To The Members Of Umang Dairies Limited Report On The Audit Of The Financial StatementsOpinion
We have audited the accompanying Financial statements of Umang Dairies Ltd. ("theCompany") which comprise the
Balance sheet as at March 31 2019 the Statement of Profit and Loss (including thestatement of Other Comprehensive Income) the Statement of Changes in Equity andthe Cash Flow Statement for the year then ended and notes to the financial statementsincluding a summary of significant ac -counting policies and other explanatory information(hereinafter referred to as "the financial statements").
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 theCompanies Act 2013 ("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 March 31 2019 its profit including othercomprehensive income the changes in equity and its cash flows ended on that date.
Basis for opinion
We conducted our audit of the Financial statements in accordance with the Standards onAuditing (SAs) as specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for theAudit of the Financial statements' section of our report. We are independent of theCompany in accordance with the Code of Ethics' issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the Rules thereun-der andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the finan -cial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined the matters described below to be the key audit matters to becommunicated in our report. for the year We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the financial statements. The results of our audit procedures includingthe procedures performed to address the matters below provide the basis for our auditopinion on the accompanying financial statements.
|Key audit matter ||Auditor's response |
|1. revenue recognition ||how our audit addressed the key audit matter: |
|For the financial year ended 31 March 2019 the Company has recorded revenue amounting to Rs. 22465.03 Lakhs. ||We assessed the overall sales process and the relevant systems and the design of controls over the capture and recording of revenue transactions. We have tested the effectiveness of controls on the processes related to revenue recognition relevant to our audit. We performed sample testing on revenue and checked that the revenue recognition criteria are appropriately applied. We have also performed cut-off tests to ensure the Company has complied with proper cut-off procedures and revenue is recognised in the appropriate accounting period. |
|The accounting policies for revenue recognition are set out in Note 1 to the financial statements and the different revenue streams of the Company have been disclosed in Note 23 to the financial statements. We have identified sales cut- off to be significant because of the high volume of transactions and the varying sales contractual and shipping terms. || |
| ||our observation: |
|Revenue recognition is susceptible to the higher risk that the revenue is recognised when the control of goods has not been transferred to the customers. ||We found the Company's revenue recognition to be consistent with its accounting policy as disclosed in Note 1 to the financial statements. We are satisfied that the Company's revenue has been appropriately recognised and in the relevant accounting period. |
|2. valuation of trade receivables ||how our audit addressed the key audit matter: |
|We refer to Note 1 and Note 7 to the financial statements. As disclosed in Notes to the financial statements the Company assesses periodically and at each financial year end the expected credit loss associated with its receivables. ||We obtained an understanding of the Company's credit policy for trade receivables and evaluated the processes for identifying credit loss indicators. We have reviewed and tested the ageing of trade receivables and management's assessment on the credit worthiness of selected customers for trade receivables. We further discussed with the key management on the adequacy and appropriateness of the allowance for credit losses recorded by the company and reviewed the supporting documents provided by management in relation to their assessment. |
|When there is expected credit loss the amount and timing of future cash flows are estimated based on historical current and forward-looking loss experience for assets with similar credit risk characteristics. || |
| ||our observation: |
|The carrying amount of trade receivables of the Company was Rs.1119.25 Lakhs as at March 31 2019. We focused on this area because of its significance and the degree of judgement required to estimate the expected credit loss and determining the carrying amount of trade and other receivables as at the reporting date. ||Based on our audit procedures performed we found management's assessment of expected credit loss and recoverability of trade receivables to be reasonable and the disclosures to be appropriate. |
|3. VALUATION OF INVENTORIES ||HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER: |
|We refer to Note 6 and 1 to the financial statements. ||We have checked and analyzed the ageing of the inventories reviewed the historical trend on whether there were significant inventories written off or reversal of the allowances' for inventory obsolescence. |
|As at March 31 2019 the total carrying amount of inventories was Rs. 3146.66 lakhs. The assessment of impairment of inventories involves significant estimation uncertainty subjective assumptions and the application of significant judgment. ||We conducted a detailed discussion with the key management and considered their views on the adequacy of allowances for inventory obsolescence considering the current economic environment. We have also reviewed the subsequent selling prices in the ordinary course of business and compared against the carrying amounts of the inventories on a sample basis at the reporting date. |
|Reviews are made periodically by management on inventories for obsolescence and decline in net realizable value below cost. Allowances are recorded against the inventories for any such declines based on historical obsolescence and slow- moving history. Key factors considered include the nature of the stock its ageing shelf life and turnover rate. || |
| ||our observations: |
| ||We found management's assessment of the allowance for inventory obsolescence and valuation of inventories to be reasonable based on available evidence. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe financial statements and our auditor's report thereon. We have obtained all otherinformation prior to the date of this auditors' report. Our opinion on the Financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the Financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.
Responsibilities Of Management 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 Financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in ac -cordance with the accountingprinciples generally accepted in India including the Accounting Standards specified under
Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for 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. In preparing the Financial statementsmanagement is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities For The Audit Of The Financial Statements
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 the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3) (i) ofthe Companies Act 2013 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 the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the Financial statementsincluding the disclosures and whether the Financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe of such com expectedto outweigh the public interest benefits -munication.
report on other Legal and regulatory requirements
1. As required by the Companies' (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure-A statements on the matters specified in the paragraphs 3and 4 of the Order.
2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books.
(c) The Balance Sheet the Statement of Profit and
Loss the Statement of Changes in Equity and the
Cash flow Statement dealt with by this Report are in agreement with the books ofaccount.
(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards (Ind AS) read with the Companies (Indian Accounting Standards) Rules2015 as amended specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2013. (e) On the basis of written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference tofinancialstatements of the
Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure B" to this report; (g) With respect to the other matters to beincluded in the Auditor's Report in accordance with the requirements of section 197(16) ofthe Act as amended: In our opinion and to the best of our information and according tothe explanations given to us the remuneration paid /provided by the Company to itsdirectors during the year is in accordance with the provisions of section 197 of the Act.
(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 as amended inour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 32 to the financial statements; ii.The Company did not have material foreseeable losses in long-term contracts includingderivative contracts; iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
| ||For singhi & co. |
| ||Chartered accountants |
| ||Firm reg. No. 302049e |
|place: new delhi ||B. K. Sipani |
|date: 13th may 2019 ||Partner |
| ||Membership no. 088926 |
Annexure-A Annexure A Referred To In Paragraph 1 Of Our Report Of Even Date On TheOther Legal And Regulatory Requirements (Re: Umang Dairies Limited)
(i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipmentexcept in case of certain assets where the same is in process of updation.
(b) The Company has a regular programme of physical verification of its property plantand equipment by which property plant and equipment are verified in a phased manner overa period of three years which in are opinion is reasonable having regard to the size ofthe company and nature it's property plant and equipment. In accordance with thisprogramme property plant and equipment were not physically verified during the year.
(c) According to information and explanations given by the management the title deedsof immovable properties included in property plant and equipment are held in the name ofthe Company.
(ii) The management has conducted physical verification of inventories except stock intransit during the year at reasonable interval and material discrepancies noticed on suchphysical verification have been properly dealt with in the books of accounts.
(iii) The Company has not granted any loan to companies firms limited liabilitypartnership or other parties covered in the register maintained under section 189 of theCompanies' Act 2013. Therefore the provisions of clause 3(iii) of the Order are notapplicable.
(iv) The Company has no transaction with respect to loan investment guarantee andsecurity covered under section 185 and 186 of the Companies Act 2013. Therefore theprovisions of clause 3(iv) of the Order are not applicable. (v) The Company has notaccepted any deposits covered under section 73-76 of the Companies Act'2013 during theyear. Therefore the provisions of clause 3(v) of the Order are not applicable to theCompany. (vi) We have broadly reviewed the books of account maintained by the Companypursuant to the rules made by the Central Government for the maintenance of cost recordsunder section 148(1) of the Companies Act 2013 in respect of the Company's products towhich the said rules are applicable and are of the opinion that prima facie theprescribed records have been made and maintained. We have however not made a detailedexamination of the said records with a view to determine whether they are accurate orcomplete.
(vii) (a) According to the records of the Company the Company is generally regular indepositing undisputed statutory dues including Provident Fund Employee's State InsuranceIncome-tax Goods and Service Tax Sales-tax Service Tax Duty of customs Duty ofexcise Value Added Tax Cess and other material statutory dues with the appropriateauthorities. There was no undisputed outstanding statutory dues as at the yearend for aperiod of more than six months from the date they became payable except Mandi Tax of Rs.6.23 Lakhs.
(b). According to the records of the Company there are no dues outstanding on accountof Income-tax Sales-tax Value Added Tax Service Tax Duty of customs Duty of exciseand Cess on account of any dispute except the followings:
|Name of statue ||Nature of dues ||Amount rs. In lakhs ||Period ||Forum where dispute is pending |
|Sales- tax Act ||Sales Tax ||1.78 ||1994-95 / 1998- 2000 ||Sales tax Tribunal |
| ||Demand/ Penalty/ Interest ||40.65 ||1995- 2007 ||Appellate Authorities |
| || ||3.00 ||1995-96 ||High Court |
| || ||41.74 ||2010- ||Appellate |
| || || ||2015 ||Authorities |
|Income Tax Act 1961 ||Disallowances of Income Tax ||901.45 ||2011-12 to 2013- 14 ||CIT Appeals |
(viii) The Company has not defaulted in repayment of dues to bank. The Company did nothave any borrowing from any financial holders. (ix) During the year the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments). Further in our opinion and explanations given to us term loans raisedduring the year were applied for the purpose for which loans were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven to us no fraud by the Company or no fraud on the Company by its officers andemployees has been noticed or reported during the year.
(xi) According to the information and explanations given by the management managerialremuneration has been paid/provided in accordance with the requisite approvals mandated bythe provision of the section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable. (xiii) According to the information andexplanations given by the management transaction with related parties are in compliancewith sections 177 and 188 of the Companies Act 2013 wherever applicable and details forthe same have been disclosed in the financial statements as required by the applicableIndian Accounting Standards.
(xiv) According to the information and explanations give 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. Therefore the provisions of clause 3(xiv) of the Order are not applicable. (xv)According to the information and explanations given by the management the Company hasnot entered into non-cash transactions with directors or persons connected with directors.Therefore the provisions of clause 3(xv) of the Order are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For singhi & co. |
| ||Chartered accountants |
| ||Firm reg. No. 302049e |
|Place: new delhi ||B. K. Sipani |
|Date: 13th may 2019 ||Partner |
| ||Membership no. 088926 |
Annexure - B Report On The Internal Financial Controls Under Clause (I) Of Sub-Section3 Of Section 143 Of The Companies Act 2013 ("The Act")
We have audited the internal financial controls with reference to financial statementsof Umang Dairies Limited (the Company") as of March 31 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility For Nternali Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financialstatements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "guidance Note") and the standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to as audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those standards and the Guidance Note require that we comply withethical requirements of and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system with reference to financial statementsand their operating effectiveness. Our audit of internal financial controls with referenceto financial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theCompany's internal financial controls system with reference to financial statements.
Meaning Of Internal Financial Controls With Reference To Financial Statements
A Company's internal financial controls with reference to financial statements is aprocess 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 controlwith reference to financial statements 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 withauthorization of management and directors of the company ; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations Of Internal Financial Controls With Reference To FinancialStatements
Because of the inherent limitations of Internal Financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2019 based on the internal control over the 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 however same need to be furtherstrengthened.
| ||For singhi & co. |
| ||Chartered accountants |
| ||Firm's reg no. 302049e |
| ||B. K. Sipani |
|Place: new delhi ||Partner |
|Date: 13 may 2019 ||Membership no.088926 |