1. We have audited the attached Balance Sheet of Mahaan Foods Limited
as at 31st March 2011, the Profit and 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 check basis, evidence supporting the
amount and disclosures in financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor''s Report) Order 2003 issued
by the Central Government of India in terms of Section 227 (4A) 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 in paragraph
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
ii. 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 and proper returns adequate for the purpose of our audit
have been received from the branches not visited by us.
iii. The Balance Sheet, Profit and Loss Account and cash flow statement
dealt with by this report are in agreement with the books of account.
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred in sub section (3C) of section 211 of the Companies
Act, 1956, subject to note no. 1(o) of Schedule O regarding consignment
sales taken as net of expenses, which is not in conformity by AS 9.
v. On the basis of written representations received from the Directors
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. Attention is invited to note No. 6 stating that some of balance of
debtors, creditors and loans and advances are subject to confirmation
from respective parties. We have relied on the representations of the
management that no significant impact is expected on the working
results of the Company on this account.
vii. Subject to above, 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 31.03.2011,
b. in the case of the Profit and Loss Account, of the Profit for the
year ended on that date and
c. in the case of the Cash Flow Statement, of the Cash Flows of the
Company for the year ended on that date.
Annexure to Auditors'' Report dated 01.12.2011 on accounts for the year
ended on 31.03.2011
1. a. The Company has maintained list of fixed assets acquired by it.
However those are required to be updated substantially with regard to
quantitative details/ location, identification etc.
b. All the assets have not been physically verified by the management
during the year but there is a regular programme of verification which,
in our opinion, is reasonable having regard to the size of the Company
and the nature of its assets. We are also informed that no material
discrepancies were noticed on such verification.
c. In our opinion and according to the information and explanations
given to us, the Company has not disposed off a substantial part of the
fixed assets during the year.
2. a. The inventories have been physically verified during the year
by the management. In our opinion, the frequency of verification is
b. The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business.
c. 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 had not granted any loan, secured or unsecured to
companies, firms and other parties covered in the register maintained
under section 301 of the Companies Act, 1956. For this purpose, we have
relied on the representations of the management that Rs.2,45,63,452 due
from three companies and two parties covered in the register maintained
under section 301 of the Companies Act, 1956 are advances and not in the
nature of loans.
b. In view of above, sub-clause (b), (c), and (d) of clause 4(iii) of
the order are not applicable.
c. The Company had taken interest free unsecured loan from one company
covered in the register maintained under section 301 of the Companies
Act, 1956. The maximum amount involved during the year was Rs.49,000
and the year-end balance of loans taken from such parties is Rs.
49,000. For this purpose, we have relied on the representations of the
management that Rs. 1,34,26,503 due to a firm and two parties covered
in the register maintained under section 301 of the Companies Act, 1956
are advances received and not in the nature of loans
d. In our opinion, other terms and conditions on which such loan have
been taken by the company listed in the register maintained under
section 301 of the Companies Act, 1956 are not, prima facie,
prejudicial to the interest of the company.
e. Since the aforesaid loans taken by the company are repayable on
demand and there is no repayment schedule, the question of repayment
being regular does not arise.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanation that certain items
purchased are of special nature and/or customized to the requirements
of the company and as such comparative quotations are not available,
there are adequate internal control system commensurate with the size
of the Company and the nature of its business with regard to the
purchase of inventory, fixed assets and with regard to the sale of
goods and services. The system of getting independent confirmation of
balance requires to be given more emphasis. Further, on the basis of
our examination and according to the information and explanations given
to us, we have neither come across nor have been informed of any
instance of major weaknesses in the aforesaid internal control system
of the company.
5. a. We were informed that the company has entered the particulars of
all contracts or arrangements that need to be entered into the register
maintained u/s 301 of the Companies Act, 1956.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements that need to be entered in the register maintained under
Section 301 of the Companies Act, 1956 and exceeding the value of rupee
five lacs in respect of each party during the year have been made at
prices which appear reasonable considering the cost and benefits
available, payments made/received and other factors. However, it is
explained that purchase of certain goods are of special and/or
customized to the requirements of the Company, suitable alternate
source do not exist for obtaining comparable quotations.
6. The Company has not accepted any deposits from the public within
the meaning of Section 58A and 58AA of the Act and the rules framed
7 The Company has no Internal Audit system in place commensurate with
its size and nature of its business during the year under audit.
8 The maintenance of cost records has not been prescribed by the
Central Government under clause (d) of sub-section (1) of section 209
of the Companies Act, 1956 for the products of the company.
9 a. The Company is regular in depositing with appropriate authorities
Undisputed statutory dues including provident fund, Employees'' State
Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise
Duty and other material statutory dues applicable to it barring delays
in certain months.
b. According to the information and explanations given to us, following
undisputed amounts were in arrears, as at March 31, 2011 for a period
of more than six months from the date they become payable
Name of Statute Nature of Amount Period to which
the (Rs. In the amount
Dues Lacs) relates
Himachal Pradesh Value
Added Tax Act Value 48.22 1 01.01.2007 to
2005 Added 30.11.2008
Income tax Act 1961 Fringe 3.88 01.04.2008 to
Income tax Act 1961 Fringe 1.04 01.04.2006 to
The Haryana Murrah
Buffalo and Milch Milk 40.17 01.04.2008 to
(Preservation and Cess 31.03.2010
Development of Animal
Sector Act 2
c. According to the information and explanations given to us, the
statutory dues that have not been deposited by the Company on account
of matters pending before appropriate authorities are as under:
Name of Nature of the Amount Period to Forum where
Statute Dues (Rs. In which the dispute is pending
Sales Sales Tax 40.0 2003-04 Dy. Commissioner
1975 demand (Appeals), New
(Demand order has
stayed by Hon''ble
Value Penalty 2.91 2005-06 Asstt. Excise &
Added Tax Commissioner cum
Act 2005 Deputy Director
Rajasthan Penalty 8.49 2008-09 Rajasthan Tax
Value Added Ajmer
added 0.46 01-04-2005 to Joint Commissioner
Tax tax 30-11-2008 Sales tax,
2004 Penalty 0.91
entry Entry tax 1.77 01-04-2005 to Joint Commissioner
19991 Penalty 3.54 30-11-2008 Sales tax, Bhubaneswar
10 The Company does not have accumulated losses at the end of the
financial year 31 March, 2011. Further, the Company has not incurred
any cash losses during the financial year covered by our audit and the
immediately preceding financial year.
11 According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to any Financial Institution or Bank or to
12 As the Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities, paragraph 4(xii) of the order is not applicable.
13 As the Company is not a chit fund / nidhi / mutual benefit funds /
society to which the provisions of special statute relating to chit
fund are applicable, paragraph 4 (xiii) of the order is not applicable.
14 As the Company is not dealing or trading in shares, securities,
debentures and other investments, paragraph 4(xiv) of the order is not
15 As the Company has not given any guarantee for loans taken by others
from banks or financial institutions, paragraph 4(xv) of the order is
16 In our opinion and according to the information and explanations
given to us, the term loans taken during the year have been applied for
the purposes for which they were obtained.
17 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 fund raised on short-term basis have been used for long-term
18 The Company has not made any preferential allotment of shares during
the year under audit.
19 The Company has not issued any debentures during the year under
20 The Company has not raised any money by public Issue during the
21 According to the information and explanations given to us, no fraud
on or by the company has been noticed or reported during the course of
For DD NAGPAL & COMPANY
(Firm Registration No. 006413N)
(D D NAGPAL)
Membership No. 085366
Place: New Delhi
Dated : 1stDecember, 2011