Prestige Foods Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2010

1. We have audited the attached Balance Sheet of PRESTIGE FOODS LIMITED as at 31st March 2010 and also the Profit & Loss Account & Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the Accounting Principles used and significant estimates made by the management as well as evaluating the overall financial statements presentation. We believe that our audit provides us a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors report) Amendment order, 2004 issued by the Central Government in terms of Sub-Section (4A) of the Section 227 of the Companies Act, 1956and on the basis of such checks as we considered appropripriates and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to the extant applicable to the company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(I) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purpose of our audit;

(ii) In our opinion, proper books of accounts, as required by law have been kept by the Company, so far as appears from our examination of those books;

(iii) The Balance Sheet .Profit & Loss account and Cash Flow statement, dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit & Loss account and Cash Flow statement dealt with by this report, comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of the written representations received from the directors, as on 31 st March 2010, and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified as on 31st March, 2010 from being appointed as director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us and subject to:

I. Note No. 2(a),(c) & 4(a) & (d) regarding non- provisions in respect of Central Excise, Commercial Tax and other Contingent liabilities

ii. Note No. 4(b) & (c) regarding non provision of Commercial Tax Central Sales Tax & Entry Tax Liabilities from 1995-96 to 2002-03 of Rs.214.75 Lacs

iii. Note No. 8 regarding non-provisions of aggregate interest of Rs.1.82 Lacs (previous year Rs.1.82 Lacs) on loans and advances given by the Company.

iv. Note No.9 In respect of utilization of funds and pending compliances u/s 205Aof the Companies Act 1956

v. Note No.11 (b) regarding Non Accounting of Deferred Tax Assets.

vi. Note No.13 regarding accounts of the Company prepared On going concern basis.

vli. Note No.15 regarding remuneration to directors, subject to approval of Central Govt.

We further report that, without considering items mentioned at (i),(iv), [v) (vi) & (vii) above the effect of which is not there, had the observations made by us in [ii) & (iii] above paragraphs been considered the Loss for the year would have been Rs.125.79 Lacs as against the reported Profit of Rs.87.14 Lacs. The debit balance u. Hrofit and Loss Account would have been Rs.4679 Lacs as against reported figure of Rs.4466 Lacs and the said accounts together with notes thereon and statement on Significant Accounting Policies give in the prescribed manner the information required by the Companies Act, 1956 and also give respectively true and fair view in conformity with the Accounting Principles generally accepted in India:

(i) In the case of Balance Sheet, of the state of affairs of the Company as at 31 st March, 2010

(ii) In the case of Profit & Loss Account of the Profit for the year ended on that date; and

(iii) In the case of Cash Flow Statement of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT [Referred to in paragraph (3) thereof]

1.a)The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c) In our opinion, the company has not sold/ disposed off any significant portion of fixed assets during the year.

2. a) As explained to us, inventories have been physically verified by the management at regular intervals during the year. The management has confirmed the stocks lying at ports.

b)ln our opinion and according to the information and explanations Given to us, the procedures of physical verification of Inventories followed by the management are reasonable and adequate in relation to size of the Company and nature of its business.

c)The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventory as compared to the book records, and they have been properly dealt with, in the books of account.

3. a) The Company has not granted any loans/advances to Companies, Firms Or other parties listed in the register, maintained u/s 301 of the Companies Act 1956, except loans/advances of

Rs.18.15 Lacs (Previous year Rs.18.12 Lacs) given to three companies/firms in which some of the members are interested. Interests on such loans and advances calculated at Rs.1.82 Lacs (Previous year Rs.1.81 lacs) have not been provided during the year. In respect of loans & advances of Rs.NIL (Previous year Rs.40.46 Lacs) in the nature of loans given by the company in earlier year, interest thereon Rs.NIL Lacs (Previous year Rs.4.05 Lacs) have not been provided during the year (Refer Note No.8) However, these loans are considered good but the Schedule of repayment is not fixed.

b)The Company has taken loans of Rs.367.51 Lacs (Previous year Rs.367.51 Lacs) from two companies (including subsidiary)/ firms in which some of the Directors are interested at free of interest and prima facie not prejudicial to the interest of the Company including Companies or firms or other parties listed in the Register maintained U/s.301 of the Companies Act, 1956.

c) In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the company.

d) In respect of loans & advances granted by the company to others, loans & advances are interest free and repayable on demand. In respect of loans taken by the Company, the interest payments and the principal amount is payable on demand.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

5. a) According to the information and explanations given to us, we are of the opinion that the particulars of the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b)ln our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market price at relevant time.

6. The Company has not accepted any deposits from the public during the year within the meaning of section 58-Aof the Companies Act, 1956 and rules framed there under, except inter-corporate deposits from members, promoters & subsidiary company and other trade deposits, which are exempt deposits. No order by the Company Law Board »or National Company Law Tribunal or Reserve Bank of India or any other court oranyotherTribunal has been passed.

7. The Company has its internal control system. In our opinion, its internal control system involves reasonable internal checking of financial and other records, which is considered adequate in the circumstances. However, internal audit functions needs to be strengthened.

8. We have broadly reviewed the Books of

Account maintained by the Company, pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the said records, with a view to determine their accuracy or completeness.

9. a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, undisputed statutory dues including Provident fund, investor education and protection fund, Employees State Insurance, Income-Tax, Sales-tax, wealth tax, custom duty, Excise duty, service tax, cess and other material statutory dues as may be applicable to it have been generally regularly deposited with a slight delay in a few cases to the appropriate authorities.

b) According to the information and explanations given to us, undisputed amounts of following statutory dues were in arrears as at 31 st March, 2010 for a period of more than six months from the date it became payable.

Sr.No Amount in Lacs

1. EmployeesProvident fund (ContractorsContribution) 0.10

2. Entry Tax 104.49

3. Commercial Tax /Value Added Tax 205.54

4. Central Sales Tax 42.88

5. Investor education and protection fund (Unclaimed Dividend & Unclaimed Interest on Debenture) (Net) 6.96

c) According to the information and explanations given to us, and the records of the Company examined by us, the particulars of Commercial Tax & Excise duty dues as at 31st March, 2010 which have not been deposited on account of disputes pending, are as under: -

Name of Nature of disputed dues Amount In Lacs the Statute pending

Commercial Due to non-submission 64.37 Tax & Central of forms, Sales Tax, classification dispute Entry Tax etc. of Unit No. I

The Central Excise Duty leviable 18.90 Excise Act, on process of 1994 fabrication And assembling of certain Items

Employees Delay in Payment of 03.01 Provident Penalty Damages Fund& & Interest under Miscellaneous Provident fund Provision Act, 1952

Name of the Statue pending Period to Forum where Which the dispute is amount relates

Commercial Tax & Central Sales Tax, EntryTax 2003-04 to Deputy 2004-05 Commissioner Appeal/Revision

The Central Excise Act, 1994 1994-95 Commissioner of Central Excise & Custom Appeal

Employees Provident Fund& Miscellaneous Provision Act, 1952 1991 to Central Board of 2002 Trustee New Delhi

10. (a) In our opinion the accumulated losses of the company are more than fifty percent of its net worth. The Company has earned cash profit during the financial year covered by our audit and the cash profit in the immediately preceding financial year.

(b) According to the information provided by the Company, the Company is a Sick Industrial company within the meaning of section 3(1 )(o)of the Sick Industrial Companies Special Provisions Act 1985 and is duly registered with BIFR.

11. based on our Audit procedures and according to the information and explanation given to us, we are of the opinion that the Company has not defaulted in the repayment of the dues to financial institutions and banks.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/ society. Therefore, clause 4(xiii) of the Companies (Auditors Report) order 2003 is not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, company has not given any guarantee for loans taken by others from the banks or financial institutions

16. In our opinion and according to the information & explanations given to us the Company has not taken any term loan during they6ar.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have been used for long-term investment to the extent of Rs.0.16 Lacs (previous year 5.83 Lacs) for addition made to fix Assets.

18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. In our opinion and according to the information and explanation given to us the company has not issued any debentures during the year.

20. The Company has not raised any money by Public Issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the yearthat causes the financial statements to be materially misstated.

For M/s. M. Mehta & Co. For M/s. S.M. Jain & Co.

Chartered Accountants Chartered Accountants

CA. P.R. Bandi CA. S.M. Jain

Partner Partner

M.No.F: 016402 M.No. F: 007236

FRN:000957C FRN - 004252C

Indore July 30,2010