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Updated:17 Apr, 2014, 15:56 PM IST

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Updated:17 Apr, 2014, 15:42 PM IST

AUDITOR'S REPORT:

To the Members of KWALITY DAIRY (INDIA) LIMITED

We have audited the attached Balance Sheet of Kwality Dairy (India) Limited, as at 31st March 2011 and also the Profit and Loss Account 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

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.

As required by the Companies (Auditor's Report) Order, 2003,as amended by the Companies (Auditor's report) amendment Order 2004 issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records as we considered appropriate and according to the information and explanation given to us, we set out in the Annexure a statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to 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 those books;

(iii) The Balance Sheet and the 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 and the Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956,

(v) On the basis of written representations received from the directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956,

(vi) In our opinion and to the best of our information and according to the explanations give 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, and

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

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

For P. P Mukerjee & Associates

Chartered Accountants

Firm's Registration No. 023276N

P. P. Mukerjee

Proprietor

Membership Number: 089854

Place: New Delhi

Date: September 1, 2011

ANNEXURE TO THE AUDITOR'S REPORT OF KWALITY DAIRY (INDIA) LIMITED FOR THE YEAR ENDED 31ST MARCH 2011:

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

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

c) During the year, the Company has not disposed off a substantial part of the fixed assets. Based on the information and explanation given by the management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the fixed assets, if any, has not affected the going concern status of the Company.

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

a) 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.

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

3. a) The Company has not granted loans, secured or unsecured, to companies firms or other parties listed in the register maintained under section 301 of the Companies Act 1956.

b) The Company has taken unsecured loans from three companies covered in the register maintained under section 301 of the Companies Act 1956. The maximum amount involved during the year and year end balances of such loans aggregates to Rs. 6000.00 lacs. Besides the company has also received amounts under current account from three companies covered in the Register maintainer under section 301 of the Companies Act, 1956. The maximum amount involved during the year Rs 1742.19 Lacs and year end balances of amount received from such companies were Nil.

c) The Company had taken interest free loans from the parties covered in the register maintained under section 301 of the Companies Act,1956. In our opinion and according to the information and explanation given to us, the terms and conditions on which above mentioned loans have been taken from companies, firms or other parties listed in the registers maintained under Section 301 of the Companies Act, 1956, are not, prima facie, prejudicial to the interest of the Company.

d) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of Interest wherever agreed

e) There is no overdue amount of loans received from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) According to th