Parag Milk Foods Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2025

We have audited the standalone financial statements of Parag
Milk Foods Limited (the ''Company’), which comprise the
Standalone Balance Sheet as at 31^st March, 2025, the Standalone
Statement of Profit and Loss, the Standalone Statement of
Changes in Equity and the Standalone Statement of Cash Flows
for the year then ended, and notes to the standalone financial
statements, including a summary of material and other accounting
policies and other explanatory information.

In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone financial
statements give the information required by the Companies Act,
2013 (the ''Act’) in the manner so required and give a true and
fair view in conformity with the accounting principles generally
accepted in India, of the state of affairs of the Company as at 31^st
March, 2025, and its profit, changes in equity and its cash flows for
the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under Section 143(10) of the Act. Our

responsibilities under those Standards are further described
in the Auditor’s Responsibilities for the Audit of the Standalone
Financial Statements section of our report. We are independent of
the Company in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India (the ''ICAI’) together
with the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Act and the Rules
thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the standalone
financial statements of the current period. These matters were
addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.

We have determined the matters described below to be the key
audit matters to be communicated in our report.

Sr. No.	Key Audit Matters	How our audit addressed the key audit matters
1.	Valuation of trade receivables (Refer Note 11 to the standalone financial statements)
	As at 31st March, 2025, the trade receivables balance excluding provisions included in Note 11 were H 265.29 crore. We have identified valuation of trade receivables as a key audit matter on account of the significant management judgment involved with respect to the recoverability of trade receivables and the provisions for impairment of receivables, and the importance of cash collection with reference to the working capital management of the business.	Our audit procedures included but were not limited to the following: (a) Understanding the trade receivables process with regards to valuation and evaluation of controls designed and implemented by the management; (b) Assessment of the appropriateness of the Company’s credit risk policy and obtaining an understanding on management of credit risk; (c) Control testing: ¦ Obtaining an understanding on credit approvals, establishing credit limits and continuous monitoring of creditworthiness of customers to which the Company grants the credit in normal course of business. ¦ Obtaining understanding on how the Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade receivables. (d) Tests of details: ¦ We have checked the ageing analysis, on a sample basis and subsequent receipt of the trade receivables, to the source documents including bank statements;

Sr. No.	Key Audit Matters	How our audit addressed the key audit matters
		¦ We have verified the underlying supporting documents like acceptance of invoices along with various correspondence carried out by the management of the Company with trade receivable for realization of money; ¦ We have verified open invoices duly accepted by customers in order to ensure existence of trade receivables; ¦ We have verified the appropriateness of judgments regarding provisions for trade receivables and assessment as to whether these provisions were calculated in accordance with the Company’s provisioning policies; and ¦ We have conducted discussion with management as to the recoverability of the old outstanding and corroborating management’s explanations with underlying documentation and correspondence with the customers.
2.	Revenue recognition (Refer Note 26 to the standalone financial statements)
	The revenue of the Company consists primarily of sale of food products that are sold through distributors, modern trade and direct sale channels amongst others. Revenue is recognized when the control of products is transferred to the customer and there is no unfulfilled obligation. Owing to the volume of sales transactions, size of the distribution network and varied terms of contracts with customers, revenue is determined to be an area involving significant risk in line with the requirements of the Standards on Auditing and hence, requiring significant auditor attention. The management is required to make certain key judgements around determination of transaction price in accordance with the requirements of Ind AS 115, Revenue from Contracts with Customers, on account of consideration payable to customers in the form of various discount schemes, returns and rebates. The Company and its external stakeholders focus on revenue as a key performance indicator and this could create an incentive for revenue to be overstated or recognised before control has been transferred. Considering the aforesaid significance to our audit and the external stakeholders, revenue recognition has been considered as a key audit matter for the current year’s audit.	Our key audit procedures around revenue recognition included, but were not limited to, the following: ¦ Assessed the appropriateness of the revenue recognition accounting policies of the Company including those relating to rebates and trade discounts, by evaluating compliance with the applicable accounting standards; ¦ Evaluated the design and tested the operating effectiveness of the relevant key controls with respect to revenue recognition including general and specific information technology controls; ¦ Performed substantive testing on selected samples of revenue transactions recorded during the year by testing the underlying documents including contracts, invoices, goods dispatch notes, shipping documents and customer receipts, wherever applicable; ¦ Understood and evaluated the Company’s process for recording of the accruals for discounts and rebates and ongoing incentive schemes and on a test basis, verified the year-end provisions made in respect of such schemes; ¦ Performed analytical review procedures on revenue recognised during the year to identify any unusual and/or material variances; ¦ Performed confirmation and alternative procedures on selected invoices outstanding as at the year-end; ¦ Tested a select sample of revenue transactions recorded before the financial year end date to determine whether the revenue has been recognised in the appropriate financial period; ¦ Tested a sample of manual journal entries posted to revenue ledgers to identify any unusual items; and ¦ Evaluated the appropriateness and adequacy of disclosures in the Standalone financial statements in respect of revenue recognition in accordance with the applicable requirements.

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

The Company’s Board of Directors is responsible for the other
information. The other information comprises the information
included in the Board’s Report including Annexures to Board’s
Report, Management Discussion and Analysis, Business
Responsibility and Sustainability Report, Corporate Governance
Report and Shareholder’s Information, but does not include the
standalone financial statements and our auditor’s report thereon.

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

In connection with our audit of the standalone financial
statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the standalone financial statements or our
knowledge obtained during the audit or otherwise appears to be
materially misstated.

If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those
Charged with Governance for the Standalone
Financial Statements

The Company’s Board of Directors is responsible for the matters
stated in Section 134(5) of the Act with respect to the preparation
of these standalone financial statements that give a true and fair
view of the financial position, financial performance, changes
in equity and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including
the Indian Accounting Standards specified under Section 133
of the Act. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions
of the Act for safeguarding of the assets of the Company and for
preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and
design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant
to the preparation and presentation of the standalone financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the standalone financial statements, Board of
Directors is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless Board of Directors either intends to liquidate
the Company or to cease operations, or has no realistic alternative
but to do so.

Those Board of Directors are also responsible for overseeing the
Company’s financial reporting process.

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

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

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:

¦ Identify and assess the risks of material misstatement of
the standalone financial statements, whether due to fraud
or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control;

¦ Obtain an understanding of internal control relevant to the
audit in order to design 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 Company has adequate internal financial controls system
in place and the operating effectiveness of such controls;

¦ Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management;

¦ Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the
related disclosures in the standalone 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’s report. However, future events or
conditions may cause the Company to cease to continue as
a going concern; and

¦ Evaluate the overall presentation, structure and content of the
standalone financial statements, including the disclosures,
and whether the standalone financial statements represent
the underlying transactions and events in a manner that
achieves fair presentation.

We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

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

Report on Other Legal and Regulatory
Requirements

1. As required by the Companies (Auditor’s Report) Order,
2020 (the ''Order’), issued by the Central Government of India
in terms of Section 143(11) of the Act, we give in the Annexure
‘A’ a Statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.

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 best of our knowledge and
belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by
law have been kept by the Company so far as it appears
from our examination of those books except for the
matter stated in paragraph (h)(vi) below;

(c) The standalone balance sheet, the standalone
statement of profit and loss, the standalone statement of
changes in equity and the standalone statement of cash
flows dealt with by this Report are in agreement with the
books of account;

(d) In our opinion, the aforesaid standalone financial
statements comply with the Indian Accounting
Standards specified under Section 133 of the Act;

(e) On the basis of the written representations received
from the directors as on 31^st March, 2025 taken on

record by the Board of Directors, none of the directors is
disqualified as on 31^st March, 2025 from being appointed
as a director in terms of Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to our
separate Report in Annexure ‘B’;

(g) With respect to the other matters to be included in the
Auditor’s Report in accordance with the Section 197(16)
of the Act, in our opinion and according to the information
and explanations given to us, the remuneration paid by
the Company to its directors during the current 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 in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our
opinion and to the best of our information and according
to the explanations given to us;

(i) The Company has disclosed the impact of pending
litigations on its financial position in its standalone
financial statements - (Refer Note 41 to the
standalone financial statements);

(ii) The Company did not have any long-term contracts,
including derivative contracts for which there were
any material foreseeable losses;

(iii) There has been no delay in transferring amounts,
required to be transferred, to the Investor Education
and Protection Fund by the Company;

(iv) (a) The management of the Company has

represented that, to the best of its knowledge
and belief, other than as disclosed in the notes
to the standalone financial statements, during
the year, no funds have been advanced or
loaned or invested (either from borrowed
funds or share premium or any other sources
or kind of funds) by the Company to or in
any other person or entity, including foreign
entities (the ''Intermediaries’), with the
understanding, whether recorded in writing or
otherwise, that the intermediary shall, whether,
directly or indirectly lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the Company
(the ''Ultimate Beneficiaries’) or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries;

(b) The management of the Company has
represented, that, to the best of its knowledge
and belief, other than as disclosed in the notes
to the standalone financial statements, during

the year, no funds have been received by the
Company from any person or entity, including
foreign entities (the ''Funding Parties’), with the
understanding, whether recorded in writing or
otherwise, that the Company shall, whether,
directly or indirectly, lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the Funding
Party (the ''Ultimate Beneficiaries’) or provide
any guarantee, security or the like on behalf of
the Ultimate Beneficiaries; and

(c) Based on such audit procedures, we have
considered reasonable and appropriate in the
circumstances that nothing has come to our
notice that has caused us to believe that the
representations under paragraph (a) and (b)
above, contain any material misstatement.

(v) (a) The final dividend paid by the Company during
the year in respect of the same declared for the
previous year is in accordance with Section 123
of the Act, to the extent it applies to payment
of dividend.

(b) As stated in Note 16 to the standalone financial
statements, the Board of Directors of the
Company have proposed final dividend for
the year which is subject to the approval
of the members at the ensuing Annual
General Meeting. The dividend declared is in

accordance with section 123 of the Act, to the
extent it applies to declaration of dividend.

(vi) Based on our examination which included test
checks, except for the instances mentioned below,
the Company has used accounting softwares
for maintaining its books of account, which have
a feature of recording audit trail (edit log) facility
and the same has operated throughout the
year for all relevant transactions recorded in the
respective software:

(a) The feature of recording audit trail (edit log)
facility was not enabled at the database level to
log any direct data changes for the accounting
softwares used for maintaining the books of
account relating to payroll, and certain non¬
editable fields / tables of the accounting
software used for maintaining general ledger.

(b) The feature of recording audit trail (edit log)
facility was not enabled at the application layer
of the accounting softwares relating to revenue,
trade receivables and general ledger.

Further, the audit trail (edit log) facility was enabled
and operated throughout the year for the respective
accounting software, we did not come across any
instance of the audit trail feature being tampered
with and the audit trail has been preserved by the
Company as per the statutory requirements for
record retention.

SHARP & TANNAN

Chartered Accountants
Firm’s Registration No. 109982W
by the hand of

Edwin Paul Augustine

Partner

Membership No. 043385

Mumbai, 2^nd May 2025 UDIN: 25043385BMOOJH7464

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Mar 31, 2024

We have audited the standalone financial statements of Parag Milk Foods Limited (the ''Company''), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of material and other accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (the ''Act'') in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and its profit, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (the ''ICAI'') together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Sr. No.	Key Audit Matters	How our audit addressed the key audit matters
1. Inventories (Refer Note 9 to the standalone financial statements)
	The value of inventory is a key audit matter due	Our audit procedures included and were not limited to
	to involvement of high risk, basis the nature of the	the following:
	food industry wherein value per unit is relatively insignificant but high volumes are involved which are dispersed across different point of sales and warehouses.	i. Evaluation of the design and testing of the implementation of internal controls relating to physical inventory counts on a test basis;
		ii. Performance of test of controls over verification of
		documentary evidence of controls including the calculation of shrinkages; and
		iii. Performance of test of details through sample
		selection of stores as part of the inventory verification program, including verification of inventory from floor to documentary evidence and vice versa and verification of shrinkage.
2.	Valuation and existence of inventories (Refer Note 9 to the standalone financial statements)
	Our audit procedures on the valuation and	In order to ascertain the existence of inventories, we
	existence of inventories consisted mainly of the	assessed and reviewed the controls implemented and
	following:	executed by the Company to ensure the existence of inventories. We observed the periodic physical inventory counts. We also performed analytical procedures as well as tests of details of individual transactions.

Sr. No.	Key Audit Matters	How our audit addressed the key audit matters
	The inventories of the Company amounted to	As for the valuation of inventories, we assessed and
	55,982.62 Million.	reviewed the controls relating to valuation. For materials and supplies, we compared the price recognized in the
	Our audit of inventories was focused around the	balance sheet to the latest purchase invoice, to ensure
	risk that there would be a material misstatement	that the inventory of materials and supplies is valued in
	relating to the existence of inventories and that the valuation of inventories which involves judgement	accordance with the accounting policies applied.
	of the management. According to the standalone financial statements''	To address the risk for material error on inventories, our audit procedures included amongst other:
	accounting principles inventories are measured	Assessing the compliance of Company''s accounting
	at the lower of cost or net realizable value. The	policies over inventory with applicable accounting
	company has procedures for identifying risk for obsolescence inventories based on estimated	standards.
	usage and shelf life of products.	Assessing the inventory valuation processes and practices. On major locations we tested the effectiveness of the key controls. Assessing the analyses and assessment made by management with respect to slow moving and obsolete stock. We assessed the adequacy of the company''s disclosures related to inventories.
3.	Valuation of trade receivables (Refer Note 10 to the standalone financial statements)
	As at March 31, 2024, the trade receivables balance	Our audit procedures included but were not limited to
	excluding provisions included in Note 10 were 52,352.82 Million.	the following: (a) Understanding the trade receivables process with
	We have identified valuation of trade receivables	regards to valuation and evaluation of controls
	as a key audit matter on account of the significant management judgment involved with respect	designed and implemented by the management;
	to the recoverability of trade receivables and the	(b) Assessment of the appropriateness of the
	provisions for impairment of receivables, and the	Company''s credit risk policy and obtaining an
	importance of cash collection with reference to the	understanding on management of credit risk;
	working capital management of the business.	(c) Control testing: • Obtaining an understanding on credit approvals, establishing credit limits and continuous monitoring of creditworthiness of customers to which the Company grants the credit in normal course of business. • Obtaining understanding on how the Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade receivables. (d) Tests of details: • We have checked the ageing analysis, on a sample basis and subsequent receipt of the trade receivables, to the source documents, including bank statements; • We have verified the underlying supporting documents like acceptance of invoices along with various correspondence carried out by the management of the Company with trade receivable for realization of money;

Sr. No.	Key Audit Matters	How our audit addressed the key audit matters
		• We have verified open invoices duly accepted
		by customers in order to ensure existence of trade receivables;
		• We have verified the appropriateness of
		judgments regarding provisions for trade receivables and assessment as to whether these provisions were calculated in accordance with the Company''s provisioning policies.
		We have conducted discussion with management as to the recoverability of the old outstanding and corroborating management''s explanations with underlying documentation and correspondence with the customers.
4.	Revenue recognition (Refer Note 25 to the standalone financial statements)
	The revenue of the Company consists primarily	Our key audit procedures around revenue recognition
	of sale of food products that are sold through	included, but were not limited to, the following:
	distributors, modern trade and direct sale channels amongst others. Revenue is recognized when the control of products is transferred to the customer and there is no unfulfilled obligation.	• Assessed the appropriateness of the revenue recognition accounting policies of the Company including those relating to rebates and trade discounts, by evaluating compliance with the
	Owing to the volume of sales transactions, size of the distribution network and varied terms of contracts with customers, revenue is determined to be an area involving significant risk in line with the requirements of the Standards on Auditing and hence, requiring significant auditor attention.	applicable accounting standards; • Evaluated the design and tested the operating effectiveness of the relevant key controls with respect to revenue recognition including general and specific information technology controls;
	The management is required to make certain key	• Performed substantive testing on selected samples
	judgements around determination of transaction	of revenue transactions recorded during the year
	price in accordance with the requirements of Ind	by testing the underlying documents including
	AS 115, Revenue from Contracts with Customers, on	contracts, invoices, goods dispatch notes, shipping
	account of consideration payable to customers in	documents and customer receipts, wherever
	the form of various discount schemes, returns and	applicable;
	rebates. The Company and its external stakeholders focus on revenue as a key performance indicator and this could create an incentive for revenue to be overstated or recognised before control has been transferred. Considering the aforesaid significance to our audit and the external stakeholders, revenue	• Understood and evaluated the Company''s process for recording of the accruals for discounts and
		rebates and ongoing incentive schemes and on a test basis, verified the year-end provisions made in respect of such schemes;
	recognition has been considered as a key audit	• Performed analytical review procedures on revenue
	matter for the current year''s audit.	recognised during the year to identify any unusual and/or material variances;
		• Performed confirmation and alternative procedures
		on selected invoices outstanding as at the year-end;
		• Tested a select sample of revenue transactions
		recorded before the financial year end date to determine whether the revenue has been recognised in the appropriate financial period;
		• Tested a sample of manual journal entries posted to
		revenue ledgers to identify any unusual items; and
		• Evaluated the appropriateness and adequacy of
		disclosures in the consolidated financial statements
		in respect of revenue recognition in accordance with the applicable requirements.

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

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Board''s Report including Annexures to Board''s Report, Management Discussion and Analysis, Business Responsibility Report, Corporate Governance Report and Shareholder''s Information, but does not include the standalone financial statements and our auditor''s report thereon.

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

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

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

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

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order to design 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 Company has adequate internal financial controls system in place and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern; and

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 (the ''Order''), issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure ''A'' a Statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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 best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) the Standalone Balance Sheet, the Standalone Statement of Profit and Loss, the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act;

(e) on the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure ''B'';

(g) with respect to the other matters to be included in the Auditor''s Report in accordance with the Section 197(16) of the Act, in our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. Further, the Ministry of Corporate Affairs has not prescribed other details under aforesaid section which are required to be commented upon by us; and

(h) with respect to the other matters to 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 and according to the explanations given to us;

(i) the Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - (Refer Note 41 to the standalone financial statements);

(ii) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

(iii) there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

(iv) (a) the management of the Company

has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the standalone financial statements, during the year, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities (the ''Intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (the ''Ultimate Beneficiaries'') or

provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) the management of the Company has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the standalone financial statements, during the year, no funds have been received by the Company from any person or entity, including foreign entities (the ''Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (the ''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) based on such audit procedures, we have considered reasonable and appropriate in the circumstances that nothing has come to our notice that has caused us to believe that the representations under paragraph (a) and (b) above, contain any material misstatement.

(v) As stated in note 15 to the standalone financial statements, the Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with Section 123 of the Act, to the extent it applies to declaration of dividend.

(vi) Based on our examination which included test checks, except for the instances mentioned below, the Company has used accounting softwares for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software:

(a) The feature of recording audit trail (edit log) facility was not enabled at the database level to log any direct data changes for the accounting softwares used for maintaining the books of account relating to payroll, consolidation process and certain noneditable fields/tables of the accounting software used for maintaining general ledger.

(b) The feature of recording audit trail (edit log) facility was not enabled at the application layer of the accounting softwares relating to revenue, trade receivables and general ledger.

Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, as amended is applicable from 1st April, 2023 reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended, on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.

SHARP & TANNAN Chartered Accountants Firm''s Registration No.109982W by the hand of

Edwin Paul Augustine Partner

Mumbai, May 18, 2024 Membership No. 043385

UDIN: 24043385BKDZVN2175

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Mar 31, 2023

Independent Auditor''s Report

To the Members of Parag Milk Foods Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements
of Parag Milk Foods Limited (the ''Company''), which
comprise the Standalone Balance Sheet as at 31st
March, 2023, the Standalone Statement of Profit
and Loss, the Standalone Statement of Changes
in Equity and the Standalone Statement of Cash
Flows for the year then ended, and notes to the
standalone financial statements, including a
summary of Significant Accounting Policies and other
explanatory information.

In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information
required by the Companies Act, 2013 (the ''Act'') in the
manner so required and give a true and fair view in
conformity with the Indian Accounting Standards
prescribed under Section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules,
2015 as amended and other accounting principles
generally accepted in India, of the state of affairs of
the Company as at 31st March, 2023, and its profit,
changes in equity and its cash flows for the year ended
on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards
on Auditing (SAs) specified under Section 143(10) of
the Act. Our responsibilities under those Standards are
further described in the Auditor''s Responsibilities for the
Audit of the Standalone Financial Statements section
of our report. We are independent of the Company in
accordance with the Code of Ethics issued by the Institute
of Chartered Accountants of India (the ''ICAI'') together
with the ethical requirements that are relevant to our
audit of the financial statements under the provisions of
the Act and the Rules thereunder, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the standalone financial statements of the current
period. These matters were addressed in the context of
our audit of the standalone financial statements as a
whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

Compiled by: Dion Global Solutions Limited

Statutory Reports

Sr. Key Audit Matters How our audit addressed the key audit matters

No._

2. Valuation and existence of inventories (Refer Note 9 to the standalone financial statements)

Our audit procedures on the
valuation and existence of
inventories consisted mainly of the
following:

The inventories of the Company
amounted to ^5,582.56 Million.

Our audit of inventories was focused
around the risk that there would be
a material misstatement relating
to the existence of inventories and
that the valuation of inventories
which involves judgement of the
management.

According to the standalone
financial statements'' accounting
principles inventories are measured
at the lower of cost or net realizable
value. The company has procedures
for identifying risk for obsolescence
inventories based on estimated
usage and shelf life of products.

In order to ascertain the existence of inventories, we assessed and
reviewed the controls implemented and executed by the Company to
ensure the existence of inventories. We observed the periodic physical
inventory counts. We also performed analytical procedures as well as
tests of details of individual transactions.

As for the valuation of inventories, we assessed and reviewed the controls
relating to valuation. For materials and supplies, we compared the price
recognized in the balance sheet to the latest purchase invoice, to ensure
that the inventory of materials and supplies is valued in accordance with
the accounting policies applied.

To address the risk for material error on inventories, our audit procedures
included amongst other:

Assessing the compliance of Company''s accounting policies over
inventory with applicable accounting standards.

Assessing the inventory valuation processes and practices. On major
locations we tested the effectiveness of the key controls.

Assessing the analyses and assessment made by management with
respect to slow moving and obsolete stock.

We assessed the adequacy of the company''s disclosures related to
inventories.

3.

Valuation of trade receivables (Refer Note 10 to the standalone financial statements)

As at 31st March, 2023, the trade
receivables balance excluding
provisions included in Note 10 were
^2,137.91 Million.

We have identified valuation of
trade receivables as a key audit
matter on account of the significant
management judgment involved
with respect to the recoverability of
trade receivables and the provisions
for impairment of receivables, and
the importance of cash collection
with reference to the working capital
management of the business.

Our audit procedures included but were not limited to the following:

(a) Understanding the trade receivables process with regards to
valuation and evaluation of controls designed and implemented by
the management;

(b) Assessment of the appropriateness of the Company''s credit risk policy
and obtaining an understanding on management of credit risk;

(c) Control testing:

• Obtaining an understanding on credit approvals, establishing credit
limits and continuous monitoring of creditworthiness of customers to
which the Company grants the credit in normal course of business.

• Obtaining understanding on how the Company establishes an
allowance for doubtful debts and impairment that represents its
estimate of incurred losses in respect of trade receivables.

(d) Tests of details:

• We have checked the ageing analysis, on a sample basis and
subsequent receipt of the trade receivables, to the source
documents, including bank statements;

• We have verified the underlying supporting documents like
acceptance of invoices along with various correspondence
carried out by the management of the Company with trade
receivable for realization of money;

• We have verified open invoices duly accepted by customers in
order to ensure existence of trade receivables;

• We have verified the appropriateness of judgments regarding
provisions for trade receivables and assessment as to whether
these provisions were calculated in accordance with the
Company''s provisioning policies.

We have conducted discussion with management as to the recoverability
of the old outstanding and corroborating management''s explanations
with underlying documentation and correspondence with the customers.

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

The Company''s Board of Directors is responsible for the
other information. The other information comprises the
information included in the Board''s Report including
Annexures to Board''s Report, Management Discussion
and Analysis, Business Responsibility Report, Corporate
Governance Report and Shareholder''s Information, but
does not include the standalone financial statements
and our auditor''s report thereon.

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

In connection with our audit of the standalone
financial statements, our responsibility is to read the
other information and, in doing so, consider whether

the other information is materially inconsistent with
the standalone financial statements or our knowledge
obtained during the audit or otherwise appears to be
materially misstated.

If, based on the work we have performed, we conclude
that there is a material misstatement of this other
information, we are required to report that fact. We
have nothing to report in this regard.

Responsibilities of Management and Those
Charged with Governance for the Standalone
Financial Statements

The Company''s Board of Directors is responsible
for the matters stated in Section 134(5) of the Act
with respect to the preparation of these standalone
financial statements that give a true and fair view
of the financial position, financial performance,

changes in equity and cash flows of the Company in
accordance with the accounting principles generally
accepted in India, including the Indian Accounting
Standards specified under Section 133 of the Act.
This responsibility also includes maintenance of
adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of
the Company and for preventing and detecting frauds
and other irregularities; selection and application of
appropriate accounting policies; making judgments
and estimates that are reasonable and prudent;
and design, implementation and maintenance
of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to
the preparation and presentation of the standalone
financial statements that give a true and fair view and
are free from material misstatement, whether due to
fraud or error.

In preparing the standalone financial statements,
management is responsible for assessing the
Company''s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless management either intends to
liquidate the Company or to cease operations, or has
no realistic alternative but to do so.

Those Board of Directors are also responsible for
overseeing the Company''s financial reporting process.

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

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

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material
misstatement of the standalone financial
statements, whether due to fraud or error, design
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control;

• Obtain an understanding of internal control relevant
to the audit in order to design 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
Company has adequate internal financial controls
system in place and the operating effectiveness of
such controls;

• Evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by management;

• Conclude on the appropriateness of management''s
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company''s ability to continue as a going concern.
If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor''s
report to the related disclosures in the standalone
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''s report. However, future
events or conditions may cause the Company to
cease to continue as a going concern; and

• Evaluate the overall presentation, structure and
content of the standalone financial statements,
including the disclosures, and whether the
standalone financial statements represent the
underlying transactions and events in a manner
that achieves fair presentation.

We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal control
that we identify during our audit.

We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and
to communicate with them all relationships and other
matters that may reasonably be thought to bear on
our independence, and where applicable, related
safeguards.

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

Report on Other Legal and RegulatoryRequirements

1. As required by the Companies (Auditor''s Report)
Order, 2020 (the ''Order''), issued by the Central
Government of India in terms of Section 143(11) of
the Act, we give in the Annexure ''A'' a Statement on
the matters specified in paragraphs 3 and 4 of the
Order, to the extent applicable.

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 best
of our knowledge and belief were necessary
for the purposes of our audit;

(b) in our opinion, proper books of account
as required by law have been kept by the
Company so far as it appears from our
examination of those books;

(c) the Standalone Balance Sheet, the Standalone
Statement of Profit and Loss, the Standalone
Statement of Changes in Equity and the
Standalone Statement of Cash Flows dealt
with by this Report are in agreement with the
books of account;

(d) in our opinion, the aforesaid standalone
financial statements comply with the Indian
Accounting Standards specified under Section
133 of the Act;

(e) on the basis of the written representations
received from the directors as on 31st March,
2023 taken on record by the Board of Directors,
none of the directors is disqualified as on
31st March, 2023 from being appointed as a
director in terms of Section 164(2) of the Act;

(f) with respect to the adequacy of the internal
financial controls over financial reporting of
the Company and the operating effectiveness
of such controls, refer to our separate Report in
Annexure ''B'';

(g) with respect to the other matters to be included
in the Auditor''s Report in accordance with the
Section 197(16) of the Act, in our opinion and
according to the information and explanations
given to us, the remuneration paid by the
Company to its directors during the current
year is in accordance with the provisions of
Section 197 of the Act. The remuneration paid
to any director is not in excess of the limit laid
down under Section 197 of the Act. Further, the
Ministry of Corporate Affairs has not prescribed
other details under aforesaid section which are
required to be commented upon by us; and

(h) with respect to the other matters to 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 and according to the explanations
given to us;

(i) the Company has disclosed the impact of
pending litigations on its financial position
in its standalone financial statements -
(Refer Note 41 to the standalone financial
statements);

(ii) the Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses;

(iii) there were no amounts which were
required to be transferred to the Investor
Education and Protection Fund by the
Company;

(iv) (a) the management of the Company

has represented that, to the best
of its knowledge and belief, other
than as disclosed in the notes to the
standalone financial statements,
during the year, no funds have been
advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind
of funds) by the Company to or in
any other person or entity, including
foreign entities (the ''Intermediaries''),
with the understanding, whether
recorded in writing or otherwise,
that the intermediary shall, whether,
directly or indirectly lend or invest in
other persons or entities identified
in any manner whatsoever by or
on behalf of the Company (the
''Ultimate Beneficiaries'') or provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;

(b) the management of the Company
has represented, that, to the best
of its knowledge and belief, other
than as disclosed in the notes to the
standalone financial statements,
during the year, no funds have been
received by the Company from any
person or entity, including foreign
entities (the ''Funding Parties''), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, whether, directly or indirectly, lend
or invest in other persons or entities

identified in any manner whatsoever
by or on behalf of the Funding Party
(the ''Ultimate Beneficiaries'') or
provide any guarantee, security or
the like on behalf of the Ultimate
Beneficiaries; and

(c) based on such audit procedures, we
have considered reasonable and
appropriate in the circumstances
that nothing has come to our notice
that has caused us to believe that the
representations under paragraph (a)
and (b) above, contain any material
misstatement.

(v) the Company neither declared nor paid
dividend during the year. Accordingly, the
Company is not required to comply with
Section 123 of the Act.

(vi) Proviso to Rule 3(1) of the Companies
(Accounts) Rules, 2014, as amended,
for maintaining books of account using
accounting software which has a feature
of recording audit trail (edit log) facility
is applicable to the Company from the
financial year commencing on or after
1st April, 2023, and accordingly, reporting
under Rule 11(g) of the Companies
(Audit and Auditors) Rules, 2014, as
amended, is not applicable for the
financial year ended 31st March, 2023.

SHARP & TANNAN

Chartered Accountants
Firm''s Registration No. 109982W
by the hand of

Edwin Paul Augustine

Partner

Place: Mumbai Membership No. 043385

Date: April 29, 2023 UDIN: 23043385BGPJRA2300

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Mar 31, 2018

REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Standalone Ind AS Financial Statements of Parag Milk Foods Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information, (hereinafter referred to as “Standalone Ind AS Financial Statements”).

MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the (state of affairs) financial position, profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true 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 accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the Standalone Ind AS Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the Standalone Ind AS Financial Statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Company as at March 31, 2018, its profit (financial performance including other comprehensive income), its cash flows and changes in equity for 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 give in “Annexure 1”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(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 best of our knowledge and belief were necessary for the purposes of our audit;

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

c. The Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid Standalone Ind AS Financial Statements comply 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 directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in “Annexure 2”.

g. With respect to the other matters to 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 and according to the explanations given to us:

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

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

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

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 Report of even date to the members of Parag Milk Foods Limited on the standalone financial statements for the year ended March 31, 2018]

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for certain assets where quantitative details are not available since inception.

(b) During the year, the fixed assets of the Company have been physically verified by the management, except for certain assets where quantitative details are not available as discussed above, and as informed, no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of immovable properties recorded as fixed assets in the books of account of the Company are held in the name of the Company.

(ii) The inventory (excluding stocks lying 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 material discrepancies were noticed on physical verification carried out during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them.

(iii) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph 3 (iii)(a), 3 (iii)(b) and 3 (iii)(c) of the Order are not applicable to the Company.

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

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions 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 the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, sales tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable 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 source and employees state insurance.

According to the information and explanations given to us, there are no undisputed dues in respect of provident fund, employees’ state insurance, income tax, sales tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, which were outstanding, at the 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 are no dues with respect to service tax, customs duty, excise duty, Goods & services tax which have not been deposited on account of any dispute, except in respect of sales tax and 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

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 Rs.6.66 Mn.

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

(ix) In our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of initial public issue offer 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 of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such instance by the management.

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

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanation given to us, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of Act, where applicable and the details have been disclosed in the Standalone Financial Statements etc., as required by the applicable accounting standards.

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

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanation given to us the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

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 Report of even date to the members of Parag Milk Foods Limited on the Standalone Ind AS Financial Statements for the year ended March 31, 2018]

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Parag Milk Foods Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Standalone Ind AS 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit 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

---

Mar 31, 2017

To

The Members of Parag Milk Foods Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Parag Milk Foods Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true 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 financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March, 2017, its profit and its cash flows for 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 give in "Annexure 1", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(2) As required by Section 143(3) of the Act, we report that:

a. We have sought and except for the matter described in the paragraph (g) (iv) below, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. I n our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. On the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in "Annexure 2".

g. With respect to the other matters to 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 and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 31 on Contingent Liabilities to the standalone financial statements;

(ii) The Company did not have any long-term contracts including derivative contracts. Hence, the question of any material foreseeable losses does not arise;

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

(iv) The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December, 2016. However, we are unable to obtain sufficient and appropriate audit evidence to report on whether the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management (Refer Note No. 37 to the financial statements).

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for few assets where quantitative details are not available since inception.

(b) During the year, the fixed assets of the Company have been physically verified by the management and as informed, no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of immovable properties recorded as fixed assets in the books of account of the Company are held in the name of the Company.

(ii) The inventory (excluding stocks lying 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 material discrepancies were noticed on physical verification carried out during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them.

(iii) As informed, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph 3 (iii)(a), 3 (iii)(b) and 3 (iii)(c) of the Order are not applicable to the Company.

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

Name of the statute	Nature of dues	Amount '' in Millions #	Period to which the amount relates	Forum where dispute is pending
Maharashtra Value Added Tax Act, 2002	VAT	0.45	F.Y 2006-07	Joint Commissioner of Sales Tax (App) -1
Maharashtra Value Added Tax Act, 2002	VAT	37.90	F.Y 2009-10	Joint Commissioner of Sales Tax (App) -1
Central Sales Tax Act, 1956	CST	8.74	F.Y 2006-07	Joint Commissioner of Sales Tax (App) -1
Central Sales Tax Act, 1956	CST	12.26	F.Y 2009-10	Joint Commissioner of Sales Tax (App) -1
Income Tax Act, 1961	Income tax	12.19	FY 2011-12	Income Tax Appellate Tribunal
Income Tax Act, 1961	Income tax	47.42	FY 2012-13	Commissioner of Income Tax (Appeals)
Income Tax Act, 1961	Income tax	74.67	FY 2013-14	Commissioner of Income Tax (Appeals)

# Amount paid under protest against the disputed dues is Rs, 6.66 Mn.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions 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 the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, however, there have been significant delays in few cases for tax deducted at source and service tax.

According to the information and explanations given to us, there are no undisputed dues in respect of provident fund, employees'' state insurance, income tax, sales tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, which were outstanding, at the yearend 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 are no dues with respect to income tax, service tax, value added tax, customs duty, excise duty, which have not been deposited on account of any dispute, except in respect of sales tax and income tax as below :

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

(ix) In our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of initial public issue offer 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 of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such instance by the management.

(xi) According to the information and explanations given to us, and read with Note 45 to the financial statements, managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanation given to us, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of Act, where applicable and the details have been disclosed in the Standalone Financial Statements etc., as required by the applicable accounting standards.

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

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanation given to us the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Parag Milk Foods Limited ("the Company") as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India ("ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit 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

Place: Mumbai Partner

Date : May 29, 201 7 Membership No. 061083

---

Mar 31, 2016

To

The Members of Parag Milk Foods Limited

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Parag Milk Foods Limited (hereinafter referred to as "the Holding Company") and its subsidiary (the Holding Company and its subsidiary together referred to as "the Group") comprising of the Consolidated Balance Sheet as at March 31, 2016, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the Consolidated Financial Statements").

Management''s Responsibility for the Consolidated Financial Statements

The Holding Company''s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as "the Act") that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

Auditor''s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company''s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Holding Company''s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31st March, 2016, their consolidated profit and their consolidated cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 44 of the financial statements in regard to recording of an impairment loss of Rs.42 Million on cows and assessment of recoverable amount based on net realizable value by management.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, we report, to the extent applicable, that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

b. In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept by the Company so far as it appears from our examination of those books;

c. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements;

d. In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. On the basis of written representations received from the directors of the Holding Company as on March 31, 2016 taken on record by the Board of Directors of the Holding Company and its subsidiary company, none of the directors of the Group companies is disqualified as on March 31,

2016 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the the Group, and the operating effectiveness of such controls, we give our separate Report in the "Annexure".

g. With respect to the other matters to 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 and according to the explanations given to us:

(i) The consolidated financial statements disclose

the impact of pending litigations on the consolidated financial position of the Group

- Refer Note 31 to the consolidated financial statements;

(ii) The Group does not have any material foreseeable losses on long term contracts including derivative contracts;

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

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

[Referred to under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditor''s Report of even date to the members of Parag Milk Foods Limited on the consolidated financial statements for the year ended March 31, 2016]

In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended March 31, 2016, we have audited the internal financial controls over financial reporting of the Group as of that date.

Management''s Responsibility for Internal Financial Controls

The respective Board of Directors of the Group are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Group''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the

Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Group''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Group have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W

Anup Mundhra

Place : Mumbai Partner

Date : June 24, 2016 Membership No.061083