explanations given to us, no undisputed amount payable in respect of aforesaid statutory dues were outstanding as at 31st March, 2015 for the period of more than six months from the date they become payable except sales tax of 17.00 Lakhs which remains outstanding for a period of more than six months from the date it became payable.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the details of disputed amounts in respect of sales tax, income tax, wealth tax, service tax, value added tax, custom duty, and excise duty / cess not deposited with the appropriate authorities are as follow :

in lakhs)

Sr. Dispute Amt. Nature Period to Forum No. under: (net of Dues which the where of amount dispute is depo sit) Relates pending

(i) Central 23.24 Sales tax and Penalty 1998-99 - High Court Sales Tax 12.49 Additional Tax demand 2000-01 - Jt. Comm. Act and 15.74 Sales tax demand 2000-01 - Dy. Comm. Sales Tax 1.55 Sales tax demand 2001-02 - Dy. Comm. Act of 0.60 Sales Tax demand 2002-03 - Tribunal various 2.39 Sales tax asst dues 2003-04 - Jt. Comm. states 0.46 Purchase Tax 2003-04 - Jt. Comm. 3.67 Sales tax 2004-05 - Tribunal

(ii) Income 1.93 Income tax 1996-97 - High Court

Tax Act, 3.12 1999-00 - High Court

1961 1.37 2006-07 - A.O

(iii) Others 0.75 Food Safety Penalty 2013-14 - Allahabad Nayab High Court

Nirnayak Adhikari

The following matters, which have been excluded from the above table, have been decided in favour of the company but the department has preferred appeals at higher levels. The details are as under :

(Rs. in lakhs)

Sr. Dispute Amt. Nature Period to Forum No. under: (net of Dues which the where of amount dispute is depo sit) Relates pending

(i) Central 4.58 Demand for duty on 1988-89 -Asst. Excise goods cleared Comm. Act, 1944 4.28 MODVAT on capital 2003-04 -Asst. goods Comm.

(ii) Income 50.46 Income tax 1992-93 - ITAT Tax Act, 31.10 1993-94 - ITAT 1961 7.84 1994-95 -High Court

14.06 1995-96 -High Court

16.03 1996-97 -High Court

0.51 2001-02 -High Court

5.10 2002-03 -High Court

41.55 1997-98 -High Court

(c) The 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 has been transferred to such fund within time except Rs 0.15 lacs which is held in abeyance due to legal case pending.

viii) The Company neither has any accumulated losses nor has incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

ix) Based on our audit procedures and as per the information and explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks and financial institution. The Company has not obtained any borrowing by way of debentures.

(x) To the best of our knowledge and belief and according to the information and explanations given to us the Company has given guarantee of Rs 1809.00 Lacs for loans taken by others from banks. In our opinion and based on the information and explanations given to us, the terms and conditions are not prejudicial to the interests of the Company.

xi) Based on information and explanations given to us by the management, term loan was applied for the purpose for which the loan was obtained.

xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the standalone financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year nor we have been informed of any such case by the management.

For KANTILAL PATEL & CO.,

CHARTERED ACCOUNTANTS

Firm Regn. No. 104744W

[Mayank S. Shah] Place : Ahmedabad Partner

Date : June 01, 2015 Membership No.: 44922

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Mar 31, 2014

We have audited the accompanying financial statements of Vadilal Industries Limited, which comprise the Balance Sheet as at March 31, 2014, 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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with General Circular 15/2013 dated 13 September, 2013 issued by 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 have 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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Emphasis of Matter:

a. Attention is invited to Note No. 27.3 (a) of the financial statements, whereby the company has for the year accounted transport subsidy of Rs 80 Lacs awaiting announcement of such policy from government.

b. Attention is invited to Note No. 27.6 of the financial statements, where in as per the reasons stated by the management, advances of Rs 196.93 lacs outstanding at the year end from Company''s Overseas Subsidiary are considered realisable/ recoverable.

c. Attention is invited to Note No. 27.14 of the financial statements, whereas the company has recognised Mat Credit entitlement for current financial year of Rs. 89.94 Lacs and upto 31st March 2014 of Rs. 493.35 Lacs.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 (together with "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 paragraphs 4 and 5 of the Order.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the accounting standards notified under the Companies Act, 1956, read with General Circular 15/2013 dated 13 September, 2013 issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

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

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

(i) (a) The company has maintained separate records showing particulars about quantitative details and situation of fixed assets in respect of plant and machinery and in respect of other fixed assets for addition made from August 2009, on the basis of available information.

(b) As explained to us, the company has not conducted physical verification of fixed assets during the year. In absence of physical verification of fixed assets material discrepancies if any could not be ascertained.

(c) The company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As explained to us, the inventory have been physically verified during the year by the management. In respect of inventory lying with third parties, inventories have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(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 are 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 inventory and the discrepancies noticed on such physical verification between physical stocks and book records have been adequately dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 :

[a] The company has granted loan to two parties covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and year end balance of loan granted is Rs. 221.93 lacs.

[b] In our opinion rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the company.

[c] In respect of loans given by the company, receipt of interest, wherever applicable, is regular and principal amount is repayable on demand and therefore the question of overdue amount does not arise.

[d] The company has not taken secured/ unsecured loan from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, paragraph 4 (iii) (e), (f) and (g) are not considered applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, 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 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 internal controls.

(v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

[a] In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section.

[b] According to the information and explanations given to us transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rupees five lakhs or more in respect of any party, have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time. In respect of ice cream, sales are made at predetermined prices, which in our opinion are prima facie reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has generally complied with the provisions of section 58 A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public.

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by Central Government for the maintenance of cost records under Section 209 [1][d] of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) The company is generally regular in depositing undisputed provident fund, investor education & protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues to appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amount in respect of aforesaid statutory dues were outstanding as at 31st March, 2014 for the period of more than six months from the date they become payable except sales tax of Rs.17.00 lakhs which remains outstanding for a period of more than six months from the date it became payable.

(c) The details of disputed statutory dues as at March 31, 2014 that have not been deposited by the company, are as under:

(x) The company has no accumulated losses and has not incurred any cash losses during the current financial year or for immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks. The company has not obtained any borrowings by way of debentures.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company has given guarantee for loans taken by others from banks or financial institutions. In our opinion and based on the information and explanations given to us, the terms and conditions are considered not prejudicial to the interest of the company.

(xiv) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans raised during the year were prima facie been used for the purpose for which they were raised. The term loans outstanding at the beginning of the year were applied for the purpose for which they were obtained.

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

(xvi) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xvii)According to the information and explanations given to us, the company has not issued any debentures during the year.

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

(xix) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

(xx) In our opinion and according to the information and explanations given to us, the nature of the company''s business/activities during the year are such that clause;

(xiii) provisions of any special statute applicable to chit fund,

(xiv) dealing or trading in shares, securities, debentures and other investments of Company (Auditors'' Report) Order, 2003 are not applicable to the company.

For KANTILAL PATEL & CO., Chartered Accountants Firm Registration No. 104744W

Mayank S. Shah Partner Membership No.: 44922 Place : Ahmedabad Date : May 29, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Vadilal Industries Limited, which comprise the Balance Sheet as at March 31, 2013, 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"). 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 have 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Emphasis of Matter:

a. Attention is invited to Note No. 27.3 (a) of the financial statement, whereby the company has for the year accounted transport subsidy of Rs 57 Lacs awaiting announcement of such policy from government.

b. Attention is invited to Note No. 27.6 of the financial statement, where in as per the reasons stated by the management, investment of Rs 11.74 lacs and advances of Rs 125.58 lacs outstanding at the year end from Company''s Overseas Subsidiary are considered realisable/ recoverable.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 (together with "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 paragraphs 4 and 5 of the Order.

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

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

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

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

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, 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 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

(i) (a) The company has maintained separate records showing particulars about quantitative details and situation of fixed assets in respect of plant and machinery and in respect of other fixed assets for addition made from August 2009, on the basis of available information.

(b) As explained to us, the company has not conducted physical verification of fixed assets during the year. In absence of physical verification of fixed assets material discrepancies if any could not be ascertained.

(c) The company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As explained to us, the inventory have been physically verified during the year by the management. In respect of inventory lying with third parties, inventories have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(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 are 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 inventory and the discrepancies noticed on such physical verification between physical stocks and book records have been adequately dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 :

[a] The company has granted interest free loan to subsidiary company. The maximum amount involved during the year and year end balance of loan granted is Rs 125.58 lacs.

[b] In our opinion other terms and conditions of such loans are not prima facie prejudicial to the interest of the company.

[c] In respect of loans given by the company, principal amount is repayable on demand and therefore the question of overdue amount does not arise.

[d] The company has not taken secured/ unsecured loan from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, paragraph 4 (iii) (e), (f) and (g) are not considered applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, 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 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 internal controls.

(v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

[a] In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section.

[b] According to the information and explanations given to us transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rupees five lakhs or more in respect of any party, have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time. In respect of ice cream, sales are made at predetermined prices, which in our opinion are prima facie reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has generally complied with the provisions of section 58 A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by Central Government for the maintenance of cost records under Section 209[1][d] of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) The company is generally regular in depositing undisputed provident fund, investor education & protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues to appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amount in respect of aforesaid statutory dues were outstanding as at 31st March, 2013 for the period of more than six months from the date they become payable except sales tax of Rs.17.00 lakhs which remains outstanding for a period of more than six months from the date it became payable.

(c) The details of disputed statutory dues as at March 31, 2013 that have not been deposited by the company, are as under :



(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the dispute deposit) amount is pending (Rs. in lakhs) relates

(i) Central

Sales 23.24 1998-99 - High Court

Tax Act 12.49 2000-01 - Jt. Comm..

and 15.74 2000-01 - Dy. Comm.

Sales 1.55 2001-02 - Dy. Comm.

Tax 0.60 2002-03 - Tribunal

Act of 2.39 2003-04 - Jt Comm

various 0.46 2003-04 - Jt. Comm

states 3.67 2004-05 - Tribunal

(ii) Income 1.93 1996-97 - High Court

Tax 3.12 1999-00 - High Court

Act, 1.37 2006-07 - A.O

1961 1.50 2009-10 - CIT Appeals

(iii)Water 6.55 1998-99 U.P.State

Cess to 10-11 pollution

Control

Board

The following matters, which have been excluded from the above table, have been decided in favour of the company but the department has preferred appeals at higher levels. The details are as under :



(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the department has deposit) amount preferred (Rs. in lakhs) relates appeals

(i) Central 4.58 1988-89 - Asst. Comm. of

Excise Central Excise

Act, 4.28 2003-04 -Asst. Comm. of

1944 Central Excise

9.17 2000-01 - High Court,

Hyderabad

(ii) Income 50.46 1992-93 - Tribunal

Tax 31.10 1993-94 - Tribunal

Act, 7.84 1994-95 - High Court

1961 14.06 1995-96 - High Court

16.03 1996-97 - High Court

0.51 2001-02 - High Court

5.10 2002-03 - High Court

41.55 1997-98 - High Court



(x) The company has no accumulated losses and has not incurred any cash losses during the current financial year or for immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks. The company has not obtained any borrowings by way of debentures.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company has given guarantee for loans taken by others from banks or financial institutions. In our opinion and based on the information and explanations given to us, the terms and conditions are considered not prejudicial to the interest of the company.

(xiv) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans raised during the year were prima facie been used for the purpose for which they were raised. The term loans outstanding at the beginning of the year were applied for the purpose for which they were obtained.

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

(xvi) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xvii) According to the information and explanations given to us, the company has not issued any debentures during the year.

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

(xix) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

(xx) In our opinion and according to the information and explanations given to us, the nature of the company''s business/activities during the year are such that clause;

4(xiii) provisions of any special statute applicable to chit fund,

4(xiv) dealing or trading in shares, securities, debentures and other investments of Company (Auditors'' Report) Order, 2003 are not applicable to the company.



For KANTILAL PATEL & CO.,

Chartered Accountants

Firm Registration No. 104744W

Mayank S. Shah

Place : Ahmedabad Partner

Date : May 30, 2013 Membership No.: 44922

---

Mar 31, 2012

1. We have audited the attached balance sheet of Vadilal Industries Limited as at March 31, 2012, the Statement of profit & loss and also 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 conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies [Auditors' Report] Order, 2003 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 in paragraph 3 above, we report that :

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

(iii) The balance sheet, Statement of profit & loss and cash flow statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the balance sheet, Statement of profit & loss and cash flow statement dealt with by this report comply with accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of the written representations received from directors, as on 31st March 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, on the said date.

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

(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2012;

(b) in the case of Statement of profit & loss, of the ‘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 for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF VADILAL INDUSTRIES LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2012.

(i) (a) The company has maintained separate records showing particulars about quantitative details and situation of fixed assets in respect of plant and machinery and in respect of other fixed assets for addition made from August 2009, on the basis of available information.

(b) As explained to us, the company has not conducted physical verification of fixed assets during the year. In absence of physical verification of fixed assets material discrepancies if any could not be ascertained.

(c) The company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As explained to us, the inventory have been physically verified during the year by the management. In respect of inventory lying with third parties, inventories have been confirmed by them. In our opinion, the frequency of verification is reasonable. (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 are 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 inventory and the discrepancies noticed on such physical verification between physical stocks and book records have been adequately dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 :

[a] The company has granted interest free loan to subsidiary company. The maximum amount involved during the year and year end balance of loan granted is Rs. 115.92 lacs.

[b] In our opinion other terms and conditions of such loans are not prima facie prejudicial to the interest of the company.

[c] In respect of loans given by the company, principal amount is repayable on demand and therefore the question of overdue amount does not arise.

[d] The company has taken unsecured loan from one company. The year end and maximum outstanding balance of loan taken from such company is Rs. 15.38 lacs

[e] In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the company.

[f] In respect of loan taken by the company the interest payments are regular and the principal amount is repayable on demand.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, 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 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 internal controls.

(v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

[a] In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section.

[b] According to the information and explanations given to us transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rupees five lakhs or more in respect of any party, have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time. In respect of ice cream, sales are made at predetermined prices, which in our opinion are prima facie reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by Central Government for the maintenance of cost records under Section 209 [1 ][d] of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) The company is generally regular in depositing undisputed provident fund, investor education & protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues to appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amount in respect of aforesaid statutory dues were outstanding as at 31st March, 2012 for the period of more than six months from the date they become payable except sales tax of Rs.17.00 lakhs which remains outstanding for a period of more than six months from the date it became payable.

(c) The details of disputed statutory dues as at March 31, 2012 that have not been deposited by the company, are as under :

(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the dispute deposit) amount is pending (Rs.) relates

(i) Central 23.24 1998-99 - High Court Sales 12.49 2000-01 - Jt. Comm.. Tax Act 15.74 2000-01 - Dy. Comm. and 1.55 2001-02 - Dy. Comm. Sales 0.60 2002-03 - Tribunal Tax Act 2.39 2003-04 - Jt Comm of various 0.46 2003-04 - Jt. Comm states 3.67 2004-05 - Tribunal

(ii) Income 1.93 1996-97 - High Court Tax Act, 3.12 1999-00 - High Court 1961 1.37 2006-07 - A.O

2.45 2006-07 - Tribunal

1.50 2009-10 - CIT Appeals

(iii) Central 2.32 2006-07 - Asst Comm. Excise Act

(iv) Water 6.55 1998-99 U.P.State Pollution Cess to 2010-11 Control Board

The following matters, which have been excluded from the above table, have been decided in favour of the company but the department has preferred appeals at higher levels. The details are as under :

(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the department has deposit) amount preferred (Rs.) relates appeals

(i) Central 4.58 1988-89 - Asst. Comm. of Excise Central Excise Act, 4.28 2003-04 - Asst. Comm. of 1944 Central Excise

9.17 2000-01 - High Court, Hyderabad

(ii) Income 50.46 1992-93 - Tribunal Tax Act, 31.10 1993-94 - Tribunal

1961 7.84 1994-95 - High Court

14.06 1995-96 - High Court

16.03 1996-97 - High Court

0.51 2001-02 - High Court

5.10 2002-03 - High Court

41.55 1997-98 - High Court

(x) The company has no accumulated losses and has not incurred any cash losses during the current financial year or for immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks. The company has not obtained any borrowings by way of debentures.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company has given guarantee for loans taken by others from banks or financial institutions. In our opinion and based on the information and explanations given to us, the terms and conditions are considered not prejudicial to the interest of the company.

(xiv)To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans raised during the year were prima facie been used for the purpose for which they were raised. The term loans outstanding at the beginning of the year were applied for the purpose for which they were obtained.

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

(xvi) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xvii)According to the information and explanations given to us, the company has not issued any debentures during the year.

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

(xix)To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

(xx) In our opinion and according to the information and explanations given to us, the nature of the company's business/activities during the year are such that clause;

4(xiii) provisions of any special statute applicable to chit fund,

4(xiv) dealing or trading in shares, securities, debentures and other investments of Company (Auditors' Report) Order, 2003 are not applicable to the company.

For KANTILAL PATEL & CO., Chartered Accountants

Firm Registration No. 104744W

Mayank S. Shah

Place : Ahmedabad Partner

Date : May 30, 2012 Membership No.: 44922

---

Mar 31, 2011

1. We have audited the attached balance sheet of Vadilal Industries Limited as at March 31, 2011, the profit & loss account and also 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 conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies [Auditors' Report] Order, 2003 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 in paragraph 3 above, we report that:

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

(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 & loss account and cash flow statement dealt with by this report comply with accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of the written representations received from 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, on the said date.

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

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

(b) in the case of the profit & loss account, of the '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 for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF VADILAL INDUSTRIES LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2011.

(i) (a) The company has maintained separate records showing particulars about quantitative details and situation of fixed assets in respect of plant and machinery and in respect of other fixed assets for addition made from August 2009, on the basis of available information.

(b) As explained to us, the company has not conducted physical verification of fixed assets except plant and machinery during the year. In absence of physical verification of fixed assets except plant and machinery, material discrepancies if any could not be ascertained. In respect of plant and machinery reconciliation of physical verification with book records is under progress.

(c) The company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As explained to us, the inventory have been physically verified during the year by the management. In respect of inventory lying with third parties, inventory have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(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 are 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 inventory and the discrepancies noticed on such physical verification between physical stocks and book records have been adequately dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 :

[a] The company has granted interest free loan to subsidiary company. The maximum amount involved during the year and year end balance of loan granted is Rs. 70.85 lacs.

[b] In our opinion other terms and conditions of such loans are not prima facie prejudicial to the interest of the company.

[c] In respect of loans given by the company, principal amount is repayable on demand and therefore the question of overdue amount does not arise.

[d] The company has taken unsecured loan from two companies. The year end and maximum outstanding balance of loan taken from such parties is Rs. 14.05 lacs and Rs. 170.47 lacs respectively.

[e] In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the company.

[f] In respect of loan taken by the company, the interest payments are regular and the principal amount is repayable on demand.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, 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 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 internal controls.

(v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

[a] In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section.

[b] According to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rupees five lakhs or more in respect of any party, have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time. In respect of ice cream, sales are made at predetermined prices, which in our opinion are prima facie reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58 A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public.

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii) We are informed that Central Government has not prescribed under section 209 [1][d] of the Companies Act, 1956, maintenance of cost records for the products manufactured by the company.

(ix) (a) The company is generally regular in depositing undisputed provident fund, investor education & protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues to appropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amount in respect of aforesaid statutory dues were outstanding as at 31st March, 2011 for the period of more than six months from the date they become payable except sales tax of Rs.18.33 lakhs which remains outstanding for a period of more than six months from the date it became payable.

(c) The details of disputed statutory dues as at March 31, 2011 that have not been deposited by the company, are as under:

(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the dispute deposit) amount is pending (Rs.) relates

(i) Central 23.24 1998-99 - High Court

Sales 12.49 2000-01 - Jt. Commissioner

Tax Act 15.74 2000-01 - Dy Commissioner

and 1.55 2001-02 - Dy Commissioner

Sales 0.60 2002-03 - Tribunal

Tax Act 2.39 2003-04 - Jt. Commissioner

of various 0.46 2003-04 - Jt. Commissioner

states 3.67 2004-05 - Tribunal

(ii) Income 3.16 1996-97 - Tribunal

Tax Act, 3.12 1999-00 - High Court

1961 1.37 2006-07 - A.O

2.45 2006-07 - CIT Appeals

(iii)Central 1.16 2006-07 - Asst. Excise Commissioner Act

The following matters, which have been excluded from the above table, have been decided in favour of the company but the department has preferred appeals at higher levels. The details are as under:

(Rs. in lakhs)

Sr. Dispute Amount Period to Forum where No. under: (net of which the department has deposit) amount preferred (Rs.) relates appeals

(i) Central 4.58 1988-89 - Asst. Comm. of

Excise Central Excise

Act, 4.28 2003-04 - Asst. Comm. of

1944 Central Excise

9.17 2000-01 - High Court, Hyderabad

(ii) Income 50.46 1992-93 - Tribunal

Tax Act, 31.10 1993-94 - Tribunal

1961 7.84 1994-95 - High Court

14.06 1995-96 - High Court

16.03 1996-97 - High Court

0.51 2001-02 - High Court

5.10 2002-03 - High Court

41.55 1997-98 - High Court

(x) The company has no accumulated losses and has not incurred any cash losses during the current financial year or for immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks. The company has not obtained any borrowings by way of debentures.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company has given guarantee for loans taken by others from banks or financial institutions. In our opinion and based on the information and explanations given to us, the terms and conditions are considered not prejudicial to the interest of the company.

(xiv)To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans raised during the year were prima facie been used for the purpose for which they were raised. The term loans outstanding at the beginning of the year were applied for the purpose for which they were obtained.

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

(xvi)During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xvii)According to the information and explanations given to us, the company has not issued any debentures during the year.

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

(xix)To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

(xx) In our opinion and according to the information and explanations given to us, the nature of the company's business/activities during the year are such that clause;

4(xiii) provisions of any special statute applicable to chit fund,

4(xiv) dealing or trading in shares, securities, debentures and other investments of Company (Auditors' Report) Order, 2003 are not applicable to the company.

For KANTILAL PATEL & CO., Chartered Accountants Firm Registration No. 104744W

Mayank S. Shah Partner Membership No.: 44922

Place : Ahmedabad Date : July 18, 2011

---

Mar 31, 2010

1. We have audited the attached balance sheet of Vadilal Industries Limited as at March 31, 2010, the profit & loss account and also the 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies [Auditors Report] Order, 2003 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 in paragraph 3 above, we report that:

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

(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 & loss account and cash flow statement dealt with by this report comply with accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

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

(a) in the case of the balance sheet, of the state of affairs of the company as at 31 st March, 2010;

(b) in the case of the profit & loss account, of the 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 for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF VADILAL INDUSTRIES LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2010.

(i) (a) The company, has maintained separate records showing particulars about quantitative details and situation of Gross Block. The Company has also maintained separate year wise records for revaluation, depreciation and accumulated depreciation. However, the procedure for incorporating individual asset wise above details in the main system is under progress and pending reconciliation with financial records.

(b) The company has not conducted physical verification of fixed assets during the year. In absence of physical verification of fixed assets during the year, material discrepancies, if any could not be ascertained.

(c) The company has not disposed off substantial part of fixed assets during the year.

(ii) (a) As explained to us, the inventory have been physically verified during the year by the management. In respect of inventory lying with third parties, inventory have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(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 are 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 inventory and the discrepancies noticed on such physical-verification between physical stocks and book records have been adequately dealt with in the books of account.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 :

[a] The company has not granted loans to any company and hence paragraphs 4(iii) (a), (b), (c), and (d) of Company (Auditors Report) Order, 2003 are not applicable to the company.

[b] The company has taken unsecured loan from two companies. The year end and maximum outstanding balance of loan taken from such parties is Rs. 169.26 lacs and Rs. 262.84 lacs respectively.

[c] In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the company.

[d] In respect of loan taken by the company, the interest payments are regular and the principal amount is repayable on demand.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, 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 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 internal controls.

(v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956:

[a] In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section.

[b] According to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rupees five lakhs or more in respect of any party, have been made at the prices which are prima facie reasonable having

I regard to prevailing market prices at the relevant time, in respect of ice cream, sales are made at predetermined prices, which in our opinion are prima facie reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58 A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public, except that there has been a slight shortfall in maintaining liquid assets during the year.

We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

(viii)We are informed that Central Government has not prescribed under section 209 [1][d] of the Companies Act, 1956, maintenance of cost records for the products manufactured by the company.

(ix)(a)The company is generally regular in depositing undisputed provident fund, investor education & protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues to appropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amount in respect of aforesaid statutory dues were outstanding as at 31st March, 2010 for the period of more than six months from the date they become payable except sales tax of Rs.18.33 lakhs and Advance Income tax of Rs. 30.20 lacs which remains outstanding for a period of more than six months from the date it became payable. However advance income tax has been paid subsequently there against.

(c) The details of disputed statutory dues as at March 31, 2010 that have not been deposited by the company, are as under:

(Rs. In lakhs)

Sl. Dispute Amount Period to Forum where

No. under: (net of which the dispute deposit) amount is pending (Rs.) relates

(i) Central 23.24 1998-99 -Tribunal

Sales 12.49 2000-01 - Jt. Commissioner

Tax Act 15.74 2000-01 - Dy Commissioner

and 1.55 2001.02 - Dy Commissioner

Sales 0.60 2002-03 -Tribunal

Tax Act 2.39 2003-04 -Tribunal

of 0.46 2003-04 - Jt. Commissioner

various 3.67 2004-05 - Jt. Commissioner

states 0.41 2005-06 -Jt. Comm. appeal

(ii) Income 0.59 1995-96 -Tribunal

Tax Act, 3.16 1996-97 -Tribunal

1961 3.12 1999-00 - High Court

1.37 2006-07 -A.O

(iii) Central 1.53 2006-07 -Appellate Excise Commissioner Act

The following matters, which have been excluded from the above table, have been decided in favour of the company but the department has preferred appeals at higher levels. The details are as under:

Sl. Dispute Amount Period to Forum where

No. under: (net of which the department has deposit) amount preferred (Rs.) relates appeals

(i) Central 4.58 1988-89 - Asst. Comm. of

Excise Central Excise

Act, 4.28 2003-04 - Asst. Comm. of

1944 Central Excise

9.17 2000-01 -High Court,

Hyderabad

(ii) Income 50.46 1992-93 -Tribunal

Tax Act, 31.10 1993-94 -Tribunal

1961 7.84 1994-95 - High Court

14.06 1995-96 - High Court

16.03 1996-97 - High Court

0.51 2001-02 - High Court

5.10 2002-03 - High Court

(x) The company has no accumulated losses and has not incurred any cash losses during the current financial year or for immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks. The company has not obtained any borrowings by way of debentures.

(xii) In our opinion and according to the information and explanation given to us, no loans and advances have been granted on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company has given guarantee for loans taken by others from banks or financial institutions. In our opinion and based on the information and explanations given to us, the terms and conditions are considered not prejudicial to the interest of the company.

(xlv) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, the term loans raised during the year were prima facie been used for the purpose for which they were raised. The term loans outstanding at the beginning of the year were applied for the purpose for which they were obtained.

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

(xvi) During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xvii) According to the information and explanations given to us, the company has not issued any debentures during the year.

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

(xix) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

(xx) In our opinion and according to the information and explanations given to us, the nature of the companys business/activities during the year are such that clause;

(xiii) provisions of any special statute applicable to chit fund,

(xiv) dealing or trading in shares, securities, debentures and other investments of Company (Auditors Report) Order, 2003 are not applicable to the company.



For KANTILAL PATEL & CO.,

Chartered Accountants

Firm Registration No. 104744W

Mayank S. Shah

Place : Ahmedabad Partner

Date : May 24, 2010 Membership No.: 44922