To the members of KMG MILK FOOD LIMITED
We have audited the accompanying Ind AS financial statements of KMG MILK FOOD LIMITED("the company") which comprise the Balance Sheet as at 31st March 2018 and theStatement of Profit & Loss (including other comprehensive income) Cash flow Statementand the statement of changes in the equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information (herein after referredto as "Ind AS financial statements"). In our opinion and to the best of ourinformation and according to the explanations given to us the Ind AS financial statementsgive the information required by the act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the company as at 31st March 2018 and its Statement ofProfit & Loss and its cash flow and the statement of changes in the equity for theyear ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the audit of the financial statementssection of our report. We are independent of the company in accordance with the code ofethics issued by the Institute of Chartered Accountant of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Key Audit Matters
Key Audit matters are those matters that in our professional judgement were of mostsignificance in our audit of financial statements of the current period. These matterswere addressed in the context of our audit of financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Management's Responsibility for the financial statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS 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)Rules 2014. This responsibility also includes the maintenance of adequate accountingrecords in accordance with the provision of the Act for safeguarding of the assets of theCompany and for preventing and detecting the frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibility for Audit of the Financial Statements
Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit.
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence economic decisions of users taken on the basisof these financial statements
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 thereunder.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company's Directors as well as evaluating the overallpresentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS financial statements.
Report on Other legal Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraph 3 & 4 of the order.
2. As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes 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 Balance Sheet Statement of Profit and Loss and the cash flow statement and thestatement of changes in equity dealt with by this Report are in agreement with the booksof account; d. In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors aredisqualified as on March 31 2018 from being appointed as a director in terms of Section164(2) of the Act;
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B" and
g. With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the
Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us:
i. The Company have the following pending litigations which would impact its Wnancialposition:
a) In the matter of Semen Bank Officer/Haryana Live Stock Development Board PehowaHarayana (Milk Cess) vs. Company of Rs 713164397/- including interest of 697907522/-.
b) In the matter of Company vs Hitkari Industries Ltd in the Karkadoma Court forRs.185000 + 123671/- Delhi.
c) In the matter of Company v/s Shree Ganesh Trading Co. Kurukshetra Kurukshetra Courtfor Rs. 128693/- plus Interest
d) In the matter of Company vs. Baldev Bhui in the Karkadoma Court for Rs.130000/-Delhi.
e) In the matter of Company vs. Prem Prakash in the Karkadoma Court for Rs.90000+67000/- Delhi.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection
Fund by the Company.
For and on behalf of Manoj & Associates
Chartered Accountants FRN 012867N
Manoj Kumar Jain
(Prop) M.NO 091989
Annexure A" to the Independent Auditors' Report
Referred to Independent Auditors' Report to the members of the Company on the Ind ASfinancial statements of the Company for the year ended March 31 2018 we report that:
1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Fixed Assets have been physically verified by the management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of itsbusiness. Pursuant to the program a portion of the fixed asset has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical fixed assets have been noticed. (c) The title deeds of immovableproperties are held in the name of the company.
2) (a) As explained to us the inventories have been physically verified by themanagement at reasonable intervals. (b) There are no discrepancies noticed on physicalverification of the inventory as compared to books records.
3) The Company has not granted any loans 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) and (c) of theorder are not applicable to the Company and hence not commented upon.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013In respect of loans investments guarantees and security.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us no undisputed amounts payable in respectof the above were in arrears as at March 31 2018 for a period of more than six monthsfrom the date on when they become payable. (b) According to the information andexplanations given to us no amounts payable in respect of income tax sales tax wealthtax service tax duty of customs duty of excise or value added tax or cess which havenot been deposited on account of any disputes.
STATEMENT OF DUES
|Name of the Statute ||Nature of the dues ||Amount (In Rs.) ||Date ||Forum where dispute is pending |
|Haryana Livestock Development Board ||Milk Cess ||15084375 /- ||07/09/2012 ||Supreme Court |
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has not taken anyloan either from financial institutions or from the government and has not issued anydebentures.
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments) and term Loans during the year.Accordingly the provisions of clause 3 (ix) of the Order are not applicable to theCompany and hence not commented upon. 10) Based upon the audit procedures performed andthe information and explanations given by the management we report that no fraud by theCompany or on the company by its officers or employees has been noticed or reported duringthe year. 11) Based upon the audit procedures performed and the information andexplanations given by the management the managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act; 12) In our opinion the Company is not aNidhi Company. Therefore the provisions of clause 3 (xii) of the Order are not applicableto the Company. 13) In our opinion all transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details have beendisclosed in the Ind AS financial statements as required by the applicable accountingstandards. 14) Based upon the audit procedures performed and the information andexplanations given by the management the company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3 (xiv) of the Order are notapplicable to the Company and hence not commented upon. 15) Based upon the auditprocedures performed and the information and explanations given by the management thecompany has not entered into any non-cash transactions with directors or persons connectedwith him. Accordingly the provisions of clause 3 (xv) of the Order are not applicable tothe Company and hence not commented upon. 16) In our opinion the company is not requiredto be registered under section 45 IA of the Reserve Bank of India Act 1934 andaccordingly the provisions of clause 3 (xvi) of the Order are not applicable to theCompany and hence not commented upon.
For and on behalf of
Manoj & Associates
Chartered Accountants FRN 012867N
Manoj Kumar Jain
"Annexure B" to the Independent Auditor's Report of even date on theFinancial Statements of KMG Milk Food Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KMG MilkFood Limited("the Company") as of March 31 2018 in conjunction with our auditof the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect 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
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 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 and on behalf of Manoj & Associates
Chartered Accountants FRN 012867N
Manoj Kumar Jain