We have audited the standalone financial statements of Parag
Milk Foods Limited (the 'Company’), which comprise the
Standalone Balance Sheet as at 31st 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 31st
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.
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Sr.
No.
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Key Audit Matters
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How our audit addressed the key audit matters
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1.
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Valuation of trade receivables (Refer Note 11 to the standalone financial statements)
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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.
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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:
Ý 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.
Ý 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:
Ý We have checked the ageing analysis, on a sample basis and subsequent
receipt of the trade receivables, to the source documents including
bank statements;
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Sr.
No.
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Key Audit Matters
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How our audit addressed the key audit matters
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Ý 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;
Ý We have verified open invoices duly accepted by customers in order to
ensure existence of trade receivables;
Ý 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
Ý 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.
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2.
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Revenue recognition (Refer Note 26 to the standalone financial statements)
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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.
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Our key audit procedures around revenue recognition included, but were not
limited to, the following:
Ý 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;
Ý 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;
Ý 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;
Ý 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;
Ý Performed analytical review procedures on revenue recognised during the
year to identify any unusual and/or material variances;
Ý Performed confirmation and alternative procedures on selected invoices
outstanding as at the year-end;
Ý 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;
Ý Tested a sample of manual journal entries posted to revenue ledgers to identify
any unusual items; and
Ý Evaluated the appropriateness and adequacy of disclosures in the Standalone
financial statements in respect of revenue recognition in accordance with the
applicable requirements.
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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:
Ý 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;
Ý 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;
Ý Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management;
Ý 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
Ý 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 31st March, 2025 taken on
record by the Board of Directors, none of the directors is
disqualified as on 31st 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, 2nd May 2025 UDIN: 25043385BMOOJH7464
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