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Milkfood Ltd.

BSE: 507621 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE588G01013
BSE 00:00 | 25 Nov 576.60 -10.50
(-1.79%)
OPEN

586.55

HIGH

586.55

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558.65

NSE 05:30 | 01 Jan Milkfood Ltd
OPEN 586.55
PREVIOUS CLOSE 587.10
VOLUME 415
52-Week high 663.00
52-Week low 286.00
P/E 49.28
Mkt Cap.(Rs cr) 282
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 586.55
CLOSE 587.10
VOLUME 415
52-Week high 663.00
52-Week low 286.00
P/E 49.28
Mkt Cap.(Rs cr) 282
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Milkfood Ltd. (MILKFOOD) - Auditors Report

Company auditors report

TO THE MEMBERS OF MILKFOOD LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Milkfood Limited("the Company") which comprise the Balance Sheet as at March 31 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements"). In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Emphasis of matter:

Attention is drawn to the Note no 4 regarding biological asset Note no 6(i) & (ii)regarding trade receivable Note no 7(i) regarding security deposit Note no 7(ii)regarding Loans to employee Note no 8(iii) regarding Advance to Suppliers and insuranceclaim receivable Note no 9(i) regarding non-moving stock Note no 13(iii) regarding GSTamount voluntarily deposited under protest Note no 17(i) regarding classification ofsecurity deposit received Note no. 39 regarding Covid -19 pandemic effect Ouropinion is not qualified in respect of these matters.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India(ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

The Key Audit Matter How the matter was addressed in our audit
The company operates in various states within India exposing it to a variety of different Central and State Laws regulations and interpretations thereof. In this regulatory environment there is an inherent risk of litigation and claims. Consequently provisions and contingent liability disclosures may arise from direct and indirect tax proceeding legal proceedings including regulatory and other government/ department proceedings as well as investigations by authorities and commercial claims. Our procedures included:
Reviewing the outstanding litigations against the Company for consistency with the previous years. Enquire and obtain explanations for movement during the year.
Discussing the status of significant known actual and potential litigations with the Company's in-house officials and other senior management personnel who have knowledge of these matters and assessing their responses.
At March 31 2021 the Company's contingent liabilities for legal matters were Rs. 78 Lakhs (refer Note to the standalone financial statement) and provision for legal matters aggregated Nil. This represents tax of Rs.71 Lakhs levied u/s 47 of Rajasthan Sales Tax Act. 1994. The tax has been levied on account of non-deposit of sale tax by the consignment agent of the company. Department is of the view that liability of principal and agent is joint and several. The remaining Rs 7 lacs represent the claim against the company that have not been acknowledged as debt. Reading the latest correspondence between the Company and the various tax/legal authorities and review of correspondence with/legal opinions obtained by the management from external legal advisors where applicable for significant matters and considering the same in evaluating the appropriateness of the Company's provisions or disclosures on such matters.
GST Receivable Examining the Company's legal expenses and reading the minutes of the board meetings in order to ensure that all cases have been identified. With respect to tax matters involving our tax specialists and discussing with the Company's tax officers their views and strategies on significant cases as well as the related technical grounds relating to their conclusions based on applicable tax laws.
The Company has partially deposited the amount of Rs 16.27 crores voluntarily under protest towards GST in respect of verification conducted by the department regarding input tax credit of four dealers. As per information given by the company it has not received any show cause notice. Further it has been informed that company is legally advised of its success as it has made the payment through banking channels.
Management applies significant judgment in estimating the likelihood of the future outcome in each case when considering whether and how much to provide or in determining the required disclosure for the potential exposure of each matter. This is due to the highly complex nature and magnitude of the legal matters involved along with the fact that resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiation or litigation. Assessing the decisions and rationale for provisions held or for decisions not to record provisions or make disclosures.
These estimates could change substantially overtime as new facts emerge as each legal case progresses. For those matters where management concluded that no provisions should be recorded considered the adequacy and completeness of the Company's disclosures.
Given the inherent complexity and magnitude of potential exposures across the country and the judgment necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter. We have verified the challans and relied upon the assertions of the management.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially in consistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are responsible for overseeingthe Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") 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 thematters specified in the paragraph 3 and 4 of the order.

2. With respect to matter to be included in the Auditor's report under section197(16) of the Act:

In our opinion and according to the information and explanations given to us theCompany has paid/provided the managerial remuneration to its whole time/Managing Directorin accordance with the provisions of the Companies Act subject to approval by specialresolution by the shareholder for the year ended March 31 2021.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 thebest of 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 the statement of profit and loss including othercomprehensive income statement of changes in equity and the statement of cash flow dealtwith by this Report are in agreement with the books of account;

(d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

(e) on the basis of the written representations received from the directors takenon record by the Board of Directors none of the directors is disqualified as on 31 March2021 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) with respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in "Annexure B"; and

(g) 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. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements; ii. the Company did not have any long termcontracts including derivative contracts for which there were any material foreseeablelosses; iii. there were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

For V. P. Jain & Associates

Chartered Accountants

Firm's registration number: 015260N
Place: New Delhi Sarthak Madaan
Date: 30-06-2021

Partner

UDIN: 21547131AAAAAL6780 Membership number: 547131

Annexure - A to the Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the MilkfoodLimited ("the company") on the standalone financial statements for the yearended 31 March 2021 we report that:

(i) In respect of fixed assets:

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

(b) The Company has a programme of verification of fixed assets to cover all theitems in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the company and the nature of its assets. Pursuantto the said programme certain fixed assets were physically verified by the Managementduring the year. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the title deeds of immovable properties areheld in the name of the Company. Original copy of title deeds have not been produced asthe same are deposited as security with banks under loan agreement as confirmed by themanagement.

(ii) Physical verification of the inventory has been conducted by the management atthe end of the year and no material discrepancies were noticed.

(iii) As per information and explanations given to us Company has notgranted anyloans to parties covered in the register maintained under section 189 of the CompaniesAct 2013 (‘the Act'). Thus paragraph 3(iii) of the Order is not applicable to theCompany.

(iv) In our opinion and according to the information and explanations given to usthe Company has not given any loans and made any investment within the meaning of section185 & 186 of the Act. Thus paragraph 3(iv) of the Order is not applicable to theCompany.

(v) According to the information and explanation given to us the company has notaccepted any deposits during the year. It is also confirmed by the company that no orderhas been passed by the Company Law Board or National Company Law Tribunal or Reserve Bankof India or any court or any other tribunal.

(vi) According to the information and explanations given to us and on the basis ofour review of the cost records maintained by the Company pursuant to the Companies (CostAccounting Records) Rules 2014 prescribed by the Central Government under Section 148(1)of the Companies Act 2013 we are of the opinion that prima facie the prescribed costrecords have been maintained. We have however not made a detailed examination of therecords with a view to determining whether they are accurate or complete.

(vii) In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the company has generally been regular indepositing undisputed statutory dues including provident Fund Employees State insuranceincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues applicable to it with the appropriateauthorities. There were no undisputed amounts payable in respect of the aforesaidstatutory dues in arrears as at 31.03.2021 for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales taxservice tax duty of customs duty of excise or value added taxwhich have not been deposited as at 31.03.2021 on account of any dispute.

(viii) According to the information and explanations given to us the Company hasnot defaulted in repayment of loans or borrowing to a financial institution bankGovernment during the year.

(ix) In our opinion and according to the information and explanation given to usthe moneys raised by way of term loans during the year have been applied by the companyfor the purposes for which they were obtained.

(x) According to the information and explanations given to us no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided managerialremuneration subject to special resolution passed by the shareholders the approvalmandated by the provisions of section 197 read with Schedule V to the Act. It has beeninformed that the required approval will be obtained in the ensuing AGM of the company.

(xii) In our opinion and according to the information and explanations given to usthe Company is not a nidhi company.

Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company and as certified by the management transactionswith the related parties are in compliance with sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

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

For V. P. Jain & Associates

Chartered Accountants

Firm's registration number: 015260N
Place: New Delhi Sarthak Madaan
Date: 30-06-2021

Partner

UDIN: 21547131AAAAAL6780 Membership number: 547131

Annexure - B to the Auditors' Report

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 MilkfoodLimited ("the Company") as of 31 March 2020 in conjunction with our audit ofthe standalone 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 (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.

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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

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.

Opinion

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 31 March 2021 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 V. P. Jain & Associates

Chartered Accountants

Firm's registration number: 015260N
Place: New Delhi Sarthak Madaan
Date: 30-06-2021

Partner

UDIN: 21547131AAAAAL6780 Membership number: 547131

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