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Modern Dairies Ltd.

BSE: 519287 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE617B01011
BSE LIVE 15:40 | 22 Nov 9.36 -0.27
(-2.80%)
OPEN

10.05

HIGH

10.05

LOW

9.18

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 10.05
PREVIOUS CLOSE 9.63
VOLUME 13982
52-Week high 24.65
52-Week low 8.68
P/E
Mkt Cap.(Rs cr) 22
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 10.05
CLOSE 9.63
VOLUME 13982
52-Week high 24.65
52-Week low 8.68
P/E
Mkt Cap.(Rs cr) 22
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Modern Dairies Ltd. (MODERNDAIRIES) - Auditors Report

Company auditors report

To

The Members of Modern Dairies Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of Modern Dairies Limited (the"Company") which comprise the Balance Sheet as at 31st March 2016the Statement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 (the "Act") with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules2014 (as amended). This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act; safeguarding the assets of theCompany; preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based onour audit.

4. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial controls relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to Note XXIX to the accompanying financial statements whichindicates that the Company has incurred a net loss of Rs.2423.55 lac during the yearended 31st March 2016 and as of that date the Company’s accumulatedlosses amounted to Rs.11425.25 lac which have resulted in complete erosion of the networth of the Company Further as of that date its current liabilities exceeded its currentassets by Rs.5385.50 lac. These conditions along with other matters as set forth in NoteXXIX indicate the existence of a material uncertainty that may cast significant doubtabout the Company’s ability to continue as a going concern. Our opinion is notmodified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor's Report) Order 2016 (the "Order')issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

11. Further to our comments in Annexure 1 as required by Section 143(3) of the Act wereport that.

a. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c. the financial statements dealt with by this report are in agreement with the booksof account;

d. in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended);

e. the matter described in paragraph 9 under the Emphasis of Matters paragraph in ouropinion may have an adverse effect on the functioning of the Company

f. on the basis of the written representations received from the Directors as on 31stMarch 2016 and taken on record by the Board of Directors none of the Directors isdisqualified as on 31" March 2016 from being appointed as a Director in terms ofSection164(2) of the Act;

g. we have also audited the internal financial controls over financial repotting(IFCoFR) of the Company as of 31st March 2016 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date and our report dated30st May 2016 as per annexure 2 expresses unmodified opinion; and

h. with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our Information and according to the explanations given to us:

i. as detailed in Note XXVIII(a) and XXVIII(b) to the financial statements the Companyhas disclosed the Impact of pending litigations on its financial position;

ii. the Company did not have any long-term contracts Including derivative contracts forwhich there were any material foreseeable losses; and

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
per Lalit Kumar
Place: Chandigarh Partner
Date: 30th May 2016 Membership No.:095256

Annexure 1 to the Independent Auditor's Report of even date to the members of ModernDairies Limited on the financial statements for the year ended 31 March 2016

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain Fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.

(c) According to information and explanations given to us the title deeds of all theimmovable properties (which are included under the head "fixed assets") aremortgaged with banks from which borrowings are obtained by the Company. The Company hasmaintained certified copies of the title deeds. Based on our examination of these recordsand other sufficient appropriate audit evidences in our opinion the title deeds of allthe immovable properties (which are included under the head 'fixed assets’) are heldin the name of the Company.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks tying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by foe management. No material discrepancies were noticed on foeaforesaid verification.

(iii) The Company has not granted any loan secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has not entered into any transaction covered underSections 185 and 186 of foe Act Accordingly the provisions of clause 3(iv) of the Orderare not applicable.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect .of Company’s products/servicesand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues -including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues as applicable have generally beenregularly deposited to the appropriate authorities though there has been a slight delayin a few cases. Further no undisputed amounts payable in respect thereof were outstandingat the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs.) lac Amount paid under Protest (Rs.) in lac Period to which the amount relates Forum where dispute is pending
The Haryana Murrah Buffalo and Other Milch Animal Breed (Preservation and Development of Animal Husbandry and Dairy Development Sector) Act 2001 Milk Cess 1623.13 591.00 2001-02 to 2015-16 Hon’ble Supreme Court of India
The Haryana Murrah Buffalo and Other Milch Animal Breed (Preservation and Development of Animal Husbandry and Dairy Development Sector) Act 2001 Interest on milk cess 1759.44 2001-02 to 2015-16 Hon’ble Supreme Court of India
Central Excise Act 1944 CENVAT credit interest 82.40 82.40 2005-06 Custom Excise and Service Tax Appellate Tribunal.
Central Excise Act 1944 CENVAT credit interest 178.85 15.00 2007-08 to 2009-10 Custom Excise and Service Tax Appellate Tribunal.
Customs Act 1962 Penalty and redemption fine 10.60 10.60 2011-12 Custom Excise and Service Tax Appellate Tribunal
Haryana Tax on Entry of Goods into Local Areas Act 2003 Entry Tax 132.84 2007-08 to 2014-15 Hon’ble Supreme Court of India
Income-tax Act 1961 Income Tax 6.46 6.05 Assessment Year 2006-07 and 2008-09 Income- tax Appellant Tribunal.

(viii) There are no loans or borrowings payable to financial institutions or governmentand no dues payable to debenture-holders. The Company has defaulted in repayment ofloans/borrowings (as per Corporate Debt Restructuring package) to the following banks:

Name of the bank Nature of Loan Amount of default Period of default
Punjab National Bank Term loan 48.63 31-60 days
72.11 61-90 days
- Interest 140.50 Above 90 days
Punjab National Bank Term loan 63.49 31-60 days
113.49 61-90 days
- Principal 228.99 Above 90 days
Punjab National Bank Corporate loan 1.49 0-30 days
53.41 31-60 days
- Interest 20.77 61-90 days
48.10 Above 90 days
Punjab National Bank Corporate loan 98.51 31-60 days
9.40 61-90 days
- Principal 107.90 Above 90 days
State Bank of India Term loan 1.21 0-30 days
- Interest 35.79 31-60 days
38.31 61-90 days
53.00 Above 90 days
State Bank of India Term loan 103.87 61-90 days
- Principal 103.87 Above 90 days
State Bank of India Corporate loan 8.06 0-30 days
- Interest 20.47 31-60 days
14.72 61-90 days
27.84 Above 90 days
State Bank of India Corporate loan 62.87 61-90 days
- Principal 62.87 Above 90 days
Canara Bank Term loan 4.06 31-60 days
- Interest 77.20 61-90 days
110.96 Above 90 days
Canara Bank Term loan 6.54 0-30 days
- Principal 132.22 61-90 days
145.00 Above 90 days
Canara Bank Corporate loan 0.03 31-60 days
- Interest 5.64 61-90 days
5.24 Above 90 days
Canara Bank Corporate loan 9.26 61-90 days
- Principal 9.30 Above 90 days

Further the Company has overdrawn the working capital facility during the year. Thedetails of such default during the year are as under:

Name of the bank Amount of default Period of default
Punjab National Bank 1.23 to 164.56 1-58 days
State Bank of India 20.25 to 98.92 1-121 days
Canara Bank 0.10 to 12.14 1-90 days

(ix) In our opinion the Company has applied moneys raised by way of the term loans forthe purposes for which these were raised. The Company did not raise moneys by way ofinitial public offer/ further public offer (including debt instruments) during the year.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals as required under Section 197 of the Act read with Schedule Vto the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe Directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
per Lalit Kumar
Place : Chandigarh Partner
Date : 30th May 2016 Membership No.: 095256

Annexure 2

Independent Auditor’s report on the Internal Financial Controls under Clause (i)of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

1. In conjunction with our audit of the financial statements of Modern Dairies Limited("the Company") as of and for the year ended 31st March 2016 wehave audited the internal financial controls over financial reporting (IFCoFR) of theCompany of as of that date.

Management’s Responsibility for Internal Financial Controls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of the Company’s business includingadherence to Company’s policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company’s IFCoFR based onour audit. We conducted our audit in accordance with the Standards on Auditing issued bythe ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards anti the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company’s IFCoFR is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A Company’s IFCoFR includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and Directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

8. In our opinion’the Company has in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Per Lalit Kumar
Place: Chandigarh Partner
Date: 30th May 2016 Membership No.:095256