COMPANY SECRETARY Shri Anup Gupta. Sr. MANAGER-FINANCE Shri P. N. Verma

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2 BOARD OF DIRECTORS Shri Lal Chand Choudhary - Chairman & Director Shri Anil Kumar - Director Shri Bhagwan Sahay - Director Shri Prahlad - Director Shri Baldev Ram Berwal - Director Shri Inder Singh Bhati - Director Shri Sukhpal Jat - Director Smt. Manju Jakhar - Director Smt. Kaushalya Kumari - Director Dr. Nagraj V. Belavadi - Expert Director Shri Soumen Biswas - Expert Director Shri Ajit Singh Parmar - Expert Director Shri Anil Kumar Mathur - Director & Chief Executive COMPANY SECRETARY Shri Anup Gupta Sr. MANAGER-FINANCE Shri P. N. Verma STATUTORY AUDITOR M/s S.B. Billimoria & Co., Chartered Accountants, Gurgaon, Haryana BANKERS State Bank of Bikaner & Jaipur State Bank of India Bank of Baroda HDFC Bank REGISTERED OFFICE Paayas Milk Producer Company Limited D-232, 233, 4th Floor, Atlantis Tower, Vaishali Nagar Jaipur (Rajasthan)

3 CONTENTS S.N. Particulars Page No. 1. Notice of Annual General Meeting...2 Enclosures : (A) Minutes of Last Annual General Meeting...4 (B) Budget Directors' Report Independent Auditors' Report Annexure to Independent Auditors' Report Annual Accounts: (A) Balance Sheet as on 31 st March, (B) Profit & Loss A/c as on 31 st March, (C) Cash Flow Statement...20 (D) Notes forming part of the Financial Statements (Schedules from 3 to 26)...21 (E) Significant Accounting Policies Attendance Slip & Proxy Form...37

4 PAAYAS MILK PRODUCER COMPANY LIMITED Regd office : D , 4 th Floor, Atlantis Tower, Vaishali Nagar, Jaipur , Rajasthan NOTICE Notice is hereby given that the Second Annual General Meeting of the members of Paayas Milk Producer Company Limited will be held on Monday, 16 th September 2013 at Ravindra Manch, Ramniwas Bagh, Jaipur at 12 Noon to transact the following businesses: 1. To receive, consider and adopt the audited Balance Sheet as at 31 st March, 2013 and the Profit and Loss Account for the period ended on that date and the Directors' and Auditors' report thereon. 2. To consider and declare the limited return (dividend) on the share capital of the Company and in this regard to pass the following resolution. "Resolved that the limited return (dividend) on the share capital of the company at a rate of Rs per equity share out of the current profits of the period ended 31 st March, 2013, on 4,22,978 equity shares of Rs.100 each fully paid up absorbing Rs 17,32,021/- (inclusive of Rs. 2,51,598/- as Dividend Distribution Tax ) for the FY be and is hereby approved and confirmed, and that the same be paid to those equity shareholders, whose names appeared in the Register of Members as on 31 st March, 2013." 3. To consider and appoint a director in place of Shri Lal Chand Choudhary, who retires by rotation and being eligible, offers himself for re-appointment. 4. To consider and appoint a director in place of Shri Inder Singh Bhati, who retires by rotation and being eligible, offers himself for re-appointment. 5. To consider and appoint Smt. Manju Jakhar, who vacates office as additional director, being eligible, offers herself for appointment as Director. 6. To appoint Statutory Auditors, fix their remuneration and in this regard to pass the following resolution :- "RESOLVED that M/s S.B. Billimoria & Co., Chartered Accountants, Gurgaon, Haryana (Firm Registration No W), be and are hereby appointed as Statutory Auditors of the Company, to hold the office from conclusion of this Annual General Meeting untill the conclusion of the next Annual General Meeting at a remuneration of Rs.7.00 Lacs (Rs. Seven Lacs) plus applicable service tax and reimbursement of actual out of pocket expenses." 7. To consider and approve the Budget of the Company for the FY By order of the Board of Directors Place : Jaipur Date : 5 th August 2013 Sd/- Anup Gupta (Company Secretary) 2

5 NOTES: 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON SHOW OF HAND AND ON A POLL INSTEAD OF HIS/HER AND A PROXY NEED TO BE MEMBER OF THE COMPANY. THE INSTRUMENT APPOINTING PROXY IN ORDER TO BE EFFECTIVE SHOULD BE DULY COMPLETED, STAMPED AND SIGNED AND MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY ATLEAST 48 HOURS BEFORE THE SCHEDULED TIME OF THE MEETING. A BLANK PROXY FORM IS ANNEXED HERETO. 2. Members/Proxies are requested to bring attendance slips sent herewith duly filled in, for attending the meeting. 3. The following annexures are enclosed with this notice; (i) the names of candidates for election to the office of Director including a statement of qualifications in respect of each candidate. (ii) the Minutes of the previous Annual General Meeting held on (iii) Budget for Financial Year (iv) the audited Balance sheet as at 31 March, 2013 and Profit and Loss account for the period ended 31 March 2013 together with a report of the Board of Directors and Auditors Report thereon. 4. As per resolution passed by the Board of Director of the Company at its meeting held on 5 th August, 2013, every member of the company shall have single vote at the Second Annual General Meeting. 5. Members are requested to bring their copy of the Annual Report to the AGM as the same will not be distributed at the meeting. 6. Limited Return (Dividend) for the period ended on 31 st March 2013 will be paid to those Members, whose names appeared on the Register of Members as on Documents referred to in the accompanying notice are open for inspection at the Registered Office of the Company on all working days between A.M to 2.00 P.M. 8. The member requiring information on accounts or operation of the Company or indenting any query are requested to forward the same to the Company Secretary, at least 7 days prior to the date of meeting. STATEMENT OF QUALIFICATION IN RESPECT OF THE CANDIDATES TO BE ELECTED AS DIRECTOR UNDER SECTION 581ZA (4)(c ) OF THE COMPANIES ACT 1956 Item No. 3 to 5 i. Shri Lal Chand Choudhary is 12 th passed. He is engaged in Agriculture and Dairy Farming. ii. Shri Inder Singh Bhati is graduate in Arts. He is engaged in Agriculture and Dairy Farming. iii. Mrs. Manju Jakhar is graduate in Arts. She is engaged in Agriculture and Dairy Farming. Place: Jaipur Date : 5 th August 2013 By order of the Board of Directors Sd/- Anup Gupta Company Secretary Registered Office: Paayas Milk Producer Company Limited D , 4 th Floor, Atlantis Tower,Vaishali Nagar, Jaipur , Rajasthan 3

6 MINUTES OF THE 1 st ANNUAL GENERAL MEETING OF PAAYAS MILK PRODUCER COMPANY LIMITED AT RAVINDRA MUNCH, RAMNIWAS MARG, JAIPUR ON MONDAY, 13 th AUGUST, 2012 AT NOON Present : 1. Shri Lal Chand Choudhary Chairman & Shareholder 2. Shri Anil Kumar Director & Shareholder 3. Shri Bhagwan Sahay Director & Shareholder 4. Shri Prahlad Director & Shareholder 5. Mr. Baldev Ram Berwal Director & Shareholder 6. Shri Mukesh Sharma Director & Shareholder 7. Shri Anil Kumar Mathur Director & Chief Executive 8. Shri Anup Gupta Company Secretary 194 shareholders were present in person & 1247 shareholders were present through proxies. A. Shri Lal Chand Choudhary took the Chair B. Shri Anup Gupta, Company Secretary declared the quorum present in terms of article 11.6 of Articles of Association of the Company. The Register of Proxies, Members Register and the Register of Directors shareholding were available and open for inspection. The meeting was then called to order. C. The Chairman welcomed the Members and Directors to the 1 st Annual General meeting of the Company. D. With the unanimous consent of the members present, the Notice convening the 1 st Annual General Meeting having already been circulated to the members was taken as read. E. Thereafter, the Chairman in his speech briefed the meeting about the membership enrolment drive and the activities to be carried out by the Company. Thereafter, on the advice of the Chairman, Mr Anil Kumar Mathur, Director and Chief Executive of the Company, took up the items of Agenda of the meeting: Ordinary Business: 1. To consider and adopt Memorandum and Articles of Association the Company. 1.1 Members deliberated on the Memorandum of Association & Articles of Association of the Company. 1.2 Thereafter, Shri Rameshver Yadav proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 1/ RESOLVED that Memorandum of Association and Articles of Association of the Company, as registered with the Registrar of Companies, Rajasthan, and laid before the meeting, be and is hereby adopted. Shri Sitaram Yadav seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 2. To consider and appoint a director in place of Shri Lal Chand Choudhary, who vacates the office, being eligible, offer him-self for re-appointment. 2.1 Shri Mahavir Mehla proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 2/ RESOLVED that Shri Lal Chand Choudhary, First Director of the Company, who vacates the office at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company. 4

7 Shri Pokher Mal Jat seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 3. To consider and appoint a director in place of Shri Anil Kumar, who vacates the office, being eligible, offer him-self for re-appointment. 3.1 Shri Rameshwer Sharma proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 3/ RESOLVED that Shri Anil Kumar, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Smt. Prem Lata seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 4. To consider and appoint a director in place of Shri Bhagwan Sahay, who vacates the office, being eligible, offer him-self for re-appointment. 4.1 Shri Dudaram proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 4/ RESOLVED that Shri Bhagwan Sahay, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Shri Jata Shanker Yadav seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 5. To consider and appoint a director in place of Shri Prahlad, who vacates the office, being eligible, offer him-self for re-appointment. 5.1 Smt. Parvati proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 5/ RESOLVED that Shri Prahlad, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Smt. Manju Jakhar seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 6. To consider and appoint a director in place of Shri Baldev Ram Berwal, who vacates the office, being eligible, offer him-self for re-appointment. 6.1 Shri Kanahiya Lal proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 6/ RESOLVED that Shri Baldev Ram Berwal, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Shri Chiranji Lal Sharma seconded the resolution. 5

8 The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 7. To consider and appoint a director in place of Shri Mukesh Sharma, who vacates the office, being eligible, offer him-self for re-appointment. 7.1 Shri Shanker Lal proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 7/ RESOLVED that Shri Mukesh Sharma, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Shri Suresh Yadav seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 8. To consider and appoint a director in place of Smt. Kaushalya Kumari, who vacates the office, being eligible, offer her-self for re-appointment. 8.1 Smt. Santosh Yadav proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 8/ RESOLVED that Smt. Kaushalya Kumari, First Director of the Company, who vacates the offices at First Annual General Meeting of the Company and being eligible offers herself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation. Shri Nathu Ram Yadav seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 9. To consider and appoint Shri Inder Singh Bhati, as Director of the Company, liable to retire by rotation. 9.1 Shri Sadhu Ram proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 9/ RESOLVED that Shri Inder Singh Bhati be and is hereby appointed as a Director of the Company, liable to retire by rotation. Shri Kalu Ram seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 10. To consider and appoint Shri Sukhpal Jat, as Director of the Company, liable to retire by rotation Shri Santosh Yadav proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 10/ RESOLVED that Shri Sukhpal Jat be and is hereby appointed as a Director of the Company, liable to retire by rotation, with effect from date when he is allotted Director Identification number under the provisions of the Companies Act, Smt. Shanti Devi seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 11. To consider and appoint Smt. Kamala Devi, as Director of the Company, liable to retire by rotation Shri Durgesh Kumar proposed the following resolution as an Ordinary Resolution: 6

9 RESOLUTION NO. 1 st AGM: : 11/ RESOLVED that Smt. Kamala Devi be and is hereby appointed as a Director of the Company, liable to retire by rotation, with effect from date when she is allotted Director Identification number under the provisions of the Companies Act, Smt Anju Kumavat seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 12. To consider & approve the Budget estimates of the Company for the financial year Shri Ratan Lal proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 ST AGM: : 12/ RESOLVED that the Budget Estimates of the company for the financial year as laid before the annual general meeting be and are hereby approved. Shri Tara Chand seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 13. To consider & approve criteria for categorizing the members into different classes based on patronage Shri Badri Jat proposed the following resolution as an Ordinary Resolution: RESOLUTION NO. 1 ST AGM: : 13/ RESOLVED that in terms of article 9.4( i ) of the Articles of Association of the Company, the criteria for categorizing members into different classes based on the members participation in business (i.e., patronage) are as set out herein below: S. No Parameter Class A Class B Class - C* 1 No. of days of milk supplied >=270 days >=270 days >=200 days to the Company during previous financial year 2 Annual Milk Quantity >=6000 >=2000 to >=500 supplied to the Company (in litres) <6000 during previous financial year 3 Minimum number of 60 shares 20 shares 5 shares MPC shares subscribed (amount (Rs 6000/-) (Rs 2000/) (Rs 500/) of share capital contributed) 4 Milk quantity supplied during Flush to Lean Flush to Flush to Flush months namely November lean ratio lean ratio lean ratio to February to that of the shall not shall not shall not milk quantity supplied during Lean exceed 3.0 exceed 3.0 exceed 3.0 months namely April to July during previous financial year 7

10 *Note Those members who have poured milk quantity more than 2000 liters but with a supply days ranging from 200 to 269 days shall be categorised as Class C members. For the purpose of patronage calculation, the following shall be considered: i. Members who have been admitted during the previous financial year and have not yet completed 365 days of their membership but have subscribed the minimum required share capital for the class chosen by them shall be considered to belong to that class. ii. iii. Any member who will not meet the criteria under Class A or Class B may slide to a lower Class i.e. class B or Class C based on the criteria which they fulfill. Those members who are not fulfilling the required criteria to retain at least Class C will be issued notice for cancellation of membership as per the provisions of Article 4.3 read with Article 8 of the Articles of Association of the Company. be and are hereby approved and adopted. Shri Ram Karan seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 14. To consider the appointment of M/s S.B. Billimoria & Co, Chartered Accountants, as First Auditors of the company Shri Ram Raj proposed the following resolution as a Ordinary Resolution: RESOLUTION NO. 1 st AGM: : 14/ RESOLVED that M/s S.B. Billimoria & Co., Chartered Accountants, Gurgaon, Haryana (Firm Registration No W), be and are hereby appointed as First Auditors of the company, to hold the office till the conclusion of the next annual general meeting at a remuneration of Rs.5 Lacs (Five Lacs) plus applicable service tax and reimbursement of out of pocket expenses. Shri Balu Ram seconded the resolution. The Chairman put the motion to vote and on a show of hands declared the same as carried unanimously. 15. There being no other business, the meeting concluded with a vote of thanks to the Chair. Date : Chairman 8

11 Budget for the Financial Year A. Revenue Budget Particulars Revenue Turnover (i) Rs in Lacs 49,168 Expenses Material Cost 41,412 Fixed & Other Variable Cost 7,589 Total Expenses (ii) Rs in Lacs 49,001 Profit Before Tax (i - ii) Rs in Lacs 167 % to Sales 0.3% B. Capital Budget Particulars Computer & Printer Rs. In Lacs 440 Furniture & Fixture Rs. In Lacs 11 Office Equipment Rs. In Lacs 45 Plant & Machinery Rs. In Lacs 1,488 Total Rs. In Lacs 1,984 9

12 To the Shareholders, PAAYAS MILK PRODUCER COMPANY LIMITED DIRECTORS' REPORT The Directors are pleased to present before you their First Annual Report on the operations of the Company along with the Audited Accounts for the period from 19 th May, 2012 to 31 st March, The Company was incorporated on 19 th May, 2012 as a Producer Company under the provisions of Part IXA of the Companies Act, 1956 in the State of Rajasthan to undertake the business of pooling, purchasing, processing of milk and milk products primarily of the Members and also of others, marketing of the same and to deal in activities that are part of or incidental to any activity related thereto. 1. Financial Results During the period under review, the Company generated total revenue of Rs lakhs, mainly from the sale of milk and milk products. The total expenditure incurred including material cost was lakhs. This resulted in profit of Rs Lakhs. After making the provision for tax amounting to Rs lakhs, net profit after tax amounts to Rs lakhs. The summarized Financial Results are as under : Particulars 10 Period from 19 th May 2012 to 31 st March, 2013* (Rs in Lacs) Revenue from Operations Expenditure including material cost Profit/(Loss) for the period before tax Provision for Taxation Profit/(Loss) for the period after tax *The Company has started its business operation with effect from 1 st December, Operations The Company has setup 1,411 village level Milk Pooling Points in operational area of 8 Districts of Rajasthan. Your Company has allotted membership to 40,542 milk producers out of which 11,455 are female members. During the period under review, the Company has procured Lacs litres of raw milk. 3. Limited Return (Dividend) During the limited period of four months of its operation ending on 31 st March, 2013, The Board of Directors are pleased to recommend limited return (dividend) at the rate of Rs.3.50 per equity share absorbing Rs.17,32,021/- (including Dividend Distribution Tax). The limited return (dividend) will be paid to those members, whose names appeared in the Register of Members as on 31 st March, Transfer to Reserve Pursuant to provisions of article no of the Articles of Association of the Company read with

13 section 581 ZI of the Companies Act 1956, the Board proposes to transfer Rs 9,91,424/- to the credit of General Reserve in the Balance Sheet. 5. Way forward During the current year in the month of April, 2013, the Company launched Ghee under the 'Paayas' brand. The Company is also expected to launch Poly Pack Milk in next couple of months. The other various fermented milk products like Dahi, Chhach, and Lassi are also expected to be launched in current year. Your Company always focus to procure clean, hygienic and good quality of raw milk. To ensure the same, continuous efforts are being made by conducting various awareness/ training programmes relating to quality of milk and milk handling as per Standard Operating Procedures. The Company has started its pilot programmes on Ration Balancing under animal nutrition and several demonstrations have been given on silage making and introduction of new fodder variety. The Company has also started cattle feed supply under its brand name of 'Mudrika' and 'Mudrika Gold'. To enhance the productivity and to improve the genetic potential of cows and buffaloes, Artificial Insemination (AI) Programme has been taken up by use of semen of proven bulls of different breed i.e. indigenous, exotic and cross-breed bulls maintained at Sabarmati Ashram Gaushala (SAG), Ahmedabad. 6. Changes in Capital Structure During the current FY , the Company has till this date allotted fully paid equity shares of Rs.100/- each to its Producer Members. Accordingly, the issued and paid-up share capital of the Company has increased to Rs.4,33,23,900/- divided into 4,33,239 equity shares of Rs.100/- each. 7. Directors The subscribers, who have signed the Memorandum and the Articles of Association of the Company have designated the following seven Directors as First Directors of the Company: 1. Shri Lal Chand Choudhary 2. Shri Anil Kumar 3. Shri Bagwan Sahay 4. Shri Prahlad 5. Shri Mukesh Sharma 6. Shri Baldev Ram Berwal 7. Smt. Kaushalya Kumari These Seven Directors have been elected by shareholders as Directors at the First Annual General Meeting of the Company held on 13 th August 2012 along with following three other Directors: 1. Shri Sukhpal Jat 2. Shri Inder Singh Bhati 3. Smt. Kamala Devi. Smt. Kamala Devi, Director has resigned from the position of Director of the Company and her resignation was accepted by the Board at its 6 th meeting held on 22 nd March Your Board wishes to place on record its appreciation of services rendered by Smt. Kamala Devi during her tenure. 11

14 In terms of article 9.6 of the Articles of Association of the Company and relevant provisions under Companies Act, 1956 Shri Lal Chand Choudhary and Shri Inder Singh Bhati, Directors of the Company are liable to retire by rotation at the Second Annual General Meeting and being eligible, offer themselves for re-appointment. In terms of article 9.7(i) of the Articles of Association of the Company and relevant provisions under Companies Act 1956, the Board at its meeting held on , had appointed Smt. Manju Jakhar as Additional Director of the Company. Smt. Manju Jakhar vacates office at the Second Annual General Meeting and being eligible, offers herself for appointment as Director. The statement of qualification of the Directors seeking appointment as Directors is annexed to the Notice convening Second Annual General Meeting of the Company. The Board recommends their re-appointment at the Second Annual General Meeting of the Company. 8. Directors Responsibility Statement In accordance with section 217 (2AA) of the Companies Act, 1956, the Board of Directors of the Company informs the members that: a) in the preparation of annual accounts, the applicable accounting standards have been followed; b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year and the profit for that period; c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the directors have prepared the annual accounts on a going concern basis. 9. Internal Control System The Company has well placed, proper and adequate internal control system, which ensures that all assets are safeguarded and protected and the transactions are authorized, recorded and reported correctly. The Companies internal control system comprises audit and compliance by audit division from the Internal Auditors. The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions. Independence of the audit and compliance is ensured by the direct reporting of Internal Auditors to the Board. 10. Auditors M/s S.B. Billimoria & Co., Chartered Accountants, Statutory Auditors retire at the Second Annual General Meeting and being eligible offers themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their reappointment, if made, would be in accordance with the provisions of section 224(1B) of the Companies Act Your Directors recommend the re-appointment of M/s S.B. Billimoria & Co. as Statutory Auditors of the Company at the Second Annual General Meeting. 12

15 11. Particulars of Employees Pursuant to Sections 217(2A) of the Companies Act,1956 read with the Companies (Particulars of Employees) Rules, 1975, none of the employees were in receipt of remuneration which in the aggregate exceeds Rupees Sixty Lacs per annum or Rupees Five Lacs per month, as the case may be, during the period under review. 12. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earning and out go. Particulars required to be furnished pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988: (i) (ii) 13. Acknowledgement Part A and B of the Rules pertaining to Conservation of energy and Technology absorption are presently not applicable to the Company. Foreign Exchange earnings and outgo: Earnings - Nil; Outgo - Nil. The Directors wish to convey their appreciation to members, business associates for their support and contribution during the period under review. The Directors would also like to give thanks to Bankers, Employees, both Internal and Statutory Auditors for their continued support to the Company. The Directors acknowledge with gratitude the encouragement and support extended NDDB, NDDB Dairy Services and Mother Dairy Fruit & Vegetable (P) Ltd. Place : Jaipur Date : 5 th of August 2013 For and On Behalf of the Board of Directors Sd/- Lal Chand Choudhary Chairman & Director 13

16 To the Members, Report on the Financial Statements PAAYAS MILK PRODUCER COMPANY LIMITED INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of PAAYAS MILK PRODUCER COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at 31 st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the period 19 th May, 2012 (date of incorporation of the Company) to 31 st March, 2013, and a summary of the significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements The Company's Management is responsible for the preparation of these 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 Standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. 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. In making those risk assessments, the auditor considers the internal controls relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2013; 14

17 (b) (c) in the case of the Statement of Profit and Loss, of the profit of the Company for the period ended on that date; and in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by Section 227(3) of the Act, we report that: (a) (b) (c) (d) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. 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. 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. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act. (e) On the basis of the written representations received from the directors as on 31 st March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31 st March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act. For S. B. BILLIMORIA & CO. Chartered Accountants (Registration No W) Sd/- Jitendra Agarwal Partner Jaipur, 5 th August, 2013 (Membership No ) 15

18 ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph 1 under 'Reports on Other Legal and Regulatory Requirements' section of our report of even date) (i) Having regard to the nature of the Company's business/activities/result during the period, clauses (viii), (x), (xiii), (xiv) and (xix) of paragraph 4 of the Order is not applicable to the Company. (ii) In respect of its fixed assets : (iii) (iv) (v) (vi) (vii) (viii) a. The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. b. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. c. The Company has not disposed off any fixed assets during the period. Therefore, the provisions of clause 4(i) (c) of the Order are not applicable to the Company. In respect of its inventory: a. As explained to us, the inventories were physically verified during the period by the management at reasonable intervals. b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. c. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. According to the information and explanations given to us, there are no contracts or arrangements which need to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause 4(vi) of the Order are not applicable to the Company. In our opinion, the company has an adequate internal audit system commensurate with the size of the Company and the nature of its business. 16

19 (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) According to the information and explanations given to us, in respect of statutory dues: a. The Company has generally been regular in depositing undisputed statutory dues including Provident Fund, Income Tax, Service Tax and other material statutory dues applicable to it with the appropriate authorities. We are informed that the Employees State Insurance Act is not applicable to the Company and that the operations of the Company during the period did not give rise to any liability for Investor Education and Protection Fund, Sales Tax, Customs Duty, Excise Duty and Wealth Tax. b. There are no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March, 2013 for a period of more than six months from the date they became payable. c. There are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on 31 March, 2013 on account of any dispute. According to the information and explanations given to us, the Company has not taken any loan from banks or financial institutions and has not issued any debentures. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. According to the information and explanations given to us, the Company has not obtained any term loan. In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that the company has purchased fixed assets during the period against which current liabilities are outstanding at period-end which has resulted in use of short-term funds to the extent of Rs. 67,352,891/- for long term investment as at 31 st March, According to the information and explanations given to us, 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, According to the information and explanations given to us, the Company has not raised any money by public issues. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the period. 17 For S. B. BILLIMORIA & CO. Chartered Accountants (Firm Registration No W) Sd/- (Jitendra Agarwal) Partner Jaipur, 5 th August, 2013 (Membership No )

20 PAAYAS MILK PRODUCER COMPANY LIMITED Balance Sheet as at March 31, (Amount in ` ) S. Particulars Note No. As at No. March 31, 2013 A. EQUITY AND LIABILITIES 1. Shareholders funds (a) Share capital 3 42,297,800 (b) Reserves and surplus 4 991,424 43,289, Non - current liabilities (a) Long - term provisions 5 155,953 (b) Deferred tax liabilities (net) 6 714, , Current liabilities (a) Trade payables 7 23,889,929 (b) Other current liabilities 8 141,612,369 (c) Short - term provisions 9 1,732, ,235,133 Total 211,394,477 B. ASSETS 1. Non - current assets (a) Fixed assets (i) Tangible assets 10a 112,007,987 (ii) Intangible assets 10b 86, ,094,288 (b) Long - term loans and advances 11 1,149, ,244, Current assets (a) Inventories 12 22,413,504 (b) Trade receivables 13 3,537,298 (c) Cash and cash equivalents 14 57,743,600 (d) Short - term loans and advances 15 13,362,565 (e) Other current assets 16 1,093,254 98,150,221 Total 211,394,477 See accompanying notes forming part of the financial statements In terms of our report attached For S.B. BILLIMORIA & CO. Chartered Accountants For and On behalf of the Board of Directors Sd/- Sd/- Sd/- Sd/- JITENDRA AGARWAL L.C.Choudhary Anil Kumar Anil Kumar Mathur Partner Director Director Director & Chief Executive Place:Jaipur Place: Jaipur Date: 5 th August, 2013 Date: 5 th August 2013 Sd/- Sd/- Anup Gupta P.N. Verma Company Secretary Sr.Manager (Finance)

21 PAAYAS MILK PRODUCER COMPANY LIMITED Statement of Profit and Loss for the period May 19, 2012 to March 31, 2013 (Amount in ` ) S. Particulars Note No. Period ended No. March 31, Revenue from operations 17 1,610,916, Other income 18 4,897, Total revenue (1+2) 1,615,813, EXPENSES (a) Purchases of traded goods 19 1,480,340,696 (b) Changes in inventories of stock-in-trade 20 (22,165,182) (c) Employee benefits expense 21 17,118,729 (d) Depreciation and amortization expense 10 3,753,891 (e) Operating, administrative and ,824,089 other expenses Total expenses 1,611,872, Profit before tax 3,941, Tax expenses: (a) Current tax 751,017 (b) Minimum alternate tax (MAT) credit (247,320) (c) Deferred tax 714,167 Net tax expense 1,217, Profit after tax (5-6) 2,723, Earnings per equity share : 26 (Nominal value Rs. 100 per share) (a) Basic 6.44 (b) Diluted 6.44 See accompanying notes forming part of the financial statements In terms of our report attached For S.B. BILLIMORIA & CO. Chartered Accountants For and On behalf of the Board of Directors Sd/- Sd/- Sd/- Sd/- JITENDRA AGARWAL L.C.Choudhary Anil Kumar Anil Kumar Mathur Partner Director Director Director & Chief Executive Place:Jaipur Place: Jaipur Date: 5 th August, 2013 Date: 5 th August 2013 Sd/- Sd/- Anup Gupta P.N. Verma Company Secretary Sr.Manager (Finance) 19

22 PAAYAS MILK PRODUCER COMPANY LIMITED Cash Flow Statement for Period May 19, 2012 to March 31, (Amount in ` ) S. Particulars Year Ended No. March 31, 2013 A. CASH FLOW FROM OPERATING ACTIVITIES: Profit before tax 3,941,309 Adjustments For : Interest income (1,235,520) provision for employee benefits 156,767 Depreciation and amortization expense 3,753,891 Operating Profit/(loss) before working capital changes 6,616,447 Adjustments for movement in working capital: Decrease/(Increase) in inventories (22,413,504) Decrease/(Increase) in receivables (3,537,298) Decrease/(Increase) in long term loans and advances (30,000) Decrease/(Increase) in short term loans and advances (13,362,565) (Decrease)/Increase in trade payables 23,889,929 (Decrease)/Increase in other current liabilities 25,865,745 Cash flow from/(used in) operating activities 17,028,754 Taxes paid (1,623,665) Net cash from/ (used in) operating activities 15,405,089 B. CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditure on fixed assets (101,555) Interest income 142,266 Cash flow from/(used in) investing activities 40,711 C. CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issue of equity shares 42,297,800 Cash flow from/(used in) financing activities 42,297,800 Net increase/(decrease) in Cash and cash equivalents 57,743,600 Cash and cash equivalents at beginning of the period Cash and cash equivalents at the end of the period 57,743,600 Components of Cash and cash equivalents as at: Balances with the scheduled banks: in current accounts 2,743,600 in deposit accounts 55,000,000 Cash and cash equivalents as per Balance Sheet 57,743,600 See accompanying notes forming part of the financial statements In terms of our report attached For S.B. BILLIMORIA & CO. For and On behalf of the Board of Directors Chartered Accountants Sd/- Sd/- Sd/- Sd/- JITENDRA AGARWAL L.C.Choudhary Anil Kumar Anil Kumar Mathur Partner Director Director Director & Chief Executive Sd/- Sd/- Anup Gupta P.N. Verma Company Secretary Sr.Manager (Finance) Place:Jaipur Place: Jaipur Date: 5 th August, 2013 Date: 5 th August 2013

23 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement S. Particulars As at March 31, 2013 No. Number of shares Amount (`) 3. Share Capital (a) Authorised share capital 2,000, ,000,000 Equity Shares of Rs. 100/- each (Amount in ` ) (b) Issued, subscribed and fully Paid up share capital 422,978 42,297,800 Equity share of Rs. 100/- each See notes (i) to (iii) below Notes: (i) Rights, preferences and restrictions attached to shares The Company has issued one class of equity shares having face value of Rs. 100 each. Each member is entitled to one vote. Members are entitled to limited return (Dividend) and bonus in accordance with Article of Association of the Company. (ii) Reconciliation of equity shares and amount outstanding at the beginning and at the end of the period : S. Particulars As at and for the period ended No. March 31, 2013 Number of shares Amount (`) Shares issued during the period 422,978 42,297,800 Shares outstanding at the end 422,978 42,297,800 of the period (iii) The Company is registered under Part IXA of the Companies Act, 1956 as 'Producer Company' and none of the member holds 5% or more of the share capital of the Company. 21

24 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement (Amount in ` ) S. Particulars As at No. March 31, Reserves and surplus Surplus in Statement of Profit and Loss Profit for the period 2,723,445 Less: Proposed limited return (Dividend) 1,480,423 to members (Rs.3.50 per share) Tax on Limited Return (Dividend) 251,598 Closing Balance 991, Long term provisions (a) Provision for employee benefits: (i) For compensated absences 124,388 (ii) For gratuity 31, Deferred tax liabilities (net) (i) (ii) Tax effect of items constituting deferred tax liabilities: 155,953 a. On difference between book balance and tax balance 1,602,464 of fixed assets Tax effect of items constituting deferred tax assets: a. Provision for compensated absences and gratuity 48,431 b. Disallowances under section 43B of the Income Tax Act 302,730 c. Disallowances under section 35D of the Income Tax Act 537, ,297 Net deferred tax liability/(asset) 714,167 22

25 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement (Amount in ` ) S. Particulars As at No. March 31, Trade payables (a) Trade Payables (other than acceptances) 23,889,929 (see note 27) 23,889, Other current liabilities (a) Application money received for allotment of securities 1,197,775 and due for refund (b) Other payables (i) Statutory dues 891,857 (ii) Payable for purchase of fixed assets 115,746,624 (iii) Trade / security deposits received 22,194,499 (iv) Advances from customers 1,581, ,612, Short term provisions (a) (b) Provision for employee benefits (i) For gratuity 814 Provision - others (i) Provision for proposed limited return (Dividend) 1,480,423 (ii) Provision for tax on proposed limited return 251,598 1,732,835 23

26 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement 10. Fixed Assets (Owned) (Amount in `) Particulars Gross Block Accumulated Depreciation Net Block (a) Tangible Assets Additions As at Depreciation` As at As at March 31, 2013 Charges for the March 31, 2013 March 31, 2103 Period Plant and equipment 112,991, ,991,716 3,578,071 3,578, ,413,645 Furniture and fixtures 936, ,772 19,766 19, ,006 Office equipment 628, ,960 19,917 19, ,043 Others : Computers 1,200,731 1,200, , ,438 1,068,293 TOTAL (A) 115,758, ,758,179 3,750,192 3,750, ,007,987 (b) Intangible Assets Trade Mark 90,000 90,000 3,699 3,699 86,301 TOTAL (B) 90,000 90,000 3,699 3,699 86,301 Period ended 31 March, 2013 (c) Depreciation and amortisation expense (Amount in `) On tangible assets 3,750,192 On Intangible assets 3,699 3,753,891 24

27 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement (Amount in ` ) S. Particulars As at No. March 31, Long - term loans and advances (Unsecured, considered good) (a) Security deposits 30,000 (b) Minimum alternate tax (MAT) credit entitlement 247,320 (c) Advance tax (including tax deducted at source) 872,648 (net of provision for tax Rs. 751,017) 12. Inventories (At lower of cost and net realisable value) 1,149,968 (a) Goods-in-transit 12,705,987 (b) Stock-in-trade 9,459,195 (c) Stores and spares 248, Trade receivables (Unsecured, considered good) 22,413,504 (a) Outstanding for period less than six 3,537,298 months from due date 14. Cash and bank balances (a) Note: Cash and cash equivalents (i) Balance with banks: 3,537,298 a) In current accounts 2,743,600 b) In deposit accounts 55,000,000 57,743,600 (i) Balances with banks include deposits amounting to Rs.1,60,00,000/- which have maturity of more than 12 months from the date of Balance Sheet. 25

28 PAAYAS MILK PRODUCER COMPANY LIMITED Notes forming part of the Financial Statement (Amount in ` ) S. Particulars As at No. March 31, Short - term loans and advances (Unsecured, considered good) (a) Loans and advances to employees 6,997 (b) Advances to vendors 13,140,332 (c) Prepaid expenses 215, Other Current Assets (Unsecured, considered good) 13,362,565 (a) Interest accrued but not due on bank deposits 1,093, Revenue from operations 1,093,254 (a) Sale of products (refer note (i) below) 1,610,916,419 Note: (i) 18. Other income (a) (b) Sale of products comprises: Traded goods 1,610,916,419 Raw Milk 1,595,685,079 Cattle Feed 15,231,340 Total 1,610,916,419 Interest income (i) On deposits with banks 1,235,520 Other non-operating income (i) Membership fee 3,661,593 4,897,113 26