1. We have audited the attached balance sheet of DFM Foods Limited as
at 31st March, 2010. the profit and loss account and also the cash flow
statement annexed thereto for the year ended on that date. 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 the 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 misstatements. 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) (Amendment) Order,
2004 issued by the Central Government of India in terms of sub-section
(4A) of section 227 of the Companies Act, 1956, wc 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 above, we
(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
(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
(iii) The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the books of
(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 to in sub-section (3C) of section 211 of
the Companies Act, 1956;
(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 31sl 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;
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
significant Accounting Policies and other notes thereon 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, 2010.
(b) in the case of the profit and 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 (Referred to in paragraph 3 of our
report of even date)
1. In respect of its fixed assets:
a) The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
b) As explained to us the fixed assets have been physically verified by
the management during the year in a phased periodical manner, which in
our opinion is reasonable having regard to the size of the company and
the nature of its assets. The discrepancies noticed during the
verification have been properly dealt with in the books of accounts.
c) In our opinion and according to the information and explanations
given to us, the company has not disposed off a substantial part of its
fixed assets during the year.
2. In respect of its inventories:
a) As explained to us the inventory has been physically verified at all
its locations during the year by the management. 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) On the basis of our examination we are of the opinion that the
company is maintaining proper records of inventories. The discrepancies
noticed on physical verification of stocks as compared to book records
have been properly dealt with in the books of accounts.
3. a) The company has granted unsecured loans to a company, listed in
the register maintained under Section 301 of the Companies Act 1956.
The maximum amount involved during the year was Rs. 1180.00 lacs
(Previous year Rs. 1620.00 lacs) and the year end balance of loan given
to such party was Rs. 360.00 lacs. (Previous year Rs. 550.00 lacs.)
b) In our opinion the rate of interest and other terms and conditions
of unsecured loans given are prima facie not prejudicial to the
interests of the company.
c) The principal amounts and wherever applicable interest thereon in
respect of Loans and or Advances in the nature of loans given by the
Company to parties have been recovered regularly as stipulated.
d) There is no overdue amount of loan to be recovered by the company.
e) The company has not taken loans from companies, firms or other
parties covered in the register maintained under section 301 of the
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 purchases of inventory and fixed assets and
also with regard to sale of goods and services. Further on the basis of
our examination we have not observed any major weaknesses in internal
5. In our opinion and according to the explanations given to us, all
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 have been so entered. Further in our opinion and
according to the explanations given to us, the transactions made in
pursuance of contracts or arrangements entered in the register
maintained under section 301 of the Companies Act, 1956 in respect of
each party during the year have been made at prices which are
reasonable having regard to the prices at which transaction for similar
goods, materials and services have been made with other parties.
6. a) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of theCompanies Act,
1956 and Companies (Acceptance of Deposits) Rules, 1975 framed there
under with regard to the deposits accepted from the Public.
b) An amount of Rs. 1.15 Lac, (Previous year Rs.Nil) is outstanding
towards matured unclaimed deposits as on 31.03.2010.
c) No order has been passed against the company by the Company Law
Board or National Company Law Tribunal or Reserve Bank of India or any
other Court/ Tribunal.
7. In our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
8. Maintenance of cost records has not been prescribed by the Central
Government under Section 209(l)(d) of the Companies Act, 1956.
9. a) According to the information and explanations given to us and the
records of the company examined by us, the company is regular in
depositing with the appropriate authorities undisputed statutory dues
including provident fund, investor education protection fund, employees
state insurance, Income tax, sales tax, wealth tax, service tax, custom
duty, excise duty, cess and other statutory dues applicable to it.
b) According to the information and explanations given to us, no
undisputed statutory dues in respect of income tax, wealth tax, service
tax, sales tax, customs duty, excise duty and cess were in arrears as
on 31.03.2010 for a period of more than six months from the date they
c) The details of disputed dues as at 31.3.2010 in respect of Excise
Duty , Sales Tax and Income Tax which have not been deposited by the
company are as follows :
Name of statute Nature of dues Amount Period to which
(Rs.)# the amount relates
Sales tax Entry Tax(Sales tax) 2,41,384 2004-05
Central Excise Excise duty* 1,23,92,053 2007-08
Laws 2,86,33,279 2008-09
Income Tax Act Income Tax 70,550 2005-06
Name of Statue Forum where dispute is
Sales tax High Court
Central Excise Customs,Excise and
Laws Service Tax Appellate
Income Tax Act CIT (Appeals), New Delhi
# The amounts mentioned are as per demand orders including interest and
penalty wherever indicated in the order.
* The case of Excise duty has been decided in the favor of the company
but department has preferred appeals at higher levels.
10. The Company has no accumulated losses and has not incurred any
cash losses during the financial year covered by our audit or in the
immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
12. The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion and according to information and explanation given
to us, the company is not a chit fund or a nidhi /mutual benefit fund
14. In our opinion and according to the information and explanation
given to us, the company is not dealing in or trading in shares,
securities, debentures and other investments.
15. In our opinion and according to the information and explanation
given to us, the company has not given guarantees for loans taken by
others from banks or financial institutions .
16. In our opinion and according to information and explanations given
to us the term loans have been applied for the purpose for which they
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 the company has used funds raised on short-term basis for
short-term investments only.
18. During the year the company has not made preferential allotment of
shares to parties and companies covered in the register maintained
under section 301 of the Act.
19. According to the information and explanations given to us, the
company has not issued any debentures during the year.
20. During the year the company has not raised any money through a
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 our audit.
For A.K.GANGAHER & CO.
Place : Delhi A.K.GANGAHER
Dated :15th May, 2010 Proprietor
Firm ICAI Regn No. 004588N