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Umang Dairies Ltd.

BSE: 500231 Sector: Agri and agri inputs
NSE: UMANGDAIRY ISIN Code: INE864B01027
BSE 00:00 | 11 Jun 81.00 -0.25
(-0.31%)
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83.65

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83.65

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80.50

NSE 00:00 | 11 Jun 80.90 -0.55
(-0.68%)
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OPEN 83.65
PREVIOUS CLOSE 81.25
VOLUME 9920
52-Week high 93.80
52-Week low 37.55
P/E 43.55
Mkt Cap.(Rs cr) 178
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 83.65
CLOSE 81.25
VOLUME 9920
52-Week high 93.80
52-Week low 37.55
P/E 43.55
Mkt Cap.(Rs cr) 178
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Umang Dairies Ltd. (UMANGDAIRY) - Auditors Report

Company auditors report

To the Members of Umang Dairies Limited Report on the audit of the financial statements

opinion

We have audited the accompanying financial statements of Umang Dairies Limited(“the Company”) which comprise the balance sheet as at March 31 2020 thestatement of profit and loss including the statement of other comprehensive income thestatement of changes in equity and the cash flow statement for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as “the financialstatements”).

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 2020 its profit including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for opinion

We conducted our audit ofthe 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 thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide 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 financial statements for the financial year ended March312020. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

key audit matters How our audit addressed the key audit matter
A. Valuation of inventories
We refer to note 1 and 7 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. We conducted a detailed discussion with the 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.
As at March 31 2020 the total carrying value 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.
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. We found management's assessment of the allowance for inventory obsolescence and valuation of inventories to be reasonable based on available evidence.
B. Evaluation of uncertain tax positions
Refer Notes 33 to the financial statements. We have obtained details of complete tax assessments and demands raised till March 31 2020 from management. We considered management's assessment of the validity and adequacy of provisions for uncertain tax positions evaluating the basis of assessment and reviewing relevant correspondence and legal advice where available including any information regarding similar cases with the relevant tax authorities. We have discussed the management's assumptions in estimating the tax provision and the possible outcome of the disputes.
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. In respect of various tax demands and liabilities we assessed the appropriateness of management's assumptions estimates and disclosure / adjustments in the financial statements.
There are several pending sales tax income tax and other demands against the Company across various jurisdictions. Accordingly management exercises its judgement in estimation of provision required in respect of such cases. The evaluation of management's judgements including those that involve estimations in assessing the likelihood that a pending claim will succeed or a liability will arise and the quantification of the ranges of potential financial settlement have been a matter of most significance during the current year audit.
Accordingly due to complexity/ judgement involved in outcome of these dispute. Uncertain tax positions were determined to be a key audit matter in our audit of the financial statements.

Other Information

The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Company's annual report but doesnot include the financial statements and our auditor's report thereon. The annual reportis expected to be made available to us after the date of this auditor's report. Ouropinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

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. When we read the annual report if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance and take necessary actions as applicable under theapplicable laws and regulations.

Responsibilities of management for the 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 financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement 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 theCompany's financial reporting 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually 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 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 for thefinancial year ended March 31 2020 and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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” a statement on the matters specified inparagraphs 3 and 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 the statement of profit and loss including the statement ofother comprehensive income statement of changes in equity and the cash flow statementdealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these financial statements and the operatingeffectiveness of such controls refer to our separate Report in “Annexure B” tothis report;

(g) In our opinion the managerial remuneration for the year ended March 312020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197(16) read with Schedule V to 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 33 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich 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 Singhi & co.
chartered Accountants
firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Date: May 13 2020 Membership No. 088926
Place: Noida (Delhi - NCR) uDIN:20088926AAAADR1221

Annexure-A

Annexure A referred to in paragraph 1 of our report of even date on the other legal andregulatory requirements (Re: Umang Dairies Limited)

(i) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment except in case ofcertain assets where the same is in process of updation.

b. The property plant and equipment except lying with third parties have beenphysically verified by the management according to a phased programme designed to coverall the items over a period of 2 to 3 years which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. Pursuant to the programmeproperty plant and equipments were physically verified by the management by engagingoutside expert during the year and no material discrepancies were noticed on suchverification.

c. The title deeds of immovable properties included in property plant and equipment[note 2 to the financial statements] are held in the name of the Company.

(ii) The management has conducted physical verification of inventories exceptinventories lying with third parties during the year at reasonable interval. Thediscrepancies noticed on such physical verification of inventory as compared to bookrecords were not material.

(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 theAct. Therefore the provisions of clause 3(iii) of the Order are not applicable.

(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 not accepted deposit within the meaning of sections 73 to 76 of theAct and the Companies (Acceptance of Deposits) Rules 2014 (as amended) during the year.Therefore provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Act in respect of the Company's products to which the said rules areapplicable and are of the opinion that prima facie the prescribed records have been madeand maintained. We have not however made a detailed examination of the said records witha view to determine whether they are accurate or complete.

(vii) a. According to the records of the Company the Company is generally regular indepositing undisputed statutory dues including provident fund employees' 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 where applicable with theappropriate authorities. There was no undisputed outstanding statutory dues as at theyearend for a period of more than six months from the date they became payable exceptMandi Tax of Rs. 6.23 Lakhs.

b. According to the records of the Company there are no dues outstanding of incometax sales tax service tax duty of customs duty of excise goods and service tax andvalue added tax on account of any dispute other than the following:

Name of Statue Nature of disputed dues Amount * (Rs. in Lakhs) period to which it relates Forum where dispute is pending
Sales-tax Punjab Sales Tax Demand/ Penalty/ Interest 1.78 1994-95 and 1998-2000 Sales tax Tribunal Punjab
Sales-tax Rajasthan Sales Tax Demand/ Penalty/ Interest 40.65 1995 to 2007 Sales tax Tribunal Rajasthan
3.00 1995-96 High Court Rajasthan
Value Added Tax Uttar Pradesh Reversal of Input tax Credit 3.76 2010-11 High Court Allahabad
Reversal of Input tax Credit 4.17 2014-15 Sales tax Tribunal Moradabad
Non-Acceptance of Form ‘F' & Enhancement of Turnover 275.92 2013-14 to 2015-16

* net of deposited

(viii) The Company has not defaulted in repayment of dues to banks and financialinstitution. The Company did not have any borrowing from Government and dues to debentureholders.

(ix) During the year the Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments). Term loans raised during theyear 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) The managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

(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 and explanations given to us transactions with therelated parties as identified by the Company are in compliance with section 177 and 188 ofthe Act where applicable and details for the same have been disclosed in the financialstatements as required by the applicable Indian accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Therefore theprovisions of clause 3(xiv) of the Order are not applicable.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withthem. 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. Therefore the provisions of clause 3(xvi) of the Order are notapplicable.

For Singhi & co.
chartered Accountants
firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Date: May 13 2020 Membership No. 088926
Place: Noida (Delhi - NCR) uDIN:20088926AAAADR1221

ANNEXURE B

Report on the Internal Financial controls under Clause (i) of Sub - section 3 ofSection 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 312020 in conjunction withour audit of 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 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. 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 underAct.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements 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 Act to the extentapplicable to as 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 of and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial 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 have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlswith reference to financial statements were operating effectively as at March 312020based on 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 Institute ofChartered Accountants of India however needs to be further strengthened.

for Singhi & co.
chartered Accountants
firm Reg. No. 302049E
Bimal Kumar Sipani
Partner
Date: May 13 2020 Membership No. 088926
Place: Noida (Delhi - NcR) uDIN:20088926AAAADR1221