We have audited the attached Balance Sheet of M/S MILK SPECIALITIES
 LIMITED, as at 31st March, 2012 and the Profit & Loss Account for the
 year ended on that date annexed. 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) Orefer. 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 matter specified in paragraph 4 and 5 of the said Order.
 
 Further to our comments on the annexure referred to 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 purpose of our
 audit.
 
 b) In our opinion, proper books of accounts required by law have been
 kept by the Company so far as appears from our examinations of those
 books (and proper returns adequate for the purpose of our audit have
 ;been received from the branches not visited us. The Branch Auditors
 Report have been forwarded to us and have been appropriately dealt with
 N.A.);
 
 c) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account, (and with the
 audited returns from the branches N.A.) ''
 
 d) 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 Section 211 (3C) of the Companies Act, 1956,
 
 e) On the basis of written representations received from the Directors
 as on 31March, 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 director under clause (g) of sub section
 (1) of section 274 of the Companies Act, 1956.
 
 f) In our opinion and to the best of our information and according to
 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;
 
 1) In the case of Balance Sheet, of the state of Affairs of the Company
 as at 31st March, 2012; and
 
 2) In the case of the Profit and Loss Account, of the loss for the year
 ended on that date;
 
 3) In the case of cash flow statement of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDIT REPORT
 
 Referred to in paragraph 3 of our report of even date
 
 1.  a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed assets.  .
 
 b) The fixed assets have been physically verified by the management at
 reasonable intervakno. material discrepancies were noticed on such
 verification.  _
 
 c) No substantial part of the fixed assets have been disposed off
 during the year. That is why it has not affected the going concern.
 ''
 
 2.  a) The inventory has been physical verified durintj the year by the
 management. In our opinion, the frequency of verification is
 reasonable. 
 
 b) The procedure of physical verification of inventories followed by
 the management reasonable and adequate in relation to size of the
 Company and the nature of its business.
 
 c) The Company is maintaining proper records of inventory. The
 discrepancies notified on physical verification between the physical
 stocks and the books records were not material.
 
 3.  The Company has granted and also have taken loans secured or
 unsecured to/from companies firms or other parties covered in the
 register maintained u''s 301 of the Act.
 
 a) In our opinion, the rate of interest and other terms and conditions
 on which loans have been taken from/granted to companies, firms or
 other parties listed in the register maintained under section 301 of
 the Companies Act, 1956 are not prima facie, prejudicial to the
 interest of the Company.
 
 b) The Company is regular in repaying the Principal amounts as
 stipulated and has been regular in the paymentof interest. The parties
 have repaid the principal amounts as stipulated and have been regularin
 the paymentof interest.
 
 c) There is no overdue amount of loans taken from or granted to
 companies, firms or other parties listed 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 is an adequate internal control procedure
 commensurate with the size of the Company and the nature of its
 business with regard to the purchases of inventory, fixed assets and
 with regard to the saie of goods. During the course of our audit, we
 have not observed any continuing failure to correct major weakness in
 internal control.
 
 5.  a) According to the information and explanations given to us, the
 transaction that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 b) In ouropinion and according to the information and explanations
 given to us, the transactions made
 inpursuanceofcontractsorarrangementsenteredintheregister maintained
 under section 301 of the Companies Act. 1956 and exceeding the value of
 Rupees five lacs in respect of any party during the year have been made
 at prices which are reasonable having regard to prevailing market
 prices at the relevant time.
 
 6.  The Company has not accepted deposits from the public for which the
 directives issued by the Reserve Bank of India and the provisions of
 sections 58Aand 58AAof the Act and the rules framed there under are
 applicable.
 
 7.  The Company has an internal audit system commensurate with its size
 and nature of its business.
 
 8.  Maintenance of cost records has not been prescribed by the Centra!
 Govt, under clause (d) of sub-section (1) of section 209 of the Act.
 
 9.  a) The Company is regular in depositing undisputed statutory dues
 including provident Fund, Income Tax and any other statutory dues with
 the appropriate authorities.
 
 b) The disputed statutory dues pending before appropriate authorities
 are as under:
 
 
 
 S.No.  Name of Statute         Nature of the          Amount
                                dues                  (Rs.. in Lacs)
 
 
 1      Income Tax Act 1961     Income Tax             63.62 (addition)
 
 
 2      Punjab VAT Act,2005     VAT                    132.53
 
 
 
  Period to which         Forum where 
  the amountrelates       dispute pending
 
 
  UptoAY - 2008 -09       Commissioner (Appeal)
 
 
  Upto FY - 2007 - 08     Dy. Commissioner Appeal
 
 
 
 10. The Company has not any accumulated losses at the end of the
 Financial year and no cash losses have been incurred in the Financial
 year covered by our audit and the immediately preceding Financial year.
 
 11.  In our opinion and accordingly to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 Financial institution or Bank.
 
 12.  The Company has not granted loans and advances on tKe basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore, the
 provisionsofclause4(VIII)oftheCompanies(Auditor,sReport)Order, 2003 are
 not applicable to the Company.
 
 14.  The Company is not dealing or trading in shares securities,
 debentures and other investments,
 
 15.  The Company has not given any guarantee for loans taken by others
 from bank or Financial institutions, the terms and conditions whereof
 are prejudicial to the interest of the Company.
 
 16.  In our opinion the terms loans have been applied for the purpose
 for which they were raised.
 
 17.  Accordingly to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that the funds raised on short-term basis have not been used for long-
 term investment. No long-term funds have been used to finance
 short-term assets except permanent working capital.
 
 18.  The Company has not made preferential allotment of shares to
 parties and companies covered in the Register maintained under section
 301 oftheAct.
 
 19.  No debenture has been issued by the Company.
 
 20.  We have verified the end use of money raised by public issues as
 disclosed in the notes to the Financial statements. Further no Public
 issue was raised during the Financial year concerned by the Company.
 
 21.  According to the information and explanations given to us, nofraud
 on or by the Company has been noticed or reported during the course of
 our audit.
 
 
 
                                        For S. Kumar Gupta & Associates 
                                                  Chartered Accountants 
                                                            FRN 010069N
 
 
 
                                                       (CA. Sunil Gupta)
 
 Date : 03-09-2012                                         FCA, Partner
 
 Place: CHANDIGARH                                        M. No. 085624