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Parag Milk Foods Ltd.

BSE: 539889 Sector: Agri and agri inputs
NSE: PARAGMILK ISIN Code: INE883N01014
BSE 00:00 | 18 Apr 244.30 -4.35
(-1.75%)
OPEN

248.65

HIGH

248.65

LOW

243.25

NSE 00:00 | 18 Apr 244.20 -4.35
(-1.75%)
OPEN

250.45

HIGH

250.45

LOW

243.10

OPEN 248.65
PREVIOUS CLOSE 248.65
VOLUME 3160
52-Week high 414.95
52-Week low 197.00
P/E 19.10
Mkt Cap.(Rs cr) 2,055
Buy Price 243.20
Buy Qty 10.00
Sell Price 244.00
Sell Qty 10.00
OPEN 248.65
CLOSE 248.65
VOLUME 3160
52-Week high 414.95
52-Week low 197.00
P/E 19.10
Mkt Cap.(Rs cr) 2,055
Buy Price 243.20
Buy Qty 10.00
Sell Price 244.00
Sell Qty 10.00

Parag Milk Foods Ltd. (PARAGMILK) - Auditors Report

Company auditors report

To the Members of Parag Milk Foods Limited

REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Standalone Ind AS Financial Statementsof Parag Milk Foods Limited ("the Company") which comprise the Balance Sheet asat March

31 2018 the Statement of Profit and Loss (including Other

Comprehensive Income) the Statement of Cash Flow and the Statement ofChanges in Equity for the year then ended and a summary of significant accounting policiesand (hereinaft to as other explanatory information

"Standalone Ind AS Financial Statements").

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIALSTATEMENTS

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these Standalone Ind AS Financial Statements that give a true and fairview of airs) financial positionaff the(state profit or loss (financialperformance including other comprehensive income) cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Actread with relevant rules issued thereunder. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls and ensuring their operatingeffectiveness and the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone Ind AS Financial Statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these Standalone

Ind AS Financial Statements based on our audit.

We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those

Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the Standalone Ind ASFinancial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the Standalone Ind AS Financial Statements. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the Standalone Ind AS Financial Statements whether due to fraudor error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the Standalone Ind AS FinancialStatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by theCompany's Directors as well as evaluating the overall presentation of the StandaloneInd AS Financial Statements.

OPINION

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including the IndAS of the state of affairs of the Company as at March 31 2018 its profit (financialperformance including other comprehensive income) its cash flows and changes in equityfor the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

(1) As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government of

India in terms of sub-section (11) of Section 143 of the Act we givein "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.

(2) As required by Section 143(3) of the Act we report that: a. Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;

b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit the Statement of CashFlows and the Statement of Changes in Equity dealt with by this Report are in agreementwith the books of account;

d. In our opinion the aforesaid Standalone Ind AS Financial Statementscomply with the Indian

Accounting Standards specified under Section

133 of the Act read with relevant rules issued thereunder;

e. On the basis of written representations received from the directorsas on March 31 2018 and taken on record by the Board of Directors none of the directorsis disqualified as on March 31 2018 from being appointed as a director in terms ofSection 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 wegive our separate Report in "Annexure 2". g. With respect to the other mattersto be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Ind AS Financial Statements - Refer Note no. 41 onContingent Liabilities to the Standalone Ind AS Financial Statements;

(ii) The Company did not have any material foreseeable losses onlong-term contracts including derivative contracts. Hence the question of materialforeseeable losses do not arise; and

(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.

For Haribhakti & Co. LLP

Chartered Accountants ICAI Firm Registration No. 103523W/ W100048

Anup Mundhra

Partner Membership No. 061083 Place: Mumbai Date: 09 May 2018

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and

Regulatory Requirements' in the Independent Auditor's Reportof even date to the members of Parag Milk Foods Limited on the standalone financialstatements for the year ended March

31 2018]

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets except forcertain assets where quantitative details are not available since inception.

(b) During the year the fixed assets of the Company have beenphysically verified by the management except for certain assets where quantitativedetails are not available as discussed above and as informed no material discrepancieswere noticed on such verification. In our opinion the frequency of verification isreasonable having regard to the size of the Company and the nature of its assets. (c) Thetitle deeds of immovable properties recorded as fixed assets in the books of account ofthe Company are held in the name of the Company. (ii) The inventory (excluding stockslying with third parties) has been physically verified by the management during the year.In our opinion the frequency of verification is reasonable. As informed no materialdiscrepancies were noticed on physical verification carried out during the year. Inrespect of inventory lying with third parties these have substantially been confirmed bythem.

(iii) As informed the Company has not granted any loans secured orunsecured to companies firms Limited

Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Accordingly paragraph 3 (iii)(a) 3 (iii)(b) and3 (iii)(c) of the Order are not applicable to the Company.

(iv) Based on information and explanation given to us in respect ofloans investments guarantees and securities the Company has complied with theprovisions of Section 185 and 186 of the Act.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within theprovisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by theCompany in respect of products where the maintenance of cost records has been specified bythe Central Government under sub-section (1) of Section 148 of the Act and the rulesframed there under and we are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained.

(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fund sales taxvalue added tax customs duty excise duty cess and any other material statutory duesapplicable to it however there have been significant delays in all the months for Goods& Services tax and large number of cases of delays in case of tax deducted at sourceand employees state insurance. According to the information and explanations given to usthere are no undisputed dues in respect of provident fund employees' stateinsurance income tax sales tax service tax value added tax customs duty excise dutycess and any other material statutory dues applicable to it which were outstanding atthe year-end for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there areno dues with respect to service tax customs duty excise duty Goods & services taxwhich have not been deposited on account of any dispute except in respect of sales taxand income tax as below :

Name of the statute

Nature of dues

Amount Rs in Millions #

Period to which the amount relates

Forum where dispute is pending
Maharashtra Value Added Tax Act 2002

VAT

0.45

FY2006-07

Joint Commissioner of Sales Tax (App) -1
Maharashtra Value Added Tax Act 2002

VAT

37.90

FY 2009-10

Joint Commissioner of Sales Tax (App) -1
Central Sales Tax Act 1956

CST

8.72

FY 2006-07

Joint Commissioner of Sales Tax (App) -1
Central Sales Tax Act 1956

CST

20.25

FY 2009-10

Joint Commissioner of Sales Tax (App) -1
Central sales tax Act 1956

CST

2.60

FY 2012-13

Dy. Commissioner of sales Tax
Maharashtra Value Added Tax Act 2002

VAT

1.92

FY 2012-13

Dy. Commissioner of sales Tax
Maharashtra Value Added Tax Act 2002

VAT

0.64

FY 2010-11

Joint Commissioner of Sales Tax (App) -1

Name of the statute Nature of dues Amount Rs in Millions #

Period to which the amount relates

Forum where dispute is pending
Maharashtra Value Added Tax Act 2002 VAT

2.41

FY 2013-14

Dy. Commissioner of sales Tax
Central sales tax Act 1956 CST

1.43

FY 2013-14

Dy. Commissioner of sales Tax
Income Tax Act 1961 Income tax

12.89

FY 2011-12

Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax

49.32

FY 2012-13

Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax

136.39

FY 2013-14

Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax

0.27

FY 2014-15

Assessing Officer
Income Tax Act 1961 Income tax

83.28

FY 2015-16

Assessing Officer

# Amount paid under protest against the disputed dues of VAT/ CST is Rs6.66 Mn.

(viii) According to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionsbanks governments or dues to debenture holders.

(ix) In our opinion and according to the information and explanationsgiven to us the Company has utilized the money raised by way of initial public issueoffer and the term loans during the year for the purposes for which they were raised.

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or any fraud on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any suchinstance by the management.

(xi) According to the information and explanations given to usmanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi

Company. Therefore paragraph 3(xii) of the Order is not applicable tothe Company.

(xiii) According to the information and explanation given to usall transactions entered into by the Company with the related parties are incompliance with Sections 177 and 188 of Act where applicable and the details havebeen disclosed in the Standalone Financial Statements etc. as required by the applicableaccounting standards.

(xiv) The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Therefore paragraph 3(xiv) of the Order is not applicable to the

Company.

(xv) According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith him during the year. (xvi) According to the information and explanation given to usthe Company is not required to be registered under Section 45-IA of the Reserve Bank ofIndia Act 1934.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Anup Mundhra

Partner

Membership No.: 061083

Place: Mumbai

Date: May 9 2018

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under ‘Report on Other Legal and

Regulatory Requirements' in the Independent Auditor's Reportof even date to the members of Parag Milk Foods Limited on the Standalone Ind AS FinancialStatements for the year ended March 31 2018]

Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of Parag Milk Foods Limited ("the Company") as of March 31 2018 inconjunction with our audit of the Standalone Ind AS Financial Statements of the Companyfor the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act. statements inaccordance

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the

Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing specified undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both issued by the ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe eff of internal control based designandoperating 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 andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflectthetransactions and dispositions of the assets of the company;(2) provide reasonableassurance that transactions are recorded as necessary to permit preparation with generallyaccepted offinancial accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIALREPORTING

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2018 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 103523W/ W100048

Anup Mundhra

Partner

Membership No. 061083

Place: Mumbai

Date: 09 May 2018