We have audited the attached Balance Sheet of M/s HERMAN MILKFOODS LTD.
 as at 31st March, 2009 and also the Profit & Loss Account of the
 Company 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.
 
 We conducted our audit in accordance with auditing standards generally
 accepted in India. Those Standards require that we perform the audit to
 obtain reasonable assurance about whether the financial statements are
 free from material misstatement. An audit includes examining, on 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.
 
 1. As required by the Companies (Auditors Report) Order, 2003, issued
 by the Ministry of Finance and Company Affairs (Deptt. of Company
 affairs) of 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 & 5 of the said order.
 
 2 Further to our comments in the Annexure referred to the above, we
 report that:
 
 a) We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b) In our opinion, proper books of accounts as required by law have
 been kept by the company, so far as appears from our examination of
 those books;
 
 c) The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with the books of account;
 
 d) In our opinion the Balance Sheet and Profit & Loss Account dealt
 with by this report comply with the accounting standards referred to in
 the sub-section (3C) of the section 211 of the Companies Act, 1956.
 
 e) On the basis of representations from the directors, as at 31-03-
 2009 and taken on record by the Board of Directors, we report that none
 of the directors are disqualified as on 31-03-2009 from being appointed
 as director, in terms of clause (g) of sub-section (1) of Section 274
 of the Companies Act, 1956.
 
 iii) The Directors have taken proper and sufficient care for the
 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 fraud and other irregularities.
 
 The Directors have prepared the annual accounts on going concern basis.
 
 In our opinion, subject to the information dealt with in the proceeding
 paragraph in Annexure to this report, 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 (as
 amended), in the manner so required, and give a true and fair view in
 conformity with the accounting principles generally accepted in India.
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2009 and
 
 ii. In the case of the Profit and Loss Account of the profit for the
 year ended on the date.
 
 ANNEXURE TO AUDITORS REPORT
 
 Annexure referred to in paragraph 1 of the Auditors Report to the
 members of HERMAN MILKFOODS LTD. on the Accounts for the year ended
 31st March, 2009.
 
 1. a.  The company has maintained reasonable records showing details of
 fixed assets;
 
 b.  Most of the fixed assets have been physically verified by the
 management. We have been informed that no material discrepancies were
 noticed on such verification.
 
 c.  No substantial part of fixed assets has been disposed off during
 the year.
 
 2.a.  The inventory has been physically verified by the management
 during the year.
 
 b.  In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 c.  On the basis of our examination of the inventory records, in our
 opinion, the company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  a.  The company has not granted loans to companies, firms or other
 parties covered in the register maintained u/s 301 of the Act.
 
 b. The Company has not taken unsecured loans from companies firm or
 other parties covered under the register maintained under section 301
 of the act.
 
 4.  In our opinion and according to the information and explanation
 given to us, there is an adequate internal control system commensurate
 with the size of the company and the nature of its business / for the
 purchase of fixed assets, inventory, and sale of good and services.
 During the course of our audit, we have not observed any continuing
 failure to correct major weakness in the aforesaid internal control
 system.
 
 5.  In our opinion and according to the information and explanation
 given to us the transaction in pursuance of contracts or arrangements
 have been made at prices which are reasonable having regard to
 prevailing market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanation
 given to us, the Company has not accepted any deposits with the
 provisions of section 58A and 58AA of the Companies Act, 1956 and the
 rules framed there under.
 
 7.  In our opinion the Companys present internal audit system is
 commensurate with its size and nature of business.
 
 8.  In our opinion and according to the information and explanation
 given to us, we are of the opinion that the cost records as prescribed
 by the Central govt. of India under section 209(1) (d) of the Act is
 not applicable to this Company.
 
 9.  According to the Books and records as produced and examined by us
 in accordance with the generally accepted auditing practices in India,
 and also based on the management representations, in our opinion the
 company is generally regular in depositing the undisputed statutory
 dues including provident fund, Income Tax, where applicable with
 appropriate authorities. There was no arrears outstanding in respect of
 above for a period of more than 6 months as on 31.03.2009.
 
 10.  The company has accumulated losses as at 31st march, 2009 However;
 it has not incurred any cash losses either during the financial year
 ended on that date or in the immediately preceding financial year.
 
 11.  Based on our audit procedures and according to the information and
 explanation given to us, the Company has not defaulted in any repayment
 of dues to financial institution and banks.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of shares or other securities.
 
 13.  In our opinion, considering the nature of activities carried of
 the Company during the year, the provisions of any special/ statutory
 applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not
 applicable to it.
 
 14.  According to the information and explanations given to us, the
 Company has not dealt or traded in shares, securities or other
 investments during the year.
 
 15.  The company has not given any guarantee for loans taken by others
 as on 31.03.2009 from banks or financial institutions.
 
 16.  The Company has not taken any term loan or other loan during the
 year under audit.
 
 17.  On the basis of utilization of funds, which is based on overall
 examination of the balance Sheet of the company, related information as
 made available to us and as represented to us by the management, no
 funds were raised on short term basis.
 
 18.  According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the Register maintained under section 301 of the
 companies Act, 1956 during the year.
 
 19.  The Company has not issued any debentures that were outstanding
 during the year under audit.
 
 20.  The Company has not raised any money by public issued during the
 year.
 
 21.  As per the information and explanation given to us and on the
 basis of examination of records, no material fraud on or by the Company
 was noticed or reported during the course of our Audit.
 
 22.  The company is not a sick industrial company within the meaning of
 section 3(1 )(o) of the Sick Industrial Companies (Special provisions)
 Act, 1985 as on the date of balance sheet.
 
 Date:   01.09.2009                       For TARANJEET & ASSOCIATES,
 
 Place: Chandigarh                             CHARTERED ACCOUNTANTS,
 
                                                                sd/-
 
                                                    (TARANJEET SINGH)
 
                                                          PROPRIETOR
 
                                                          M.no.86328