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Auditor Report of Farmax India Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of FARMAX INDIA LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in 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 flow 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these 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 to be included in the audit report under the provisions of the Act and 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 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 internal financial control relevant to the Company's preparation of the 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 the 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 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 31st March, 2015, and 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 (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid 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 the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF FARMAX INDIA LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

(I) (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The assets have been physically verified by the management in accordance with the phased program of verification adopted by the Company, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no discrepancy between the book records and physical inventory was noticed on such verification.

(ii) (a) The inventory has been physically verified by the management at reasonable intervals during the year. Inventory lying with third parties and in-transit have been verified by the management with reference to the confirmations received from them and/or with reference to subsequent receipt of goods.

(b) In our opinion, the procedures for physical verification of inventory followed by the management are 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 is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and book records were not material in relation to the operations of the Company and have been properly dealt with in the books of account.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Consequently, paragraphs iii (a) and iii (b) of the said Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

(v) No deposits within the meaning of directives issued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevant provisions of the Act and rules framed thereunder have been accepted by the Company.

(vi) On the basis of the records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under subsection (1) of section 148 of the Act have been maintained by the Company. However, we are not required to and thus, have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

(vii) (a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues applicable with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2015 for a period of more than six months from the date they became payable except central sales tax of Rs. 19,65,912.

(b) According to the information and explanations given to us there are amounts payable in respect of income tax and excise duty which have not been deposited on account of disputes as detailed below:

Name of Nature Amount Period to which the The Statute of Dues Amount Relates

The Central Excise 37,39,962 2007-08, Excise Act Duty 2008-09 1944 and Penalty 2009-10 & 2011-12

The Income Income 1,74,89,574 2008-09, Tax Act, Tax 2009-10 & 1961 2010-11

AP VAT VAT 23,84,775 2007-08, Act, 2005 Audit 2008-09, Tax 2009-10

Name of Forum Where The Statute Pending

The Central Appellate Authority Excise Act - Commissioner 1944

The Income CIT/Tribunals - Tax Act, Appeals 1961

AP VAT Commercial Tax Act, 2005 Office, Hydemagai Circle

(viii) The company has accumulated losses of Rs.133,91,90,300 which have exceeded the net worth of the company by more than 50% during the current year. The company has earned cash profit of Rs.11,94,458 during the current year and incurred cash loss of Rs. 6,82,18,815 in the preceding year.

The Company has made an application in Form A (Annexure 1) on 01-08-2013for the registration as a sick unit under provision of Sick Industrial Companies (Special provisions) Act, 1985 as the net worth of the Company is completely eroded. The same has been registered in the Board as Case No. 91/2013 as per order dated 17-12-2013 of the Secretary, Board for Industrial and Financial Reconstruction. It is pending for determination of sickness.

(ix) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has defaulted in repayment of dues to the bank. We draw your attention to Note.5 & 7 of Notes to accounts.

(x) In our opinion and 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.

(xi) In our opinion and according to the information and explanations given to us, the term loans outstanding at the beginning of the year were applied, for the purpose for which they were obtained.

(xii) 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 instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.

For Vijay Sai Kumar & Associates Chartered Accountants Firm Registration No.: 004694S

Sd/- B. Vijay Sai Kumar Place : Hyderabad Proprietor Date : 28.05.2015 Membership No. : 027813


Mar 31, 2014

We have audited the accompanying financial statements of M/s Farmax India Limited, which comprise the Balance Sheet as at March 31,2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for Financial Statements:

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 sub-section (3C) of section 211 of the Companies Act, 1956(the ''Act'') read with General circular 15/2013 dated 13th September, 2013 of the Ministry Of Company Affairs in respect of Section.133 of the Companies Act,2013. This responsibility includes the design, implementation and maintenance of internal control 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.

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 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 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 internal control 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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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.

Basis for qualified opinion:

a) The company has not complied with AS-15 "Employee Benefits" with regard to provision for gratuity and disclosure requirements specified in the accounting standard and

b) Confirmations for balances outstanding in sundry debtors, advances, trade payables, secured loans and bank balances are not obtained.

Consequently, we are unable to determine whether any adjustments to these amounts are required and if there is any impact on the financial statements.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified opinion Paragraph, the 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 March 31,2014;

b) In the case of the statement of Profit and Loss, of the loss for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements.

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") ,as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 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) 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;

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

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

d) Except for the possible effects of the matter described in the Basis for Qualified opinion Paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with General circular 15/2013 dated 13th September,2013 of the Ministry Of Company Affairs in respect of Section.133 of the Companies Act,2013 except non- compliance of AS-15: and

e) On the basis of written representations received from the directors as on March 31,2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of Farmax India Limited. On the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. In respect of Fixed Assets:

(a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, 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 physical verification.

* In our opinion and according to the information and explanations given to us, no fixed

asset has been disposed during the year and therefore going concern status of the Company is not affected.

2. In respect of Inventories:

(a) As explained to us, inventories have been physically verified during the year 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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

* In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. The Company has neither granted or taken any loans ,secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section.301 of the Act.Accordingly sub clause (b), (c) & (d) of clause 4(3) of this order is not applicable.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for services & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956:

a) According to the information & explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Companies Act, 1956 during the year to be entered in the register required to be maintained under that section. Accordingly commenting on the transactions made in pursuance of such contracts or arrangements does not arise; hence clause 5(b) is not applicable.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptances of Deposits) Rules 1975 are not applicable.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. In respect of Statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have regularly deposited According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2014 for a period of more than six months from the date they became payable except central sales tax of Rs.19,65,912 and TDS of Rs.69,104.

(b) According to the information and explanations given to us, there are amounts payable in respect of income tax and excise duty which have not been deposited on account of disputes as detailed below.

Name of The Statute Nature of Dues Amount Period to which the Amount Relates

The Central Excise Act Excise Duty and 37.40 2007-08, 1944 Penalty 2008-09, 2009-10 & 2011-12

The Income Tax Act, Income Tax 473.48 2008-09, 1961 2009-10 & 2010-11

AP VAT VAT Audit Tax 23.85 2007-08, Act, 2005 2008-09, 2009-10

Name of The Statute Forum Where Pending

The Central Excise Act Appellate Authority 1944 - Commissioner

The Income Tax Act, CIT/Tribunals - 1961 Appeals AP VAT Commercial Tax Act, 2005 Office, Hydemagar Circle

10. The company has accumulated losses of Rs.131,81,79,136 which have exceeded the net worth of the company by more than 50% during the current year. The company has incurred cash losses of Rs.6,82,18,815 during the current year and Rs. 21,45,98,915 in the preceding year.

The Company has made an application in Form A (Annexure 1) on 01-08-2013 for the registration as a sick unit under provision of Sick Industrial Companies (Special provisions) Act, 1985 as the net worth of the Company is completely eroded. The same has been registered in the Board as Case No. 91/2013 as per order dated 17-12- 2013 of the Secretary, Board for Industrial and Financial Reconstruction. It is pending for determination of sickness.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has defaulted in repayment of dues to the bank. We draw your attention to Note.5 & 7 of Notes to accounts.

12. 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.

13. The Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds & other Investments.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made preferential allotment of shares during the year the terms of which are not prejudicial to the interests of the share holders.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For M/s Bhaskara Rao & Associates Chartered Accountants Firm Regn. No.006171S Sd/- (P. Prashanth) Partner Membership No.: 211208

Place: Hyderabad Date: 28-05-2014


Mar 31, 2013

We have audited the accompanying financial statements of M/s Farmax India Limited, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for Financial Statements:

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 sub-section (3C) of section 211 of the Companies Act, 1956(the ''Act''). This responsibility includes the design, implementation and maintenance of internal control 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.

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 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 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 internal control 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 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 March 31, 2013;

b) In the case of the Profit and Loss Account, of the loss for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.z

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 of India in terms of sub-section (4A) of section 227 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) 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;

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Emphasis of Matter:

We draw your attention to Note.26 on exceptional items of expenditure of Rs.1025.94 Million provided in the current year which include Bad Debts for trade receivables, Diminution in value of investment in subsidiary and amount receivables from Subsidiary written off.

Annexure to Independent Auditor''s Report

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of Farmax India Limited. On the accounts of the company for the year ended 31st March, 2013.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. (a) As explained to us, inventories have been physically verified during the year 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 are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has shown a sum of Rs.698.26 Millions as amount receivable from subsidiary and outstanding on balance sheet date. The entire amount has been written off as Bad Debts and provided for accordingly. For this purpose we draw your attention to Note.26 (ii) of notes to accounts.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for services & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceed five Lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arise.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales- tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable except central sales tax of Rs.1.97Millions.

10. The company has accumulated losses of Rs.1229.75 Millions which have exceeded the net worth of the company by more than 50% during the current year. The company has incurred cash losses of Rs.214.60 millions during the current year but not in the preceding year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has defaulted in repayment of dues to a financial institution, bank or debenture holders. We draw your attention to Note. 5 & 7 of Notes to accounts.

12. 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.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds & other Investments.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has made preferential allotment of shares during the year the terms of which are not prejudicial to the interests of the share holders.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For M/s Bhaskara Rao & Associates

Chartered Accountants

Firm Regn. No. 006171S

Sd/-

(P. Prashanth)

Partner

Membership No. : 211208

Place: Hyderabad

Date: 30-05-2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s FARMAX INDIA LIMITED Hyderabad as at 31 st March 2012, the Statement of Profit and Loss Account and Cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's 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 a 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent they are applicable to the company.

4. Further to our comments in the annexure referred to above, we report that:

a) 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.

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 such books.

c) The Balance Sheet, and the Profit and Loss account referred to in this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and the Profit and Loss account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on 31.03.2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31s' March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon and schedules attached there to give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

I) In so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31March 2012.

ii) In so far as it relates to the Statement of Profit and Loss account, of the Profit for the 12 months period ended on that date and

iii) In so far as it relates to the Cash flow statement, of the Cash flows for the Year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT EVEN DATE

1. Inrespectofitsfixedassets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of most of its 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 explanations given to us, no material discrepancies were noticed on such verification.

c. None of the Fixed Assets are disposed off during the year.

2. In respect of its inventories

a. As explained to us, inventories, excluding materials lying with third parties, were physically verified by the management at all locations at reasonable intervals.

b. As explained to us, the inventories excepting material lying with third parties (which have substantially been confirmed) were physically verified during the year by the Management at reasonable intervals.

c. On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the Company.

3. The company has advanced an amount of Rs. 698.26 Millions (Rs. 668.81 Mill ions) as interest free unsecured loan to its wholly owned subsidiary company M/s. Farmax International FZE, SAIF Zone Sharjah, UAE. The terms and

' conditions of such loan are not prima facie prejudicial to the interest of the company.

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 with regard to purchases 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. There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs. 5,00,000 or more.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. According to the information and explanations made available to us by management, the company is not required to maintain cost records under Section 209 (1) (d) of the Companies Act 1956, for any of the products manufactured by the company during the period.

9. Statutory and Other Dues

a. According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employee's State Insurance, Income Tax, Value added tax, Central Sales Tax, Customs Duty, Service tax, Cess and any other material statutory dues applicable to it with the appropriate authorities during the year. However there is a delay in remittance of statutory dues. There are no arrears of outstanding statutory dues as at March 31,2012 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employee's State Insurance, Income Tax, Central Sales Tax, Value Added Tax, Customs Duty, Service tax and Cess were in arrears, as at 31 " March 2012 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of Income Tax, Central Sales Tax, Value Added Tax, Customs Duty, Service tax and Cess that have not been deposited on account of any dispute except the following: '

Name of The Statute Nature of Dues Amount in Period to which the Forum Where Pending Millions Amount Relates

The Central Excise Excise Duty and 3.44 2007-08, 2008-09, Appellate Authority - Act 1944 Penalty 2009-10 & Commissioner 2011-12

The Income Tax Act, Income Tax 14.37 2009-10 CIT-Appeals 1961



10. The Company incurred loss of Rs. 18.39 Millions as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

12. .The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence the question of maintenance of documents and records does not arise.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) ofthe Companies (Auditor's Report) Order, 2003 are 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 (xiv) of the companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. 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.

16. In our opinion, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 ofthe Companies Act, 1956 during the financial year.

19. The company has not issued any debentures during the year.

20. The company has not raised any money by way of public issues during the current financial year. Hence the provisions of clause 4(xx) ofthe Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit subject to Note No. 26 A(aa).

CHITTA & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Reg No: 009490S

Sd/-

Place: Hyderabad Ch. Nageshwara Sastry

Date: 31-Aug-2012 Proprietor

M. No. 210531


Mar 31, 2011

1. We have audited the attached Balance sheet of M/s. FARMAX INDIA LIMITED, Hyderabad as at 31st March 2011 and also the profit and Loss Account for the period ended on that date annexed thereto. These Financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our Audit.

2. We conducted the Audit in accordance with 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 a 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 management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

3.As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India, in terms of section 227(4A) of the Companies Act, 1956 and as amended from time to time, we enclose a statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent applicable.

4. Further to my 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 purposes of our audit.

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the Books and proper returns and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

i. The Balance Sheet and Profit and Loss Account dealt with by this Report are in Agreement with the Books of account of the Company and with the returns from the Branches.

ii. In our opinion, the balance Sheet and Profit and Loss Account dealt with by this report comply with the, Accounting Standards referred to in sub-section (3C) of section 211 of the companies Act 1956.

iii. On the basis of written representations received from the Directors as on 31st March, 2011, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2011 from being appointed as a director in terms of Clause (g) of sub-section (1) of the section 274 of the Companies Act, 1956. r»s

iv. In our opinion and to the best of our information and according to the explanations given to us said accounts read with the notes thereon, give the information required by the Companies Act,1956, in the manner so required and giveatrue and fairview in conformity with the accounting principles generally accepted in India.

a) In the case of the Balance Sheet, of the state of the Company as at March 31, 2011 and

b) In the case of the Profit and Loss Account, of the profit for the period ended on that date.

ANNEXURE TO AUDITOR'S REPORT:

Referred to in Paragraph 3 of our Report of even date: 1) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars including Quantitative details and situation of fixed assets.

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

c) In our opinion, the Company had not disposed of any substantial part of fixed assets during the year.

2)In respectofInventory:

a) As explained to us, the inventory comprises of Raw - Material and finished goods have been verified and reconciled during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information as explanations given to us, the procedures of verification of inventory comprises of raw material, finished goods and packing material, followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventory comprise of raw-material and finished goods. As explained to us, there were no discrepancies noticed on verification of such securities when compared to the records.

3) In respect of Loans given and taken:

a) According to the information and explanations given to us, the Company has not granted loans (Secured or unsecured) to the Companies, Firms or other parties listed in the register maintained under Section 301 of the Companies Act 1956.

b) The company has advanced an amount of Rs. 66,88,08000/- as unsecured loans to its wholly owned subsidiary company M/s. FARMAX INTERNATIONAL (FZE), SAIF ZONE-SHARJAH, UAE. Rate of interest and other terms and conditions of such loans are not prima-facie not prejudicial to the interest of the company.

c) The Company has kept an amount of Rs.64,11,489/- as Inter Corporate Deposit in M/s. REMIDICHERLA INFRA AND POWER LIMITED in which Mr. Srinavasa Reddy is also the MD.

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 the purchase of inventory, fixed assets and also for the sale of goods.

5). In respect of transactions covered under Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed

to be entered into in the register maintained under Section 301 of the Companies Act, 1956 have been so entered,

b) In 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 maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore the provisions of Section 58 A and 58 AA of the Companies Act, 1956 and Rules there under are not applicable to the company.

7) In our opinion, and according to the information and explanations given to us, the Company does not have internal audit system commensurate with its size and nature of its business. We have been informed by the company that, they are in the process of appointing internal auditors to commensurate with the size and nature of

its business.

8) As per the information and explanation provided to us, the Central Government has not prescribed maintenance of Cost Records under section 209(1) (d) of the Companies Act, 1956 in respect of activities carried out by the company.

9) In respect of statutory dues:

a) The Company has not provided liability on ESOPS; however management has informed that the liability does not arise at this juncture. The Company is advised to obtain a proper legal opinion from a legal firm on this subject matter.

b) According to the information and explanation given to us, there are no statutory dues of any nature, which have not been deposited on account of any dispute.

10) The Company does not have accumulated losses at the end of the financial year more than 50% of its net worth and the Company has not incurred cash loss during the financial year covered by our Audit and in the financial year immediately preceding the financial year.

11) Based on our audit procedures and as per the information and explanations given to us by the management. We are of the opinion that the company has not defaulted in repayment of dues to a financial institution and bank or debenture holders.

12) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. |

13) The provisions of any Special statue applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Society are not applicable to the Company.

14) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly Provisions of Paragraph 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to this company.

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

16) According to information and explanations given to us, in my opinion the term loans were applied for the purpose for which they were obtained.

17) According to information and explanations given to us and on an overall examination of the Balance sheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment. No long-term, funds have been used to finance short-term assets except permanent working capital.

18) 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, during the year.

19) According to the information and explanations given to us the company has not issued any debentures during the period covered by our audit report

20) The Company has not raised money by way of public issue during the year. Accordingly provisions of Paragraph 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to this company.

21) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For K. PRAHLADA RAO & CO

Chartered Accountants Hyderabad September 21,2011 Sd/- K. PRAHLADA RAO

Partner M.No. 018477


Mar 31, 2010

1. We have audited the attached Balance sheet of M/s. FARMAX INDIA LIMITED, Hyderabad as at 31st March 2010 and also the profit and Loss Account for the period 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 conducted the Audit in accordance with 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 a 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India, in terms of section 227(4A) of the Companies Act, 1956 and as amended from time torn time, we enclose a statement on the matters specified in Paragraphs 4 and 5 of the said Order to the extent applicable.

4. Further to my 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 forthe purposes of ouraudit.

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the Books and proper returns and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

iii. The Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the Books of account of the Company and with the returns from the Branches.

iv. In our opinion, the balance Sheet and Profit and Loss Account 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 written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2010 from being appointed as a director in terms of Clause (g) of sub-section (1) of the 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 said accounts read with the notes thereon, give the information required by the Companies Act, 1956, 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 the Company as at March 31,2010 and

b) In the case of the Profit and Loss Account, of the profit for the period ended on that date.

ANNEXURE TO AUDITORS REPORT: Referred to in Paragraph 3 of our Report of even date:

1) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

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

c) In our opinion, the Company had not disposed of any substantial part of fixed assets during the year.

2) In respect of Inventory:

a) As explained to us, the inventory comprises of Raw - Material and finished goods have been verified and reconciled during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information as explanations given to us, the procedures of verification of inventory comprises of raw material, finished goods and packing material, followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventory comprise of raw-material and finished goods. As explained to us, there were no discrepancies noticed on verification of such securities when compared to the book records.

3) In respect of Loans given and taken:

a) According to the information and explanations given to us, the Company has not granted loans (Secured or unsecured ) to the Companies, Firms or other parties listed in the register maintained under Section 301 oftheCompaniesAct1956.

b) Company has taken unsecured loans from the directors of the company to an extent of Rs.42.05/- Lakhs during the year. Rate of interest and other terms and conditions of such loans are not prima-facie not prejudicial to the interest of the company.

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 the purchase of inventory, fixed assets and also for the sale of goods.

5) In respect of transactions covered underSection 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under Section 301 of the Companies Act, 1956 have been so entered,

b) In 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 maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore the provisions of Section 58 A and 58 AA of the Companies Act, 1956 and Rules there under are not applicable to the company.

7) In our opinion, and according to the information and explanations given to us, the Company does not have internal audit system commensurate with its size and nature of its business. We have been informed by the company that, they are in the process of appointing internal auditors to commensurate with the size and nature of its business.

8) As per the information and explanation provided to us, the Central Government has not prescribed maintenance of Cost Records under section 209(1) (d) of the Companies Act, 1956 in respect of activities carried out by the company.

9) In respect of statutory dues:

a) The Company has dues amounting to Rs.29.74 Lakhs towards CST payable which is more than 6 months old.

b) According to the information and explanation given to us, there are no statutory dues of any nature, which have not been deposited on account of any dispute.

10) The Company does not have accumulated losses at the end of the financial year more than 50% of its net worth and the Company has not incurred cash loss during the financial year covered by our Audit and in the financial year immediately preceding the financial year.

11) Based on our audit procedures and as per the information and explanations given to us by the management. We are of the opinion that the company has not defaulted in repayment of dues to a financial institution and bank or debenture holders.

12) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The provisions of any Special statue applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Society are not applicable to the Company.

14) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly Provisions of Paragraph 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to this company.

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

16) According to information and explanations given to us, in my opinion the term loans were applied for the purpose for which they were obtained.

17) According to information and explanations given to us and on an overall examination of the Balance sheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment. No long-term, funds have been used to finance short-term assets except permanent working capital.

18) 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, during the year.

19) According to the information and explanations given to us the company has not issued any debentures during the period covered by our audit report.

20) The Company has vide its Special Resolution in the Extra-ordinary General Meeting dated October 24, 2009 approved to offer 11,00,000 stock options under Farmax ESOS - 2009 with each option convertible into one equity share of Rs.10/- each out of which the Board of Directors in their meeting held on October 31, 2009 has granted 6,00,000 stock options with an exercise price of Rs.40/- per share. However, no employee has exercised the options as on March 31,2010.

21) The Company has not raised money by way of public issue during the year. Accordingly provisions of Paragraph 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to this company.

22) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For K. PRAHLADA RAO & CO

Chartered Accountants Hyderabad October 11, 2010

SD/-

K. PRAHLADA RAO

Partner

M. No. 018477


Mar 31, 2009

1. I have audited the attached Balance Sheet of M/S. FARMAX RETAIL (INDIA) LIMITED, Hyderabad as at 31st March 2009 and also the Profit and Loss Account for the period ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. My responsibility is to express an opinion on these financial statements based on my Audit.

2. I conducted my Audit in accordance with auditing standards generally accepted in India. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a 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 management, as well as evaluating the overall financial statement presentation. I believe that our audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India, in terms of Section 227 (4A) of the Companies Act, 1956 and as amended from time to time, I enclose a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

4.Further to my comments in the Annexure referred to in paragraph (3) above, I report that:

i. I have obtained ail the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

ii. In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of the Books and proper returns and proper returns adequate for the purposes of my audit have been received from the branches not visited by me;

iii. The Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the Books of account of the Company and with the returns from the Branches;

iv. In my opinion, the balance Sheet and Profit and Loss Account 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 written representations received from the Directors as on 31st March, 2009, and taken on record by the Board of Directors, I report that none of the Directors is disqualified as on 31s* March 2009 from being appointed as a director in terms of Clause (g) of sub-section (1) of the Section 274 of the Companies Act, 1956;

vi. In my opinion and to the best of my information and according to the explanations given to me, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, 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 March 31, 2009; and

b) In the case of the Profit and Loss Account, of the profit for the period ended on that date

Annexure to Auditors Report: Referred to in paragraph 3 of our Report of even date:

1) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

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

c) In our opinion, the Company has not disposed of any substantial part of fixed assets during the year.

2) In respect of Inventory:

a) As explained to us, the inventory comprises of Raw-material and finished goods have been verified and reconciled during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information as explanations given to us, the procedures of verification of inventory comprise of raw material, finished goods and packing material, followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventory comprise of raw-material and finished goods. As explained to us, there were no discrepancies noticed on verification of such securities when compared to the book records.

3) In respect of Loans given and taken:

a) According to the information and explanations given to us, the Company has not granted loans (Secured or unsecured) to the Companies, Firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956

b) Company has taken unsecured loans from the directors of the company to an extent of Rs.43.65 lakhs during the year. Rate of interest and other terms and conditions of such loans are not prima-facie not prejudicial to the interest of the company.

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 the purchase of inventory, fixed assets and also for the sale of goods.

5) In respect of transactions covered under Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under Section 301 of the Companies Act, 195 6 have been so entered,

c) In 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 maintained under section 301 of the Companies Act, 1S56 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore the provisions of Section 58 A and 58 AA of the Companies Act, 1956 and Rules there under are not applicable to the Company.

7) In my opinion, and according to the information and explanations given to me, the Company does not have internal audit system commensurate with its size and nature of its business. I have been informed by the company that, they are in the process of appointing internal auditors to commensurate with the size and nature of its business.

8) As per the information and explanations provided to me, the Central Government has not prescribed maintenance of Cost Records under Section 209(1 )(d) of the Companies Act, 1956 in respect of activities carried out by the Company.

9) In respect of Statutory dues:

a) According to the records of the company undisputed statutory dues have been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2009 for a period of more than six months from the date of becoming payable. However company has to deposit Rs.3.00 lakhs of Tax deducted at source from various parties with the Government for the year under Audit

b) According to the information and explanation given to us, there are no statutory dues of any nature, which have not been deposited on account of any dispute.

10) The Company does not have accumulated losses as at the end of the financial year more than 50% of its net worth and the Company has not incurred cash loss during the financial year covered by our Audit and in the financial year immediately preceding the financial year.

11) Based on my audit procedures and as per the information and explanations given to me by the management, I am of the opinion that the company has not defaulted in repayment of dues to a financial institution and bank or debenture holders.

12) According to the information and explanations given to me, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) The provisions of any Special Statue applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Society are not applicable to the Company.

14) In our opinion and according to the information and explanations given to me, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly Provisions of Paragraph 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to this company.

15) According to the information and explanations given to me, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

16) According to information and explanations given to me , in my opinion the tern loans were applied for the purpose for which they were obtained..

17) According to information and explanations given to me and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on short-term basis have been used for long- term investment. No long-term funds have been used to finance short-term assets except permanent working capital.

18) 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, during the year.

19) According to the information and explanations given to me the company has not issued any debentures during the period covered by our audit report.

20) The Company has not raised money by way of public issue during the year. Accordingly Provisions of Paragraph 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to this company.

21) To the best of our knowledge and belief and according to the information and explanations given to me, no fraud on or by the Company has been noticed or reported during the year.

S. KISHORE KUMAR Station : Hyderabad

Chartered Accountant Date : 12.05.2009

M. No. 029750


Aug 31, 2008

We have audited the attached Balance Sheet of "FARMAX RETAIL (INDIA) LIMITED" as at 31st August 2008. The financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements basedon our audit.

We have conducted our audit in accordance with 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 of material misstatement. An audit includes examining, on a 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 management,as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the CompaniesAct, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order wherever applicable.

2. Subject to our comments in the annexure referred to in paragraph 1 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposeofour audit.

b) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon give the information requiredby the CompaniesAct, 1956,in mannerso required.

c) In our opinion, proper books of account as required by Law have been kept by the company so far as, appears from our examination of such books.

d) The Companys Balance Sheet dealt with by this report is in agreement with the BooksofAccounts.

e) In our opinion the Balance Sheet is in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

f) On the basis of the written representation from the directors as on 31st August, 2008 and taken on record by the Board of Directors, We report that none of the Director is disqualified as on 31stAugust, 2008 from the appointment as a Director in terms of Clause (g) of sub-section (1) ofSection 274 of the Companies act, 1956.

g) In our opinion and to the best of our information and according to the explanations

given to us, the said Balance Sheet and Profit and Loss Account together with the notes thereon give the information required by the Companies Act, 1956 in the manner so required and giveatrue and fair view in conformity with the accounting principles generally accepted in India.

1. In case of the Balance sheet, of the state of affairs of the Company as at 31st August, 2008.

2. In case of Profit and LossAccount, of the profit of the Company for the year ended on that date; and Cash Flow Statement, ofthe cash flow for the year endedon that date. Annexure to Auditors Report referred to in paragraph 1 of our report of even date

1. The Company has Maintained Fixed Assets Register showing full particulars including quantitative details and situation of FixedAssets.

Fixed Assets have been physically verified by the management at reasonable intervals during the period. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and nature of its assets and we are informed thatno material discrepancies were noticedon such verification.

During the period, the Company has not disposed off substantial part of its fixed assetsso asto affect the going concern status ofthe Company.

The Company has not revalued any of its fixed assets during the year except Land. Gains onrevaluationof LandisTransferred to Revaluation Reserve.

2. Physical verification of inventory has been conducted at reasonable intervals by the management during the period. In our opinion, the frequency of verification is reasonable

In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business

In our opinion, the company is maintaining proper records of inventory. The discrepancies noticed onverificationofinventory were not material.

3. The Company has not taken loans from the Companies, firms or other parties listed in the Registers maintained under section 301 of the Companies Act, 1956 and from the Companies under same management. The terms & conditions of such loans are not prejudicial tointerest ofthe Company.

4. The Company has not granted any loans to Companies, firms or other parties listed in the Registers maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause (iii) (b), (c) and (d) of the Order are not applicableto the Company.

5. During the year the company has not repaid any Loans orAdvances in the nature of Loans.

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

7. According to the information and explanations given to us, the Company has not entered into any transactions of purchase of goods and materials and sale of goods, materials and services aggregating to Rs. 50,000/- or more in respect of any party in pursuance of contracts or arrangements entered in the registers maintainedUnder Section301oftheCompaniesAct,1956.

8. The company has not accepted any deposits from the public and consequently, directives issued by the Reserve Bank of India, the Provisions of Sections 58A, 58AA, or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable.

9. In our opinion the Company has an internal audit system commensurate with its size and nature of the business.

10. As explained to us, the Central Government has not prescribed the maintenance of Cost Records Under Section 209(1)(d) of the Companies Act, 1956 for the this typeofCompany.

11. According to the information and explanations given to us and on the basis of our examination of the books of account, the company has been regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duties, excise duties and other material statutory dues applicable to it except for delays inrespect ofremittanceof SalesTax, Provident Fund.

According to the information and explanations given to us, the Company has not remitted undisputed Fringe Benefit Tax of Rs. 221380/- and Tax Deducted at Source of Rs. 35933/- as at the end of 31st August, 2008 for a period of more than six months from the date they became payable.

According to the information and explanations given to us, there are no dues in respect of sales tax, income tax, customs duty, wealth tax, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

12. The Company does not have any accumulated losses at the end of the financial period and has not incurred cash losses in the immediately preceding financial period.

13. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or banks and has not issued any debentures.

14. The Company has not granted loans and advances on the basis of security by wayofpledge ofshares, debentures and other securities.

15. The Company is not a Chit fund, Nidhi, mutual benefit fund or a society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

16. According to the information and explanations given to us, the company is not dealing in or trading 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 applicableto the company.

17. In our opinion, the company has not given any guarantee for loans taken byothers from banks or financial institutions.

18. In our opinion, the term loans have been applied for the purpose for which they were obtained during the period.

19. 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 no funds raised on short-term basis have been used for long-term investment. No long- term funds have been used to finance short-term assets except permanent working capital.

20. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 oftheAct.

21. The Company has not issued any debentures during the period.

22. According to the information and explanations given to us, during the period covered by our audit report, the company has not raised any fund through public issue. However, it has collected calls in arrears of Rs.24397500/- and made preferential allotment by issue of 1343000 equity shares of Rs.10/- each at a price of Rs.50/- per share.

Based upon the audit procedures performed and according to the information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For S.S.SRAVAN & ASSOCIATES CHARTERED ACCOUNTANTS Place: Hyderabad

Date: 12-09-2008 Sd/- S.S.SRAVAN PROPRIETOR M No. 213488

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