TO THE MEMBERS OF VADILAL DAIRY INTERNATIONAL LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Vadilal Dairy Internationallimited ("the Company") which comprise the Balance Sheet as at March 31 2018the Statement of Profit and Loss including the statement of Other Comprehensive IncomeThe Cash Flow Statement and the Statement Of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the act') with respect to the preparation andpresentation of these financial statements that give a true and fair view of the financialposition financial performance other Comprehensive Income and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards ("Ind AS") specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application of theappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the Accounting and AuditingStandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on 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 the Actin the manner so required give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2018 and its profit including other Comprehensive Income its Cash Flows and theStatement of Changes in Equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. 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 appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and The Statement of Changes in Equity dealt with by thisreport 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 written representations received from the directors as on 31stMarch2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March2018 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the Internal Financial Controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourSeparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rules 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 it's financialposition in it's financial statements in accordance with the generally accepted accountingpractice. Attention is also invited to Note No.31 of 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 has not been an occasion in case of the company during the year under reportto transfer any sums to the Investor Education and Protection Fund.The question of delayin transferring such sums does not arise.
2 As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under "Report on other legal and regulatoryrequirements" of our report of even date) Report on the Internal Financial Controlsunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 ("theAct")
We have audited the Internal Financial Control over financial reporting of VadilalDairy International Limited ("the Company") as of 31st March 2018 inconjunction with our audit of the financial statements of the Company for the year thenended.
Management Responsibility for the 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). 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 the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout 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 about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit 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 that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company.
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company.
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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.
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 31st March 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.
"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in Paragraph 2 under "Report on other legal and regulatoryrequirements" of our report of even date)
1. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b. As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed on such physical verification.
c. We report that true copies of the title deeds of the immovable properties of thecompany were available for examination during our audit.
2. As explained to us physical verification of the inventories have been conducted atreasonable intervals by the management which in our opinion is reasonable having regardto the size of the Company and nature of its inventories. No material discrepancies werenoticed on such physical verification.
3. The Company has not granted any loans secured or unsecured to companies firmslimited liability partner-ships or other parties covered in the register maintained underSection 189 of the Act. Consequently the requirement of clause (iii) (a) to clause (iii)(c) of paragraph 3 of the Order is not applicable to the Company.
4. The Company has not advanced loan to the persons covered under section 185 of theAct or given guarantees or securities in connection with the loan taken by such persons.The company has complied with the provisions of Section 186 of the Act.
5. According to the information and explanations given to us the Company has notaccepted any deposits nor has any unclaimed deposit within the meaning of the provisionsof Sections 73 to 76 or any other relevant provision of the Act and the rules framedthereunder. Therefor the provisions of Clause (v) of paragraph 3 of the Order are notapplicable to the Company.
6. Reporting under clause 3(vi) of the Order is not applicable as the Company'sbusiness activities are not covered by the Companies (Cost Records and Audit) Rules 2014.
7. In respect of Statutory dues :
(a) According to the records of the company undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues have beenregularly deposited with appropriate authorities. According to the information andexplanations given to us undisputed amounts payable in respect of the aforesaid duesoutstanding as at March 31 2018 for a period of more than six months from the date theybecame payable are as follows:
|Name of the Statute ||Name of the dues ||Amount (in lakhs) ||Period to which the amount relates |
|1 The Income Tax Act 1961 ||Fringe Benefit Tax ||1.09 ||AY 2008-2009 |
| || ||0.72 ||AY 2009-2010 |
(b) According to the information and explanations given to us there are dues of incometax sales tax service tax duty of customs duty of excise value added tax cess onaccount of any dispute which have not been deposited. The details are as follows:
|Name of the Statute ||Name of the dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
| || ||(in lakhs) || || |
|1 The Bombay Sales Tax Act and The Central Sales Tax Act ||Sales tax ||40.05 ||1992-93 ||Bombay High Court |
| || ||12.02 ||1993-94 ||Bombay High Court |
| || ||38.22 ||1995-96 ||Supreme Court |
|2 The Maharashtra Value Added Tax 2002 and The Central Sales Tax Act ||MVAT & CST ||29.88 ||2005-06 ||Joint Commissioner Sales Tax (Appeals) And Bombay High Court |
| || ||168.04 ||2006-07 ||Joint Commissioner of Sales Tax (Appeals) (Refer note below) |
| || ||186.82 ||2007-08 ||do (Refer note below) |
| || ||22.33 ||2009-10 ||do |
| || ||42.69 ||2010-11 ||do |
|3 The Income Tax Act 1961 ||Income Tax ||133.43 ||2014-15 ||Commissioner Of Income Tax (Appeals) |
Note: The company has won the appeals in the Tribunal. The VAT authortities hadchallenged the decision of the tribunal in Bombay High Court but their petition was notadmitted by the honorable court.
8. In our opinion and according to the information and explanation given to usthecompany has not defaulted in the repayment of loans or borrowings to financialinstitutionsbanks and government.The company has not issued any debentures.
9. The Company has not raised money by way of initial public offer (including debtinstruments) or term loan and hence clause (ix) of paragraph 3 of the Order is notapplicable to the Company.
10. Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per information and explanations given to usno fraud by the Company is noticed or reported during the year nor have we been informedof any such instance by the Management.
11. In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of the Section 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us thecompany is not a nidhi company. Therefore the provisions of clause (xii) of paragraph 3of the Order are not applicable to the Company.
13. In our opinion and according to the information and explanations given to us thecompany is in compliance with section 188 and 177 of the Companies Act2013whereapplicablefor all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.
14. In our opinion and according to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year and hence clause (xiv) of paragraph 3 of theOrder is not applicable to the Company.
15. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transaction with the Directors or Personsconnected with them and covered under Section 192 of the Act. Hence clause (xv) ofparagraph 3 of the Order is not applicable to the Company.
16. To the best of our knowledge and as explained the Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934.