We have audited the attached Balance Sheet of Kwality Dairy (India)
Limited as at 31 st March 2009 and also the Profit and Loss Account and
the Cash Flow Statement 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.
1. 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
2. As required by the Companies Auditors Report Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
issued by the Central Government in terms of Section 227(4A) 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 explanations given to us, we set out in the Annexure a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
3. Further to our comments in the Annexure referred to in paragraph 2
above, we report that :
a) We have obtained all the information and explanations which to the
best of our knowledge and belief ware necessary for the purpose of our
b) In our opinion, proper books of account as required by the law have
been kept by the company, so far as appears from our examination of
c) 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
d) In our opinion, the Balance Sheet and the Profit and Loss Account
dealt with by this report have been prepared in compliance with the
applicable accounting standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956.
e) On the basis of the written representations received from the
directors, as on 31 st March, 2009 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31 st March 2009 from being appointed as directors in terms of 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
the explanations given to us, the said financial statements together
with the notes thereon/attached thereto give in the prescribed manner
the information required by the Companies Act 1956 and also 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 31 st March 2009;
(ii) In the case of the Profit & Loss Account, of the profit for the
year ended on that date; and
(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 2 of our report of even date)
(1) (a) The company has generally maintained proper records showing
full particulars including quantitative details and situations of its
(b) As explained to us, the company is following a programme for
verification of its fixed assets in a phased manner which, in our
opinion is reasonable having regard to the size of the Company and
nature of its assets. As informed, no material discrepancies were
noticed on such verification.
(c) There was no substantial disposal of fixed assets during the year.
Based on information and explanation give by the management and the
audit procedure performed by us, we are of the opinion that the sale of
fixed assets if any has not effected the going concern status of the
(2) (a) The Management has conducted physical verification of inventory
at reasonable intervals during the year. In our opinion the frequency
of verification is reasonable.
(b) 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) The company is maintaining proper records of inventory and no
material discrepancies were noticed on physically verification.
(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 loan from two 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 2500.00 Lacs. Besides the company has also
received amounts under current account from two companies covered in
the Register maintained under Section 301 of the Companies Act, 1956.
The maximum amount involved during the year Rs.4177.91 Lacs and year
end balances of amount received from such parties was Rs. nil.
(c) The Company had taken interest free loans from the parties covered
in the register maintained U/s 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 loan have been taken
from the companies listed in the register maintained U/s 301 of the
companies act, 1956, are not prima facie prejudicial to the interest of
(d) According to the information and explanations give to us, the
company is generrily regular in repayment of principal amounts and
interest thereon wherever applicable.
(4) In our opinion, and according to the information and explanations
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 inventory and fixed assets and also for the sale of goods
and services. During the course of our audit, no major weakness has
been noticed in the internal control systems in respect of these areas.
(5) (a) According to the information and explanations provided by the
managements, we are of the opinion that the particulars of contracts or
arrangements, referred to section 301 of the Act that need to be
entered into the register maintained under 3 01 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, there are the transactions referred to in (a) above did
not exceed the value of Rupees Five Lac in respect of any party during
(6) The Company has not accepted any deposits from the public covered
by the provision of section 58A and 58AA or any relevant provisions of
companys Act 1956.
(7) In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
(8) We have broadly reviewed the books of account maintained by the
company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Companies Act, 1956 and are of opinion that prima facie, the prescribed
accounts and records have been maintained. We have not, however carried
out a detailed examination of the same.
(9) (a) According to the records of the company, it has been generally
regular in depositing undisputed statutory dues
including Investor education fund, ESIC, Provident Fund, Sales Tax,
Vat, Wealth Tax, Custom Duty, Cess and other statutory dues with
appropriate authorities. There have been delays in depositing
undisputed Advance Income Tax and Fringe Benefit Tax and the amount
outstanding as at the last day of the financial year for a period
exceeding six months from the date they became payable, amounts to
Rs.206.38 Lacs and Rs. 1.69 Lacs respectively. There were no dues
during the year towards Investor Education and Protection Fund and
(b) On the basis of our examination of documents and records of the
Company, there were no disputed dues in respect of Income Tax, Sales
Tax, Wealth Tax, Service Tax, Custom Duty. Disputed cess are as under:
Name of the statute Nature Amount Period to Forum where
of dues (Rs in lacs) which the pending
Haryana Livestock Milk
Development Cess 196.18 2002-2009 High Court
(10) The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year.
(11) On the basis of record examined by us and the information and
explanation given to us, except for some delays in few cases the
company has not defaulted in repayment of dues to bank or financial
institutions. The Company has not issued any debenture.
(12) According to the information and explanations given to us and
based on the documents and records produced to us, the Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other security.
(13) In our opinion, the Company is not a chit fund or a nidhi /mutual
benefit fund/society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditors Report) Order, 2003 (as amended) are not
applicable to the Company.
(14) In our opinion and according to the information and explanations
given to us, the Company is not a dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause (xiv) of Paragraph 4 of the Companies (Auditors
Report) Order, 2003 are not applicable to the company.
(15) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(16) According to the information and explanations given to us, the
term loans have been applied for the purposes for which they were
(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 funds raised on short-term basis have been used for long-term
(18) The company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Companies Act, 195 6 during the year.
(19) The company did not have any outstanding debentures during the
(20) The company has not raised any money, through a public issue
during the year.
(21) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
For Mukesh K Arora & Co.
Place: Faridabad P.P. Mukerjee
Date : 4th September, 2009 Partner