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Directors Report of Farmax India Ltd.

Mar 31, 2015

Dear Members,

We take pleasure in presenting the Twentieth Annual report together with Audited accounts for the year ended 31st March, 2015.

FINAN IAL SUMMARY/HIGHLIGHTS, OPERATIONS, STATE OF AFFARIS:

The performance during the period ended 31st March, 2015 has been as under: (Rs. In Lakhs)

Consolidated Results

Particular 2014-2015 2013-2014

Total Income 2282.97 1778.33

Total Expenditure 2497.33 2464.60

Profit Before Tax (214.36) (888.39)

Provision for Tax 0 0

Profit/(Loss) after Tax (214.36) (888.39)

Transfer to General 0 0 Reserves

Profit available for 0 0 appropriation

Provision for Proposed 0 0 Dividend

Provision for Corporate 0 0 Tax

Balance Carried to 0 0 Balance Sheet

(Rs. In Lakhs)

Standalone Results

Particular 2014-2015 2013-2014

Total Income 2282.97 1778.33

Total Expenditure 2493.08 2662.63

Profit Before Tax (210.11) (884.30)

Provision for Tax 0 0

Profit/(Loss) after Tax (210.11) (884.30)

Transfer to General 0 0 Reserves

Profit available for 0 0 appropriation

Provision for Proposed 0 0 Dividend

Provision for Corporate 0 0 Tax

Balance Carried to 0 0 Balance Sheet

CONSOLIDATED PERFORMANCE REVIES:

The Company has recorded a turnover of Rs. 2104.56 Lakhs and a Loss of Rs. (214.36) Lakhs in the current year against the turnover of Rs. 1740.53 Lakhs and a Loss of Rs. (888.39) Lakhs in the previous financial year ending 31.03.2014.

The Audited Consolidated Financial Statements, based on the financial statements received from subsidiary of the Company, as approved by their respective Board of Directors have been prepared in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements, Accounts Standard (AS) 23 - Accounting for Investments in Associates and Accounting Standard (AS) - 27 - Financial Reporting of interest in Joint Ventures in consolidated financial statement notified under Section 211 (3C) of the Companies Act, 1956, read with the Companies (Accounting Standards) Rules, 2006 (as amended). The said consolidated financial statements form part of this Annual Report and Accounts.

STANDALONE PERFORMANCE REVIEW:

The Company has recorded a turnover of Rs. 2104.56 Lakhs and a Loss of Rs. (210.11) Lakhs in the current year against the turnover of Rs. 1740.53 Lakhs and a Loss of Rs. (884.30) Lakhs in the previous financial year ending 31.03.2014.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There were no material changes and commitments affecting financial position of the company between 31st March and the date of Board's Report (29.08.2015).

CHANGE IN THE NATURE OF BUSINESS:

During the year the Company has not changed its business activities.

DIVIDEND:

Your Directors have decided not to recommend dividend for the year as the Company do not have profit.

BOARD MEETINGS:

The Board of Directors met 12 times during the year on 29.05.2014, 14.08.2014, 28.08.2014, 25.10.2014, 10.11.2014, 12.12.2014, 02.02.2015, 04.03.2015, 05.03.2015, 06.03.2015, 09.03.2015, and 10.03.2015 and the maximum gap between any two meetings was less than four months, as stipulated under Clause 49.

DIRECTORS AND KEY MANANGERIAL PERSONNEL:

Mr. G. Omkareswar and Mr. I. Srinivasa Raju has resigned from the office of Directorship citing personal reasons during the year. The Board placed on record its sincere appreciation for the valuable services rendered by him during his tenure as director of the Company.

Pursuant to Sec. 149 and other applicable provisions of Companies Act, 2013, your Directors are seeking appointment of Mr. A. V. Rama Raju as Independent Director for five consecutive years for a term upto 31st March, 2019. Details of the proposal for appointment of Mr. A. V. Rama Raju is mentioned in the Explanatory Statement under Section 102 of Companies Act, 2013 of the Notice of 20th Annual General Meeting.

In accordance with the Companies Act, 2013 read with Articles of Association of the company the Director namely Mr. M. Srinivasa Reddy retires by rotation and being eligible, offers himself for re-appointment at this ensuing Annual General Meeting. Your Directors recommend his re-appointment.

During the year, Mr. Vara Prasad Ch, appointed as CFO of the Company

POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS' INDEPENDENCE:

1. Scope:

This policy sets out the guiding principles for the Nomination & Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent Directors of the Company.

2. Terms and References:

2.1 "Director" means a director appointed to the Board of a Company.

2.2 "Nomination and Remuneration Committee means the committee constituted in accordance with the provisions of Section 178 of the Companies Act, 2013 and clause 49 of the Equity Listing Agreement.

2.3 "Independent Director" means a director referred to in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49(II)(B) of the Equity Listing Agreement.

3. Policy:

Qualifications and criteria

3.1.1 The Nomination and Remuneration Committee, and the Board, shall review on annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a board with diverse background and experience that are relevant for the Company's operations.

3.1.2 In evaluating the suitability of individual Board member the Nomination and Remuneration Committee may take into account factors, such as:

* General understanding of the company's business dynamics, global business and social perspective;

* Educational and professional background 0 Standing in the profession;

* Personal and professional ethics, integrity and values;

* Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively.

3.1.3 The proposed appointee shall also fulfill the following requirements:

* shall possess a Director Identification Number;

* shall not b disqualified under the companies Act, 2013;

* shall Endeavour to attend all Board Meeting and Wherever he is appointed as a Committee Member, the Committee Meeting;

* shall abide by the code of Conduct established by the company for Directors and senior Management personnel;

* shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made;

* Such other requirements as any be prescribed, from time to time, under the companies Act, 2013, Equity listing Agreements and other relevant laws.

3.1.4 The Nomination & Remuneration Committee shall evaluate each individual with the objective of having a group that best enables the success of the company's business.

3.2 criteria of independence

3.2.1 The Nomination & Remuneration Committee shall assess the independence of Directors at time of appointment/ re-appointment and the Board shall assess the same annually. The Board shall re-assess determinations of independence when any new interest or relationships are disclosed by a Director.

3.2.2 The criteria of independence shall be in accordance with the guidelines as laid down in companies Act, 2013 and Clause 49 of the Equity Listing Agreement.

3.2.3 The independent Director shall abide by the "code for independent Directors "as specified in Schedule IV to the companies Act, 2013.

3.3 other directorships/committee memberships

3.3.1 The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as director of the company. The Nomination and Remuneration Committee shall take into account the nature of, and the time involved in a director service on other Boards, in evaluating the suitability of the individual Director and making its recommendations to the Board.

3.3.2 A Director shall not serve as director in more than 20 companies of which not more than 10 shall be public limited companies.

3.3.3 A Director shall not serve an independent Director in more than 7 listed companies and not more than 3 listed companies in case he is serving as a whole-time Director in any listed company.

3.3.4 A Director shall not be a member in more than 10 committee or act chairman of more than 5 committee across all companies in which he holds directorships.

For the purpose of considering the limit of the committee, Audit committee and stakeholder's relationship committee of all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under section 8 of the companies Act, 2013 shall be excluded.

Remuneration policy for Directors, key managerial personnel and other employees

1. Scope:

1.1 This policy sets out the guiding principles for the Nomination and Remuneration committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the company.

2. Terms and Reference:

In this policy the following terms shall have the following meanings:

2.1 "Director" means a director appointed to the Board of the company.

2.2 "key managerial personnel" means

(i) The Chief Executive Officer or the managing director or the manager;

(ii) The company secretary;

(iii) The whole-time director;

(iv) The chief financial Officer; and

(v) Such other office as may be prescribed under the companies Act, 2013

2.3 "Nomination and Remuneration committee" means the committee constituted by Board in accordance with the provisions of section 178 of the companies Act, 2013 and clause 49 of the Equity Listing Agreement.

3.1 Remuneration to Executive Director and key managerial personnel

3.1.1 The Board on the recommendation of the Nomination and Remuneration (NR) committee shall review and approve the remuneration payable to the Executive Director of the company within the overall approved by the shareholders.

3.1.2 The Board on the recommendation of the Nomination and Remuneration committee shall also review and approve the remuneration payable to the key managerial personnel of the company.

3.1.3 The remuneration structure to the Executive Director and key managerial personnel shall include the following components:

(i) Basic pay

(ii) Perquisites and Allowances

(iii) Stock Options

(iv) Commission (Applicable in case of Executive Directors)

(v) Retrial benefits

(vi) Annual performance Bonus

3.1.4 The Annual plan and Objectives for Executive committee shall be reviewed by the NR committee and Annual performance Bonus will be approved by the committee based on the achievement against the Annual plan and Objectives.

3.2 Remuneration to Non - Executive Directors

3.2.1 The Board, on the recommendation of the Nomination & Remuneration Committee, shall review and approve the remuneration payable to the Non - Executive Directors of the Company within the overall limits approved by the shareholders as per the provisions of Companies Act, 2013.

3.2.2 Non - Executive Directors shall be entitled to sitting fees attending the meetings of the Board and the Committees thereof. The Non- Executive Directors shall also be entitled to profit related commission in addition to the sitting fees.

3.3. Remuneration to other employees

3.3.1. Employees shall be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from Mr. A. V. Rama Raju, Ms. P. Priyanka and Mr. E. Sudheer Reddy, Independent Directors of the Company under Section 149(7) of the Companies Act, 2013 that they as Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). (Annexure II)

AUDIT COMMITTEE:

The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 177 of the Companies Act, 2013.

II) The terms of reference of the Audit Committee include a review of the following:

* Overview of the Company's financial reporting process and disclosure of its financial information to ensure that the financial statements reflect a true and fair position and that sufficient and credible information is disclosed.

* Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for any other services.

* Discussion with external auditors before the audit commences, of the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

* Reviewing the financial statements and draft audit report including quarterly / half yearly financial information.

* Reviewing with management the annual financial statements before submission to the Board, focusing on:

1. Any changes in accounting policies and practices;

2. Qualification in draft audit report;

3. Significant adjustments arising out of audit;

4. The going concern concept;

5. Compliance with accounting standards;

6. Compliance with stock exchange and legal requirements concerning financial statements and

7. Any related party transactions

* Reviewing the company's financial and risk management's policies.

* Disclosure of contingent liabilities.

* Reviewing with management, external and internal auditors, the adequacy of internal control systems.

* Reviewing the adequacy of internal audit function, including the audit character, the structure of the internal audit department, approval of the audit plan and its execution, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.

* Discussion with internal auditors of any significant findings and follow-up thereon.

* Reviewing the findings of any internal investigations by the internal auditors into the matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

* Looking into the reasons for substantial defaults in payments to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

* Reviewing compliances as regards the Company's Whistle Blower Policy.

III) The previous Annual General Meeting of the Company was held on 30.09.2014 and Chairman of the Audit Committee, attended previous AGM.

IV) The composition of the Audit Committee and the attendance of each member of the Audit Committee are given below:

The Company has complied with all the requirements of Clause 49 (II) (A) of the Listing Agreement relating to the composition of the Audit Committee. During the financial year 2014-2015, (5) four meetings of the Audit Committee were held on the 29.05.2014, 14.08.2014, 10.11.2014 and 02.02.2015.

The details of the composition of the Committee and attendance of the members at the meetings are given below:

Name Designation Category No. of meetings held during their tenure

Mr. A. V. Rama Raju Chairman NED(I) 4

*Ms. P. Priyanka Member NED(I) 2

*Mr. E. Sudheer Reddy Member NED(I) 2

*Mr. G. Omkareswar Member NED(I) 2

* Mr. I. Srinivasa Raju Member NED(I) 2

Name No. of meetings attended

Mr. A. V. Rama Raju 4

*Ms. P. Priyanka 2

*Mr. E. Sudheer Reddy 2

*Mr. G. Omkareswar 2

* Mr. I. Srinivasa Raju 2

NED (I): Non Executive Independent Director ED (P) : Executive Director Promoter

*Appointed w.e.f. 30.09.2014

*Resignation w.e.f 21.10.2014

NOMINATION & REMUNERATION COMMITTEE:

The details of composition of the Committee are given below:

Name Designation Category

Mr. A. V. Rama Raju Chairman NED(I)

*Ms. P. Priyanka Member NED(I)

*Mr. E. Sudheer Reddy Member NED(I)

*Mr. G. Omkareswar Member NED(I)

*Mr. I. Srinivasa Raju Member NED(I)

NED (I): Non Executive Independent Director ED (P) : Executive Director Promoter

*Appointed w.e.f. 30.09.2014

*Resignation w.e.f 21.10.2014

Terms of reference:

The main term of reference of the Committee is to approve the fixation/revision of remuneration of the Managing Director/Whole Time Director of the Company and while approving:

* To take into account the financial position of the Company, trend in the industry, appointee's qualification, experience, past performance, past remuneration etc.

* To bring out objectivity in determining the remuneration package while striking a balance between the interest of the Company and the Shareholders.

Remuneration Policy:

The objectives of the remuneration policy are to motivate Directors to excel in their performance, recognize their contribution and retain talent in the organization and reward merit.

The remuneration levels are governed by industry pattern, qualifications and experience of the Directors, responsibilities shouldered, individual performance etc.

STAKEHOLDER RELATIONSHIP COMMITTEE (SHAREHOLDERS/INVESTOR GRIEVANCE AND SHARE TRANSFER COMMITTEE):

Composition, meetings and the attendance during the year:

The Shareholders/Investors Grievance Committee was constituted to look into the redressing of Shareholders and Investors complaints concerning transfer of shares, non receipt of Annual Reports, and non receipt of Dividend and other allied complaints.

A. The details of composition of the Committee are given below:

Name Designation Category

*Ms. P. Priyanka Chairman NED(I)

Mr. A. V. Rama Raju Member NED(I)

*Mr. E. Sudheer Reddy Member NED(I)

*Mr. G. Omkareswar Member NED(I)

* Mr. I. Srinivasa Raju Member NED(I)

NED (I): Non Executive Independent Director ED (P) : Executive Director Promoter

*Appointed w.e.f. 30.09.2014

*Resignation w.e.f 21.10.2014

B. Powers:

The Committee has been delegated with the following powers:

* to redress shareholder and investor complaints relating to transfer of shares, Dematerialization of Shares, non-receipt of Annual Reports, non-receipt of declared dividend and other allied complaints.

* to approve, transfer, transmission, and issue of duplicate / fresh share certificate(s)

* Consolidate and sub-division of share certificates etc.

* To redress, approve and dispose off any, other complaints, transactions and requests etc., received from any shareholder of the company and investor in general.

The Board has delegated the power to process the transfer and transmission of shares to the Registrar and Share Transfer Agents, who process share transfers within a week of lodgment in the case of shares held in physical form.

The Board has designated Mr. Vara Prasad Ch, CFO of the Company as the Compliance Officer.

The Company has designated an e-mail ID called cs@farmax.co.in for redressal of shareholders' complaints/grievances.

RISK MANAGEMENT COMMITTEE

A.) Composition:

The Details of composition of the Committee are given below:

Name Designation Category

Mr. A. V. Rama Raju Chairman NED (I)

*Mr. M. Srimvas Reddy Member NED(I)

*Ms. Priyanka Palacharla Member NED(I)

*Mr. E Sudheer Reddy Member NED(I)

NED (I) : Non Executive Independent Director NED (NI) : Non Executive Non-Independent

*Appointed w.e.f. 30.09.2014

*Resignation w.e.f 21.10.2014

Role and Responsibilities of the Committee includes the following:

* Framing of Risk Management Plan and Policy

* Overseeing implementation of Risk Management Plan and Policy

* Monitoring of Risk Management Plan and Policy

* Validating the process of risk management

* Validating the procedure for Risk minimization.

* Periodically reviewing and evaluating the Risk Management Policy and practices with respect to risk assessment and risk management processes.

* Continually obtaining reasonable assurance from management that all known and emerging risks have been identified and mitigated or managed.

VIGIL MECHANISM:

Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Sec. 134(5) of the Companies Act, 2013 the Board of Directors of your Company hereby certifies and confirms that:

a. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistently and made judgment 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 of the profit and loss of the Company 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 the Companies Act, 2013 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.

e. The Directors of the Company had laid down internal financial controls and such internal financial

controls are adequate and were operating effectively.

f. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES COMPANY:

Your Company does have subsidiary Company M/s. Farmax International FZE in Dubai floated for the purpose of the expansion of the business of the Company and its products in the overseas market, for this purpose your company has issued GDR's in year 2010 and raised USD 71.1 Million. However your company has not received the GDR amount, due to which there is no business activity in M/s. Farmax International FZE. The consolidated Financial Result of the Subsidiary is also presented along with the Company's financials.

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report (FORMAT IN ANNEXURE I)

AUDITORS AND AUDITORS REPORT

In the previous Annual General Meeting ( 19th AGM), the Company appointed M/s. Vijay Sai Kumar & Associates, Chartered Accountants as statutory Auditors to hold office until the conclusion of the 20th Annual General Meeting. The Company has already received letter from them to the effect that their ratification, if made by the shareholders, would be within the prescribed limits and that they are not disqualified for re-appointment within the meaning of the Companies act 2013. The Board of Directors recommend their re-appointment/ ratification for the financial year 2015-16.

INTERNAL AUDIT:

Kushindhar is the internal Auditors of the Company.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of managerial personnel) Rules 2014, Mr. S. Sarveswar Reddy, Practicing Company Secretary has conducted Secretarial Audit of the Company for the FY 2014-15. The Secretarial Audit Report for the FY 2014-15 is annexed hereto and forms part of this Annual report. Secretarial Audit Report is self explanatory and the company will take necessary steps to appoint company secretary.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO:

The required information as per Sec. 134 (3) (m) of the Companies Act 2013 is provided hereunder:

A. Conservation of Energy

Adequate measures have been taken to reduce energy consumption, wherever possible. Total energy consumption and energy consumption per unit of production is not applicable as company is not included in the industries specified in the schedule.

B. Technology Absorption

1. Research and Development (R&D) : Nil

2. Technology absorption, adoption and innovation : Nil

C. Foreign Exchange Earnings and Out Go

Foreign Exchange Earnings : Nil

Foreign Exchange Outgo : Nil

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:

During the period under review there were no significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the company's operations in future.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

INSURANCE:

The company's properties have been adequately insured against major risks. All the insurable interests of your Company including inventories, buildings, plant and machinery, stock and liabilities under legislative enactments are adequately insured.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given loans, Guarantees or made any investments during the year under review.

RISK MANAGEMENT POLICY:

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well structured risk management process.

CORPORATE SOCIAL RESPONSIBILTY POLICY:

Since your Company does not has the net worth of Rs. 500 crores or more, or turnover of Rs. 1000 crores or more, or a net profit of Rs. 5 crores or more during the financial year, so section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable to the Company and hence the Company need not adopt any Corporate Social Responsibility Policy.

RELATED PARTY TRANSACTIONS:

During the year, the Company had entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the company on materiality of related party transactions. Relevant details or furnished in schedule 28 of financial statement.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www.farmax.co.in

FORMAL ANNUAL EVALUATION:

As per section 149 of the Companies Act, 2013 read with clause VII (1) of the schedule IV and rules made thereunder, the independent directors of the company had a meeting on 28.03.2015 without attendance of non- independent directors and members of management. In the meeting the following issues were taken up:

(a) Review of the performance of non-independent directors and the Board as a whole;

(b) Review of the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors;

(c) Assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The meeting also reviewed and evaluated the performance of non-independent directors. The company has 1 (One) non-independent directors namely:

Mr. Srinivasa Reddy Morthala

The meeting recognized the significant contribution made by non-independent directors in the shaping up of the company and putting the company on accelerated growth path. They devoted more time and attention to bring up the company to the present level.

The meeting also reviewed and evaluated the performance of the Board as whole in terms of the following aspects

* Preparedness for Board/Committee meetings

* Attendance at the Board/Committee meetings

* Guidance on corporate strategy, risk policy, corporate performance and overseeing acquisitions and disinvestments.

* Monitoring the effectiveness of the company's governance practices

* Ensuring a transparent board nomination process with the diversity of experience, knowledge, perspective in the Board.

* Ensuring the integrity of the company's accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for financial and operational control and compliance with the law and relevant standards.

It was noted that the Board Meetings have been conducted with the issuance of proper notice and circulation of the agenda of the meeting with the relevant notes thereon.

DISCLOSURE ABOUT COST AUDIT:

Cost Audit is not applicable to your Company.

RATIO OF REMUNERATION TO EACH DIRECTOR:

Under section 197(12) of the Companies Act, 2013, and Rule 5(1)(2) & (3) of the Companies(Appointment & Remuneration) Rules, 2014, a remuneration of Rs. 22,50,000 p.a. is being paid to Mr. Srinivasa Reddy Morthala , Chairman & Managing Director of the Company.

FIXED DEPOSITS:

Your Company does not accept or hold any fixed deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under and as such, no amount on account of principal or interest on fixed deposits was outstanding as on date of the Balance Sheet.

Fixed Deposits with Euram Bank:

a. In 2010 the Company made a GDR Issue of an amount of USD 71.1 mn and deposited the proceeds in a Bank Account with European American Investment Bank AG, Vienna (EURAM Bank). Advisors to the Company who planned and coordinated various functions during to the GDR Issue obtained operational control of our Bank Accounts with EURAM Bank ostensibly to make payments to the intermediaries of the GDR Issue. We were eventually informed that control of the Bank Accounts passed on to one Vintage FZE (now known as Alta Vista International FZE). The Company later discovered that without its knowledge or approval, amounts aggregating USD 15.6 mn were transferred from the Company's Vienna Bank Account to the Bank Account of Company's wholly-owned subsidiary in the UAE (FZE). Further, the Company also discovered that a nearly identical amount was transferred from FZE's Bank Account to entities with which neither the Company nor the FZE has any business relationship. When we made inquiries with Vintage FZE, the company promised to return the funds, but we have not received any funds so far. Pending recovery by FZE and their onward remittance back to the Company, these amounts have been shown by the FZE as "Amounts payable to Farmax India Limited" on the Liabilities side and the "amounts receivable from suppliers" on the assets side. Reflecting this treatment, the Company also showed this amount as receivable from FZE. Despite repeated efforts, FZE is unable to recover any of these monies so far and is planning to initiate legal action to recover the funds. However, in line with the prudential accounting principles, in the Statements of Accounts for the year March 31, 2013, these amounts have been written off by FZE without prejudice to the right to recover these amounts. Due to the above reason the money receivable from FZE has also become unrecoverable. Therefore, following prudential accounting principles, the Company has also written off the amount receivable from its wholly- owned UAE subsidiary. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts. Company has also filed a criminal complaint against Mr. Arun Panchariya the then Managing Director of (now known as Alta Vista International FZE) at that time and other suspects in the matter in the Medchal Court of Rangareddy vide S.R No. 7751 of 2013 dated 18.10.2013 and an FIR was issued in the matter vide FIR No. 664/2013 dated 29.10.2013 in Dundigal Police Station

b. As for the remaining amount of USD 56.6 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank, the Company, in August 2012, received a letter from EURAM Bank claiming that the remaining amount had been seized to repay a third party loan to the same Vintage FZE (now known as Alta Vista International FZE) pursuant to a Pledge Agreement alleged to have been executed by the Company with EURAM Bank. The Company did not authorize or execute any such Pledge Agreement and was not aware of any loan from Euram Bank to Vintage FZE. Pending the recovery of the amounts and without prejudice to its rights, the Company has written off the amounts, in line with the prudential accounting principles.

Accordingly, in the previous year, the balance of USD 56.6 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank was written off with a corresponding decrease in the securities premium account. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts. We have also submitted the GDR case file to PMO office, Finance Minister Office & External Affairs Minister office and recently our GDR case has been forwarded from PMO office to Reserve Bank Of India through letter dated 24th Oct, 2014. We have also received a letter from SEBI asking information regarding the GDR issue and we have submitted all the information called for.

INDUSTRY BASED DISCLOSURES AS MANDATED BY THE RESPECTIVE LAWS GOVERNING THE COMPANY:

The Company is not a NBFC, Housing Companies etc., and hence Industry based disclosures is not required. SECRETARIAL STANDARDS

EVENT BASED DISCLOSURES

1. Issue of sweat equity share: NA

2. Issue of shares with differential rights: NA

3. Issue of shares under employee's stock option scheme: NA

4. Disclosure on purchase by company or giving of loans by it for purchase of its shares: NA

5. Buy back shares: NA

6. Disclosure about revision: NA

7. Preferential Allotment of Shares:

Preferential Allotment of Shares: During the year the Company has allotted 12,58,71,427 Equity shares at an issue price of Rs 1.32. to the promoters and others and passed the following resolutions to give effects to such allotment. The proceeds of the issue were spent towards the objectives mentioned in the explanatory statement annexed to the notice of EGM dated 12.12.2014.

S.No. Particulars No. of Category shares allotted

1. Increase in the - - authorised capital of the Company from 50.00. 00.000 to 60.00. 00.000

2. Alteration of - - Memorandum of Association for change in authorised capital

3. Preferential 12,58,71,427 Promoters Allotment of equity and others shares

S.No. Particulars Date of Date of BM for EGM allotment of shares

1. Increase in the 24.01.2015 - authorised capital of the Company from 50.00. 00.000 to 60.00. 00.000

2. Alteration of 24.01.2015 - Memorandum of Association for change in authorised capital

3. Preferential 24.01.2015 04.03.2015, Allotment of equity 05.03.2015, shares 06.03.2015, 09.03.2015 10.03.2015

EMPLOYEE RELATIONS:

Your Directors are pleased to record their sincere appreciation of the contribution by the staff at all levels in the improved performance of the Company. None of the employees is drawing Rs 5,00,000/- and above per month or Rs.60,00,000/- and above in aggregate per annum, the limits prescribed under Section 134 of the Companies Act, 2013

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed during the calendar year. No. of complaints received: Nil

No. of complaints disposed off: Nil

ACKNOWLEDGEMENTS:

Your directors would like to express their grateful appreciation for assistance and co-operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review.

For and on behalf of the Board of Farmax India Limited

Sd/- Place: Hyderabad M. Srinivasa Reddy Date: 29.08.2015 Managing Director DIN: 00882956








Mar 31, 2014

Dear Members,

The Directors present the 19th Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2014 and Balance Sheet as on that date.

Financial Results

Key aspects of your Company''s consolidated financial performance and standalone financial results for the year 2013-14 are tabulated below:

Business Performance:

(Rs in Lacs)

Particulars Consolidated Results

2013-14 2012-13

Sales and other income 1778.33 5233.54

Total Expenditureother than Depreciation 2464.6 7379.35

Gross Profit before Depreciation and Tax (686.27) (2145.81)

Depreciation 202.12 253.82

Profil/LossBeforeTax (888.39) (2399.64)

Exceptional Items - 11976.03

Provision for Tax - 72.28

Profit Loss after tax (888.39) (14375.67)

Surplus/Loss brought forward from previous year 456.78

Balance available for appropriations (13991.18)

Appropriations: - -

Balance Carried to Balance Sheet (13991.18)

(Rs in Lacs)

Particulars Standalone Results

2013-14 2012-13

Sales and other income 1778.33 5229.67

Total Expenditureother than Depreciation 2460.51 7375.66

Gross Profit before Depreciation and Tax (682.18) (2145.99)

Depreciation 202.12 253.82

Profil/LossBeforeTax (884.30) (2399.81)

Exceptional Items - 10259.43

Provision for Tax - 72.28

Profit Loss after tax (884.30) (12731.52)

Surplus/Loss brought forward from previous year 434.03

Balance available for appropriations (12297.49)

Appropriations: - -

Balance Carried to Balance Sheet (12297.49)

Consolidated Financial Results:

The Company has recorded a turnover of Rs. 1778.33 Lakhs as against Rs. 5229.67 Lakhs in the previous year. During the year under review the consolidated loss after tax incurred by the Company is Rs. 888.39 Lakhs as against Rs.14375.67 Lakhs in the previous financial year.

The Audited Consolidated Financial Statements, based on the financial statements received from subsidiary of the Company, as approved by their respective Board of Directors have been prepared in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements, Accounting Standard (AS) 23 - Accounting for Investments in Associates and Accounting Standard (AS) 27 - Financial Reporting of interest in Joint Ventures in consolidated financial statement notified under Section 211 (3C) of the Companies Act, 1956, read with the Companies (Accounting Standards) Rules, 2006 (as amended). The said consolidated financial statements form part of this Annual Report and Accounts.

Standalone Financial Results:

On standalone basis, your Company has registered revenue of Rs. 1778.33 Lakhs as against Rs. 5229.67 Lakhs in the previous year. During the year under review the net loss of the Company stood at Rs. 884.30 Lakhs as against Rs. 12731.52 Lakhs in the previous financial year.

Dividend on Equity Shares:

Keeping in view the losses incurred by the Company, your Directors have decided not to recommend any dividend for the year under review.

Fixed Deposits:

Your Company does not accept or hold any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under and as such, no amount on account of principal or interest on fixed deposits was outstanding as on date of the Balance Sheet.

Fixed Deposits with Euram Bank:

a. In 2010 the Company made a GDR Issue of an amount of USD 71.1 mn and deposited the proceeds in a Bank Account with European American Investment Bank AG, Vienna (EURAM Bank). Advisors to the Company who planned and coordinated various functions during to the GDR Issue obtained operational control of our Bank Accounts with EURAM Bank ostensibly to make payments to the intermediaries of the GDR Issue. We were eventually informed that control of the Bank Accounts passed on to one Vintage FZE (now known as Alta Vista International FZE). The Company later discovered that without its knowledge or approval, amounts aggregating USD 15.6 mn were transferred from the Company''s Vienna Bank Account to the Bank Account of Company''s wholly- owned subsidiary in the UAE (FZE). Further, the Company also discovered that a nearly identical amount was transferred from FZE''s Bank Account to entities with which neither the Company nor the FZE has any business relationship. When we made inquiries with Vintage FZE, the company promised to return the funds, but we have not received any funds so far. Pending recovery by FZE and their onward remittance back to the Company, these amounts have been shown by the FZE as "Amounts payable to Farmax India Limited" on the Liabilities side and the "amounts receivable from suppliers" on the assets side. Reflecting this treatment, the Company also showed this amount as receivable from FZE. Despite repeated efforts, FZE is unable to recover any of these monies so far and is planning to initiate legal action to recover the funds. However, in line with the prudential accounting principles, in the Statements of Accounts for the year March 31,2013, these amounts have been written off by FZE without prejudice to the right to recover these amounts. Due to the above reason the money receivable from FZE has also become unrecoverable. Therefore, following prudential accounting principles, the Company has also written off the amount receivable from its wholly-owned UAE subsidiary. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts. Company has also filed a criminal complaint against Mr. Arun Panchariya the then Managing Director of (now known as Alta Vista International FZE) at that time and other suspects in the matter in the Medchal Court of Rangareddy vide S.R No. 7751 of 2013 dated 18.10.2013 and an FIR was issued in the matter vide FIR No. 664/2013 dated 29.10.2013 in Dundigal Police Station

b. As for the remaining amount of USD 56.6 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank, the Company, in August 2012, received a letter from EURAM Bank claiming that the remaining amount had been seized to repay a third party loan to the same Vintage FZE (now known as Alta Vista International FZE) pursuant to a Pledge Agreement alleged to have been executed by the Company with EURAM Bank. The Company did not authorize or execute any such Pledge Agreement and was not aware of any loan from Euram Bank to Vintage FZE. The Company has retained legal counsel in Austria to initiate legal action to recover the amount EURAM Bank seized to satisfy the third party loan. Pending the recovery of the amounts and without prejudice to its rights, the Company has written off the amounts, in line with the prudential accounting principles. Accordingly, in the previous year, the balance of USD 56.6 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank was written off with a corresponding decrease in the securities premium account. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts.

Corporate Governance:

As required by Clause 49 of the listing agreement, a separate report on Corporate Governance together with a certificate of Statutory Auditors of the Company forms part of this report as per Annexure II.

Formation of Various Committees:

Details of various committees constituted by the Board of Directors as per the provisions of Clause 49 of the Listing Agreement and Companies Act, 1956 are given in the Corporate Governance Report annexed and forming part of this report.

Directors:

Pursuant to the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. Omkareswar Gangaboina, Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

Increase in Share Capital:

During the year under review the Company has not issued any kind of shares or debentures.

Employee Stock Option Scheme:

Farmax has introduced Employees Stock Option Scheme-2009 (Farmax ESOS - 2009) to enable the employees of the Company to participate in the future growth and financial successes of the Company. As per the ESOS scheme 80% of the options have been granted and vested during 2009-2010 and the balance 20% of options vesting & exercise period is still due.

Directors'' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, the Board of Directors of the Company hereby confirms that:

1. In preparation of the annual accounts for the financial year ended 31st March, 2014, the applicable accounting standards have been followed;

2. The Board of Directors of the Company have selected appropriate 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 as at 31st March, 2014 and of the profit and cash flow of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. The annual accounts have been prepared on a going concern basis.

Subsidiary Company:

Your Company has a subsidiary in the name of Farmax International FZE in UAE floated for the purpose of the expansion of the business of the Company and its products in the overseas market. The Consolidated Financial Result of the subsidiary is also presented along with the Company''s financials.

The Ministry of Corporate Affairs has, vide its General Circular No: 2/2011 dated 8th February, 2011 exempted the Holding Companies from attaching Annual Reports of Subsidiary Companies with the Balance Sheet of the Holding Company as per Section 212(8) of the Companies Act, 1956. In view of the same, the individual Annual Reports of Subsidiary Companies are not attached with the Balance Sheet of your Company. A statement showing brief financial details of the Subsidiaries as per the requirements of aforesaid General Circular is included in the Annual Report.

Shareholders interested in obtaining the statement of Company''s interest in the subsidiaries or stand- alone financial statements of the Subsidiary Companies may obtain it by writing to the Company Secretary of the Company. The same are also available for inspection by any member at the registered office of the Company.

Particulars of Employees:

Information as required under section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 will be made available on request by the Members.

Corporate Social Responsibility:

Integrating the social, economic and environmental agenda in the fabric of its business and operations is the main agenda of your Company. This requires the business, to identify the relevant impact areas and define strategies that drive consumer preference, and in parallel, address these issues i.e. strategies that do well by doing good. The reasons for growing the business sustainably are compelling and your Company sees no conflict between promoting sustainable development and business growth.

Your Company''s vision is to increase the positive impact in the social agenda by improving health and well being, reduce the environmental impact from greenhouse gases, water and waste and work towards prosperity of India and business by enhancing livelihoods amongst farmers through sustainable sourcing and expanding our small distributor model.

Further, with respect to the provision of Section 135 of Companies Act, 2013 is currently not applicable to your Company; hence the same will be followed by the Company at the instance of its applicability. However your Company is always willing to contribute to the Social Causes through every possible way.

Auditors & Auditors'' Report:

Your Company''s Statutory Auditors, M/s. Bhaskara Rao & Associates, Chartered Accountants, bearing Firm Registration No. 006171S, have resigned. The Company has decided to appoint M/s Vijay Sai Kumar & Associates, bearing Firm Registration No. 004694S as the Statutory Auditors of the Company who have shown their eligibility and willingness to accept the office of the Statutory Auditors. The necessary resolution seeking your approval for appointment of Statutory Auditors has been incorporated in the Notice Convening the Annual General Meeting.

The Board has duly reviewed the Statutory Auditors'' Report on the Accounts. The observations and comments, appearing in the Auditors'' Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors.

Management Discussion and Analysis:

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of this report as per Annexure I.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo:

The information, in accordance with the provisions of Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgoings, are attached to this Report.

Trade Relations:

Your Directors wish to thank the Retailers, Wholesalers, Distributors, Suppliers of Goods & Services, Clearing & Forwarding Agents and all other business associates and acknowledge their efficiency and continued support in promoting such healthy growth in the Company''s business.

Human Resources:

Your Company continuously invests in people development, identifying and grooming management talent and has a culture of harnessing people power to the maximum.

Appreciation:

Your Directors wish to express their sincere appreciation to the Central Government, the State Governments, bankers and the business associates for their excellent support and look forward to continued support in future. Your Directors wish to place on record their appreciation to the employees at all levels for their hard work, dedication and commitment, which has enabled the Company to progress.

For and on behalf of the Board of Directors of Farmax India Limited Sd/- Date: 20.08.2014 M. Srinivasa Reddy Place: Hyderabad Managing Director


Mar 31, 2013

To The Shareholders,

The Directors present the 18th Annual Report of the Company together with its Audited Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet as on that date.

Financial Results

Key aspects of your Company''s consolidated financial performance and standalone financial results for the year 2012-13 are tabulated below:

Business Performance:

(Rs in Millions)

Particulars Consolidated Results Standalone Results 2012-13 2011-12 2012-13 2011-12

Sales and other income 52335 933.99 522.97 931.78

Total Expenditure other than Depreciation 737.94 909.43 73757 908.55

Gross Profit before Depreciation and Tax (214.59) 2456 (214.60) 2323

Depreciation 2538 47.59 2538 47.59

Profit Loss Before Tax (239.97) (23.03) (239.98) (24.36)

Exceptional Items 1197.60 1025.94

Provision for Tax 723 (5.98) 723 (5.98)

Profit Loss after tax (1444.80) (17.05) (127315) (18.38)

Surplus/Loss brought forward from previous year 45.68 62.73 43.40 61.79

Balance available for appropriations (139912) 45.68 (1229.75) 43.40

Appropriations:

Balance Carried to Balance Sheet (1399.12) 45.68 (1229.75) 43.40

Consolidated Financial Results:

The Company has recorded a turnover of Rs. 519.24 Millions as against Rs. 914.24 Millions in the previous year. During the year under review the consolidated loss after tax incurred by the Company is Rs. 1444.80 Millions as against Rs. 17.05 Millions in the previous financial year.

The Audited Consolidated Financial Statements, based on the financial statements received from subsidiary of the Company, as approved by their respective Board of Directors have been prepared in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements, Accounting Standard (AS) 23 - Accounting for Investments in Associates and Accounting Standard (AS) 27 - Financial Reporting of interest in Joint Ventures in consolidated financial statement notified under Section 211 (3C) of the Companies Act, 1956 read with the Companies (Accounting Standards) Rules, 2006 (as amended). The said consolidated financial statements form part of this Annual Report and Accounts.

Standalone Financial Results:

On standalone basis, your Company has registered revenue of Rs. 519.24 Millions as compared to Rs. 914.24 Millions in the previous year. During the year under review the net loss of the Company stood at Rs. 1273.15 Millions as against Rs. 18.39 Millions in the previous financial year.

Dividend on Equity Shares:

Keeping in view the losses incurred by the Company, your Directors have decided not to recommend any dividend for the year under review.

Fixed Deposits:

Your Company does not accept or hold any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under and as such, no amount on account of principal or interest on fixed deposits was outstanding as on date of the Balance Sheet.

Fixed Deposits with Euram Bank:

a. In 2010 the Company made a GDR Issue of an amount of USD 71.91 mn and deposited the proceeds in

a Bank Account with European American Investment Bank AG, Vienna (EURAM Bank). Advisors to the Company who planned and coordinated various functions during to the GDR Issue obtained operational control of our Bank Accounts with EURAM Bank ostensibly to make payments to the intermediaries of the GDR Issue. We were eventually informed that control of the Bank Accounts passed on to one Vintage FZE (now known as Alta Vista International FZE). The Company later discovered that without its knowledge or approval, amounts aggregating USD 15.60 mn were transferred from the Company''s Vienna Bank Account to the Bank Account of Company''s wholly- owned subsidiary in the UAE (FZE). Further, the Company also discovered that a nearly identical amount was transferred from FZE''s Bank Account to entities with which neither the Company nor the FZE has any business relationship. When we made inquiries with Vintage FZE, the company promised to return the funds, but we have not received any funds so far. Pending recovery by FZE and their onward remittance back to the Company, these amounts have been shown by the FZE as "Amounts payable to Farmax India Limited” on the Liabilities side and the "amounts receivable from suppliers” on the assets side. Reflecting this treatment, the Company also showed this amount as receivable from FZE. Despite repeated efforts, FZE is unable to recover any of these monies so far and is planning to initiate legal action to recover the funds. However, in line with the prudential accounting principles, in the Statements of Accounts for the year March 31, 2013, these amounts have been written off by FZE without prejudice to the right to recover these amounts. If, eventually, for any unlikely reason, these amounts remain unrecovered, the amounts receivable by the Company from the FZE would also become unrecoverable. Therefore, following prudential accounting principles, the Company has also written off the amount receivable from its wholly-owned UAE subsidiary. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts.

b. As for the remaining amount of USD 56.6 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank, the Company, in August 2012, received a letter from EURAM Bank claiming that the remaining amount had been seized to repay a third party loan to the same Vintage FZE (now known as Alta Vista International FZE) pursuant to a Pledge Agreement alleged to have been executed by the Company with EURAM Bank. The Company did not authorize or execute any such Pledge Agreement and was not aware of any loan from Euram Bank to Vintage FZE. The Company has retained legal counsel in Austria to initiate legal action to recover the amount EURAM Bank seized to satisfy the third party loan. Pending the recovery of the amounts and without prejudice to its rights, the Company decided to write off the amounts, in line with the prudential accounting principles. Accordingly, in the previous year, the balance of USD 56.60 million (equivalent to Rs. 2515.62 million as per the exchange rates prevalent at the time) on deposit with EURAM Bank was written off with a corresponding decrease in the securities premium account. Notwithstanding this accounting treatment, based on legal opinion, the Company is confident of recovering the amounts.

Corporate Governance:

As required by Clause 49 of the listing agreement, a separate report on Corporate Governance together with a certificate of Statutory Auditors of the Company forms part of this report as per Annexure III.

Formation of Various Committees:

Details of various committees constituted by the Board of Directors as per the provisions of Clause 49 of the Listing Agreement and Companies Act, 1956 are given in the Corporate Governance Report annexed and forming part of this report.

Directors:

Pursuant to the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. A V Rama Raju, Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

Increase in Share Capital:

During the year under review the Company has issues 150.00 Million Equity Shares of Re. 1/- each at an Issue Price of Rs. 1.44/- each to Promoters and other on preferential basis. Issued Capital of the Company is increased from Rs. 260.64 Million to Rs. 410.64 Million, thus the Subscribed and Paid-up Capital of the Company is increased from Rs. 258.30 Million to Rs. 408.30 Million.

Employee Stock Option Scheme:

Farmax has introduced Employees Stock Option Scheme-2009 (Farmax ESOS – 2009) to enable the employees of the Company to participate in the future growth and financial successes of the Company. As per the ESOS scheme 80% of the options have been granted and vested during 2009-2010 and the balance 20% of options vesting & exercise period is still due.

Directors'' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, the Board of Directors of the Company hereby confirms that:

1. In preparation of the annual accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed;

2. The Board of Directors of the Company have selected appropriate 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 as at 31st March, 2013 and of the profit and cash flow of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. The annual accounts have been prepared on a going concern basis.

Subsidiary Company:

Your Company has a subsidiary in the name of Farmax International FZE in UAE floated for the purpose of the expansion of the business of the Company and its products in the overseas market. The Subsidiary has also contributed to the overall growth in the business of the Company. The Consolidated Financial Result of the subsidiary is also presented along with the Company''s financials.

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 dated 8th February, 2011 exempted the Holding Companies from attaching Annual Reports of Subsidiary Companies with the Balance Sheet of the Holding Company as per Section 212(8) of the Companies Act, 1956. In view of the same, the individual Annual Reports of Subsidiary Companies are not attached with the Balance Sheet of your Company.

A statement showing brief financial details of the Subsidiaries as per the requirements of aforesaid General Circular is included in the Annual Report.

Shareholders interested in obtaining the statement of Company''s interest in the subsidiaries or stand-alone financial statements of the Subsidiary Companies may obtain it by writing to the Company Secretary of the Company. The same are also available for inspection by any member at the registered office of the Company.

Personnel:

No employee was in receipt of remuneration exceeding the limits prescribed under section 217 (2A) of the Companies Act, 1956 and the rules framed there under, as amended from time to time.

Corporate Social Responsibility:

Integrating the social, economic and environmental agenda in the fabric of its business and operations is the main agenda of your Company. This requires the business, to identify the relevant impact areas and define strategies that drive consumer preference, and in parallel, address these issues i.e. strategies that do well by doing good. The reasons for growing the business sustainably are compelling and your Company sees no conflict between promoting sustainable development and business growth.

Your Company''s vision is to increase the positive impact in the social agenda by improving health and well being, reduce the environmental impact from greenhouse gases, water and waste and work towards prosperity of India and business by enhancing livelihoods amongst farmers through sustainable sourcing and expanding our small distributor model.

Auditors & Auditors'' Report:

Your Company''s Statutory Auditors, M/s. Bhaskara Rao & Associates, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting. The Statutory Auditors have confirmed their eligibility and willingness to accept the office on re-appointment. The necessary resolution seeking your approval for re- appointment of Statutory Auditors has been incorporated in the Notice Convening the Annual General Meeting.

The Board has duly reviewed the Statutory Auditors'' Report on the Accounts. The observations and comments, appearing in the Auditors'' Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors under Section 217(3) of the Companies Act, 1956.

Management Discussion and Analysis:

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of this report as per Annexure II.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The information, in accordance with the provisions of 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, regarding conservation of energy, technology absorption and foreign exchange earnings and outgoings, are attached as Annexure- I to this Report.

Trade Relations:

Your Directors wish to thank the Retailers, Wholesalers, Distributors, Suppliers of Goods & Services, Clearing & Forwarding Agents and all other business associates and acknowledge their efficiency and continued support in promoting such healthy growth in the Company''s business.

Human Resources:

Your Company continuously invests in people development, identifying and grooming management talent and has a culture of harnessing people power to the maximum.

Appreciation:

Your Directors wish to express their sincere appreciation to the Central Government, the State Governments, bankers and the business associates for their excellent support and look forward to continued support in future. Your Directors wish to place on record their appreciation to the employees at all levels for their hard work, dedication and commitment, which has enabled the Company to progress.

On behalf of the Board of Directors of M/s. Farmax India Limited

Sd/-

Date: 27.06.2013 M. Srinivasa Reddy

Place: Hyderabad Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 17thAnnual Report of the Company together with its Audited Profit and Loss Account for the year ended 31 st March, 2012 and Balance Sheet as on that date.

Financial Results

Key aspects of your Company's consolidated financial performance and standalone financial results for the year 2011 - 12 are tabulated below:

(Rupees in Millions) Particulars Consolidated Results Standalone Results

2011-12 2010-11 2011-12 2010-11

Sales and other income 933.98 908.25 931.78 785.08

Total Expenditure other than Finance Charges and 862.02 820.35 861.15 698.24 Depreciation

Gross Profit before Depreciation, Finance 71.96 87.90 70.63 86.84

Charges and Tax

Finance Charges 48.20 37.43 48.20 37.31

Depreciation and Amortisation 46.79 24.46 46.79 24.46

Profrt/(Loss) Before Tax (23.03) 26.01 (24.37) 25.07

Provision for Tax (5.98) 0.72 (5.98) 3.64

Profit/ (Losses) after tax (17.05) 22.37 (18.39) 21.44

Surplus brought forward from previous year 62.73 40.36 61.79 40.36

Balance available for appropriations 45.68 62.73 43.40 21.44

Appropriations:

Balance Carried to Balance Sheet 45.68 62.73 43.40 61.79





Business Environment:

The Indian Economy is one of the fastest growing markets in the world. It has continuously recorded high growth rates and has become an attractive destination for investments, India's economic growth is expected to remain robust in 2012 and 2013, despite likely headwind of double-dip recessions in Europe and the US, according to a United Nations' annual economic report - World Economic Situation and Prospects 2012. The Indian economy is expected to grow between 7.7 per cent and 7.9 per cent this year, as per the report.

The economy has estimated a growth rate of 6.9 per cent in 2011-12 and is expected to be around 7.6 per cent in the fiscal year 2012-13. The growth has been broad based with a rebound in the agriculture sector which is expected to grow around 2.5 per cent. Manufacturing and Services sector also have registered impressive gains. The Survey reports that the industrial output growth rate was 3.9 per cent while the services sector registered a growth rate of 9.4 per cent in 2011 -12.

Business Performance:

Your Company posted yet another year of impressive performance with high growth and high earnings creating strong business results during the year under review as under:

Consolidated Financial Results:

Your Company's total consolidated revenue for the year under review increased to Rs. 934 Million from Rs. 908 Million in the previous year. The company has faced losses of Rs. 17 million due to the increase in the direct and indirect expenses such as prices of the raw materials, labor costs, increase in fuel cost, Power fluctuations, Regional agitations etc. as against a profit of Rs.22.4 million in the previous year.

The Audited Consolidated Financial Statements, based on the financial statements received from subsidiary of the Company, as approved by their respective Board of Directors have been prepared in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements, Accounting Standard (AS) 23 - Accounting for Investments in Associates and Accounting Standard (AS) 27 - Financial Reporting of interest in Joint Ventures in consolidated financial statement notified under Section 211(3 C) of the Companies Act, 1956 read with the Companies (Accounting Standards) Rules, 2006 (as amended). The said consolidated financial statements form part of this Annual Report and Accounts.

Standalone Financial Results:

On standalone basis, your Company registered gross revenue of Rs. 932 Million as compared to Rs. 785 Million in the previous year. The net loss stood at Rs. 18.4 Million as against a net profit of Rs. 21.5 Millions in the previous year due to the increase in the direct and indirect expenses such as prices of the raw materials, labor costs, increase in fuel cost, Power fluctuations, Regional agitations etc. as against a profit of Rs.22.4 million in the previous year.

Dividend on Equity Shares:

Due to the losses incurred by the Company during the year and also keeping in view the growth and expansion plans, your Directors have decided not to recommend any dividend for the year under review.

ISO 9001:2008:

Your Company continues to maintain its certification as per the International Standards of ISO 9001-2008 Quality Management System and your company is continually committed to improve the implemented QMS.

Goodwill:

The Company has considered writing off the entire goodwill of Rs.. 20.00 Millions as part of AS-14 compliances. Fixed Deposits:

Your Company does not accept or hold any fixed deposits within the meaning of Section 58 A of the Companies Act, 1956 and the rules made there under and as such, no amount on account of principal or interest on fixed deposits was outstanding as on date of the Balance Sheet.

Effect of increase in prices:

As the prices of the raw materials like Wheat, Rava, Maida, Atta etc. has hiked drastically in recent times and due to which the Company is going to incur huge losses.

Based on this reason the Company has decided to reduce or stop the Trading business and marketing of other outsourced products. The Company will continue only manufacturing of its products and their marketing.

Fixed Deposit in Euram Bank:

Your directors after thorough scrutiny here by bring to your notice that the company had fixed deposits amounting to Rs. 2515.62 Millions with EURAM Bank. These amounts pertaining to the GDRS Issued by the company during financial year 2010-11

On receipt of letter from EURAM Bank, your directors discovered that the entire amount of Rs. 2515.62 Millions has been adjusted against pledge of fixed deposits given against a loan taken by a third party by name M/s Alta Vista International FZE, Dubai.

Your directors have serious doubt about collision of M/s Alta Vista International FZE & EURAM Bank. Your company has received a letter of realization/adjustment of Rs. 2515.62 Millions from EURAM Bank on 14 August 2012. M/s Farmax India Limited is initiating all possible legal recourse to safeguard its fixed deposits & book the culprits through a process of legal means available before the company.

With the advent of recent developments your directors are of view that the amount should be, kept under contingent asset category until realization.

To our knowledge M/s EURAM Bank has been notorious in its financial dealings with various Indian Entities. Farmax India Ltd is initiating serious action against M/s EURAM Banks Financial Activities. We also bring to your notice that SEBI has in fact received many complaints against M/s EURAM Bank and its financial dealings across Indian Entities Increase in Share Capital:

Post Balance Sheet date your company has issued 15,00,00,000 Equity Shares of Re. 1/-at an issue price of Rs. 1.44/-to promoters and others on preferential basis on 8"1 of August, 2012. Thus the issued, subscribed and paid-up capital of the Company increased from Rs. 258.30 Million to Rs. 408.3 Million.

Farmax India Limited proposes to expand its business of over the counter products by using the same selling and distribution network of the Company's existing FMCG network. For that the Company has identified market potentiality of the following over the counter medicines and other products such as:

a. Acidity Control Medicines.

b. Medicines for the prevention of Blood Pressure, Stress, and Diabetes.

c. Herbal Mosquito Sticks for reducing of mosquitoes without using any kind of harmful chemicals.

For the above said purpose Company have started Research and development activities. The share application money collected through the recent preferential allotment of Equity Shares will be utilized for carrying out of the research and development activities. Venturing into the Research and Development activities will open new avenues of business for F armax India in future Corporate Governance:

As required by Clause 49 of the listing agreement, a separate report on Corporate Governance together with a certificate of Statutory Auditors of the Company forms part of this report as per Annexure III.

Formation of Various Committees:

Details of various committees constituted by the Board of Directors as per the provisions of Clause 49 of the Listing Agreement and Companies Act, 1956 are given in the Corporate Governance Report annexed and forming part of this report.

Directors:

Pursuant to the requirements of the Companies Act, 1956 and Articles of Association of the Company, Mr. OmkareswarGangaboina, Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

Brief resume of the Director proposed to be re-appointed, nature of their expertise and other details as stipulated under Clause 49 of the Listing agreement are provided in the Notice for convening the Annual General Meeting forming part of this Annual Report. - '

Directors' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms that:

1. In preparation of the annual accounts for the financial year ended 31 st March, 2012, the applicable accounting standards have been followed;

2. The Board of Directors of the Company have selected appropriate 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 as at 31 st March, 2012 and of the profit and cash flow of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. Theannualaccountshavebeenpreparedonagoingconcembasis.

Subsidiary Company:

Your Company has a subsidiary in the name of F armax International FZE in UAE floated for the purpose of the expansion of the business of the Company and its products in the overseas market.

The Consolidated Financial Result of the subsidiary is also presented along with the Company's financials.

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 dated 8th February, 2011 exempted the Holding Companies from attaching Annual Reports of Subsidiary Companies with the Balance Sheet of the Holding Company as per Section 212(8) of the Companies Act, 1956. In view of the same, the individual Annual Reports of Subsidiary Companies are not attached with the Balance Sheet of your Company.

A statement showing brief financial details of the Subsidiaries as per the requirements of aforesaid General Circular is included in the Annual Report.

Shareholders interested in obtaining the statement of Company's interest in the subsidiaries or stand-alone financial statements of the Subsidiary Companies may obtain it by writing to the Company Secretary of the Company. The same are also available for inspection by any member at the registered office of the Company.

Personnel:

No employee was in receipt of remuneration exceeding the limits prescribed under section 217 (2 A) of the Companies Act, 1956 and the rules framed there under, as amended from time to time.

Corporate Social Responsibility:

Integrating the social, economic and environmental agenda in the fabric of its business and operations is the main agenda of your Company. This requires the business, to identify the relevant impact areas and define strategies that drive consumer preference, and in parallel, address these issues i.e. strategies that do well by doing good. The reasons for growing the business sustainably are compelling and your Company sees no conflict between promoting sustainable development and business growth.

Auditors & Auditors' Report:

Your Company's Statutory Auditors, M/s. Chitta & Associates, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting. The Statutory Auditors have confirmed their eligibility and willingness to accept the office on re-appointment. The necessary resolution seeking your approval for re-appointment of Statutory Auditors has been incorporated in the Notice Convening the Annual General Meeting.

The Auditors' Report of the Company is a qualification free report.

Management Discussion and Analysis:

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of this-report as per Annexure II.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The information, in accordance with the provisions of Section 217(i)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgoings, are attached as Annexure-1 to this Report.

Trade Relations:

Your Directors wish to thank the Retailers, Wholesalers, Distributors, Suppliers of Goods & Services, Clearing & Forwarding Agents and all other business associates and acknowledge their efficiency and continued support in promoting such healthy growth in the Company's business.

Human Resources:

Your Company continuously invests in people development, identifying and grooming management talent and has a culture of harnessing people power to the maximum.

Appreciation:

Your Directors wish to express their sincere appreciation to the Central Government, the State Governments, bankers and the business associates for their excellent support and look forward to continued support in future. Your Directors wish to place on record their appreciation to the employees at all levels for their hard work, dedication and commitment, which has enabled the Company to progress.

For and on behalf of the Board of Directors

Sd/-

Date: 05.09.2012 M. Srinivasa Reddy

Place: Hyderabad Managing Director


Mar 31, 2011

The Members

We are delighted presenting the 16th Annual Report with Audited Statements of Accounts for the yea ended 31st March 2011.

FINANCIAL RESULTS

(Rupees in Lakhs)

Particulars 2010-11 2009-10 (for 12 (for 12 months) months)

Gross Sales 7725.10 6445.22

Earnings before Interest, Depreciation, and Tax 868.45 731.92

(EBIDT)

Finance Expenses 373.11 243.11

Depreciation 244.64 166.82

Profit Before Tax (PBT) 250.70 321.99

Provision for taxation including deferred tax and fringe 36.33 77.77 benefit tax

Profit After Tax (PAT) 214.37 244.23

PERFORMANCE REVIEW:

During the year under review your Company achieved sales of Rs.77.25 Crores as against Rs.64.45 Crores in the previous year. The Company made a net profit after tax of Rs.214.37 Lakhs as against Rs.244.23 Lakhs in the previous year. DIVIDEND:

Keeping the Company's expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year.

ISO 9001: 2008:

Your Company continues to maintain its Certification as per International Standards ISO 9001:20( Quality Management System and your Company is fully committed to continually improve upon th implemented QMS.

DIRECTORS:

Ms.P.Hymavathy, Mr.K.B.Prasanth Reddy and Mr. M.V.Rama Sastry have resigned from the Board of Directors of the Company your Board of Directors wishes to place on record its sincere appreciation for their valuable services rendered during their tenure as Directors of the company.

Mr.Omkareswar Ganganboina is appointed as Additional Director during the year under review, further Mr.A.V.Ramaraju -Independent Director office is liable to retirement by rotation at this Annual General Meeting.

EXTENSION OF TO HOLD AGM:

The Board of Directors of your company inform you that your company has been granted permission from the office of the Registrar of Companies, Andhra Pradesh for extension of time of 1 month to hold Annual General Meeting for the financial year2010-2011.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had 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.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

AUDITORS:

Members are informed that M/s. K. Prahlada Rao & Co., Chartered Accountants firm was appointed as Statutory Auditors of the company and are eligible for reappointment as statutory auditor for the financial year 2011-2012. They have furnished a certificate to the effect that their proposed re-reappointment, if made, would be within the limit prescribed under section 224(1B) of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Companies Act, 1956. Your Board recommends their appointment.

EMPLOYEE STOCK OPTION SCHEME:

Farmax has introduced Employees Stock Option Scheme-2009 (Farmax ESOS - 2009) to enable the employees of the Company to participate in the future growth and financial successes of the Company. As per the ESOS scheme 80% of the options have been granted and vested during 2009-2010 and the balance 20% of options vesting &exercise period is due during 2011-2012.

SUBSIDIARY COMPANY:

Your company has a subsidiary company in the name of Farmax International FZE in UAE, floated for the purpose to expand its products in overseas market and the Consolidated Accounts of your subsidiary are presented along with your company's financials.

Vide General Circular.No: 2/2011, Dated: 8th February 2011, the Ministry of Corporate Affairs, GOI has granted a general exemption to companies from attaching the balancesheet, profit and loss account and other documents referred to in section 212(1) of the Act in respect of its subsidiary companies, subject to fulfillment of the conditions mentioned therein. Accordingly, the said documents are not being attached with the Balancesheet of the company. A gist of the financial performance of the subsidiary company is contained in the report.The Annual Accounts of the subsidiary company is open for inspection by any member/ investor and the company will make availaible these documents/ details upon request by any member of the company or to any investor of its subsidiary company who may be interested in obtaining the same. Further , the Annual Accounts of the subsidiary company will be kept open for inspection by any investor at the Companys registered office.

Consolidated Financial statements are attached as required under listing agreement of the stock exchanges.

PARTICULARS OF EMPLOYEES:

No employee was in receipt of remuneration exceeding the limits prescribed under section 217(2A) of the Companies Act, 1956 and the rules framed there under, as amended to date.

PUBLIC DEPOSITS:

Your company has not accepted any deposits falling under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules 1975 during the year.

INFORMATION UNDER SECTION 217 (1) fe) OF THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES. 1988:

A. Conservation of Energy

Efforts are being made to control energy cost wherever possible even though energy cost forms only negligible proportion of total cost of manufacture of the products.

B. Technology absorption

1. Research & Development

Research & Development (R&D) center set-up in Hyderabad has been concentrating in developing products and production process/ system to improve the quality of the product at minimal cost. R&D enhancements, innovative process and production technology bring additional value to all our customers. R&D continually concentrate to improve products, service and processes using the effective quality management system and testing methodology, by implementing changes required to maintain the quality standard.

2. Technology absorption, adaptation, and innovation

Efforts in brief, made towards technology absorption, adaptation and innovation: Installation of sophisticated instrument for R&D, testing and process control measures. Technology has been fully absorbed and adapted for all types of products of the Company.

Benefits derived as a result of the efforts, e.g.: product improvement, cost reduction, and product quality maintenance etc.

(a) Improvement of designs.

(b) Import Substitution.

(c) Cost Reduction.

(d) Product Quality Maintenance & Improvement. (e) New products development.

CORPORATE GOVERNANCE:

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchanges forms a part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

A separate section on Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges forms a part of this Annual Report.

ACKNOWLEDGMENTS:

Your Directors wishes to acknowledge the invaluable support extended to the company by the Central Government, State Governments, Statutory Authorities and Company's Bankers . Your Directors also wish to place on record their sincere thanks and appreciation for the continuing support of Investors, Dealers, Business Associates and Employees in successful performance of the company during the year.

BY ORDER OF THE BOARD

Hyderabad

27 September 2011. Sd/- M. SRINIVASA REDDY Chairman & Managing Director


Mar 31, 2010

We have pleasure in presenting the 15th Annual Report with Audited Statements of Accounts for the year ended 31st March 2010.

FINANCIAL RESULTS:-

(Rupees in Lakhs)

Particulars 2009-10 2008-09 (for 12 months) (for 7 months)

Gross Sales 6445.22 1989.97

Earnings before Interest, Depreciation, and Tax (EBIDT) 731.92 205.87

Finance Expenses 243.11 59.92

Depreciation 166.82 78.05

Profit Before Tax (PBT) 321.99 67.90

Provision for taxation including deferred tax and fringe benefit tax 77.77 25.45

Profit After Tax (PAT) 244.23 42.45

PERFORMANCE REVIEW:

During the year under review your Company achieved sales of Rs.64.45 Crores as against Rs.19.89 Crores in the previous year. The Company made a net profit after tax of Rs.2.44 Crores as against Rs.42.45 Lakhs in the previous year.

DIVIDEND:

Keeping the Companys expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year.

EXTENSION OF TIME TO HOLD AGM:

The Board of Directors of your Company inform you that your Company has been granted permission from the Office of the Registrar of Companies, Andhra Pradesh for extension of time of 2 months and 11 days to hold Annual General Meeting for the financial year 2009-10.

CHANGE OF NAMEO FTHEC O MPANY:

During the year the Name of your Company has been changed to Farmax India Limited and the Fresh Certificate of Incorporation in this regard was granted by the Registrar of Companies, Andhra Pradesh on November 09,2009.

AUTHORIZED CAPITAL:

During the year under review the Authorized Share Capital of your Company was increased to Rs.50 Crores.

TRADING PERMISSION FOR EQUITY SHARES:

During the year the equity shares your Company admitted as permitted securities for trading under Indo Next Segment category of the Bombay Stock Exchange Limited with effect from June 25,2009.

LISTING OF EQUITY SHARES AT NATIONAL STOCK EXCHANGE OF INDIA:

The Board of Directors of your Company pleasure to inform you that the equity shares of the Company got listed at National Stock Exchange of India Limited (NSE) with effect from August 17,2010.

SUB DIVISION OF THE FACE VALUE OF EQUITY SHARES:

Members are aware that during the year under review the face value of equity shares of the Company was sub-divided from Rs. 10/- each into two equity shares of Rs.5/- each. Further, the face value of equity shares was again sub-divided from Rs.5/- each into five equity shares of Re.1/- each by passing necessary resolution through postal ballot process conduced on June 24, 2010.

PREFERENTIAL ISSUE OF SHARES:

During the year under review your Company has issued and allotted 1,60,00,000 equity shares of Re. 1/- each upon conversion of 16,00,000 equity warrants issued in July 2009 on preferential basis.

ISSUE OF GLOBAL DEPOSITORY RECEIPTS (GDRs):

Your Directors are pleasure to inform you that the Company has successfully concluded placement of 51,00,000 GDRs at USD 14.1 per GDR (Representing 12,75,00,000 underlying equity shares of Re. 1/-each) totaling to USD 71.91 Million (INR 318.75 Crores) and the said GDRs have been listed on Euro MTF market of Luxembourg Stock Exchange.

CHANGE IN PAID-UP CAPITAL:

On account of issue of shares on preferential basis, the paid-up capital was increased from Rs.11 Croresto Rs.12.60 Crores as on March 31, 2010. Further, on account of issue of GDRs the paid-up capital of the Company was increased from Rs. 12.6 Crores to Rs.25.35 Crores which were allotted on June 29,2010 and August 14,2010.

ISO 9001: 2008:

Your Company continues to maintain its Certification as per International Standards ISO 9001:2008 Quality Management System and your Company is fully committed to continually improve upon the implemented QMS.

DIRECTORS:

During the year under review Mr. A. N. Sarma, Mr. N. Naveen and Mr. K. V. Chalapati Reddy have resigned as Directors of the Company and Mr. G. Raju has resigned as Director with effect from July 05,2010.

Members are aware that Mr. K B Prasanth Reddy, Mr. M V Rama Sastry who were inducted on the Board on July 30,2009 and Mr. A V Rama Raju who were inducted on October 01,2009 were regularized as Directors of the Company under Section 257 of the Companies Act, 1956 in the postal ballot process conducted on October 04, 2010. Further, the Company has approved through postal ballot process conducted on October 04, 2010 the re-appointment of Mr. Srinivasa Reddy as Managing Director, Mr. Prasanth Reddy and Mr. Malla Reddy as Executive Directors of the Company.

Mrs. P. Hymavathi, and Mr. I. Srinivasa Raju retire by rotation and are eligible for re- appointment and brief particulars of these persons, are given in the Explanatory Statement to the Notice of this Meeting.

The Board commends the re-appointment of these persons as Directors of the Company.

AUDITORS:

Members are aware that Mr. S. Kishore Kumar, Chartered Accountant, Hyderabad has resigned as statutory auditor due to non-compliance of the Peer Review Process as required under Clause 41(1) (h) of the Listing Agreement with Stock Exchanges. Accordingly, M/s. K. Prahlada Rao & Co., Chartered Accountants, Hyderabad have been appointed by the Shareholders through postal ballot process conducted on October 04, 2010 as Statutory Auditors of the Company to hold office up to the conclusion of the ensuing Annual General Meeting. Further, M/s. K. Prahlada Rao & Co., Chartered Accountants will retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment as statutory auditor for the financial year 2010-11. They have furnished a certificate to the effect that their proposed re-reappointment, if made, would be within the limit prescribed under section 224(1 B) of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Companies Act, 1956.

EXPLANATION TO OBSERVATIONS IN THE AUDITORS REPORT:

With respect to the audit observations in point no.7 and 9 (a) of the Annexure to Auditors Report for the financial year, the Board of Directors of your Company explain as follows:

1) For point no.7 with regard to appointment of Internal Auditor: The Board has noted the observation and hereby inform the Members that the Company has appointed Mr. S. Kishore Kumar, Chartered Accountant, Hyderabad as Internal Auditor.

2) For point no.9 (a) with regard to outstanding due of Rs.29.74 Lakhs towards CST payable: The Board noted the same and decided to pay the said amount.

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had 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.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

EMPLOYEE STOCK OPTION SCHEME:

Pursuant to the Special Resolution passed by the Members at the Extra-ordinary General Meeting held on October 24, 2009, Farmax has introduced Employees Stock Option Scheme-2009 (Farmax ESOS - 2009) to enable the employees of the Company to participate in the future growth and financial successes of the Company. Out of 11,00,000 stock options under Farmax ESOS - 2009 with each option convertible into one equity share of Rs.10/- each, the Board of Directors of your Company, based on the recommendations of the Compensation Committee, granted 6,00,000 stock options to its eligible employees, on October 31, 2009. The disclosure required under SEBI Guidelines, in this regard, is furnished in the Annexure.

SUBSIDIARY COMPANY:

In April, 2010 your Company has incorporated a subsidiary company in the name of Farmax International FZE in Dubai, to expand its products in overseas market.

PARTICULARS OF EMPLOYEES:

No employee was in receipt of remuneration exceeding the limits prescribed under section 217(2A) of the Companies Act, 1956 and the rules framed there under, as amended to date.

PUBLIC DEPOSITS:

Your company has not accepted any deposits falling under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules 1975 during the year.

INFORMATION UNDER SECTION 217 (1) (e) OF THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES. 1988:

A. Conservation of Energy

Efforts are being made to control energy cost wherever possible even though energy cost forms only negligible proportion of total cost of manufacture of the products.

B. Technology absorption

Research & Development

Research & Development (R&D) center set-up in Hyderabad has been concentrating in developing products and production process/ system to improve the quality of the product at minimal cost. R&D enhancements, innovative process and production technology bring additional value to all our customers. R&D continually concentrate to improve products, service and processes using the effective quality management system and testing methodology, by implementing changes required to maintain the quality standard.

Technology absorption, adaptation, and innovation

Efforts in brief, made towards technology absorption, adaptation and innovation: Installation of sophisticated instrument for R&D, testing and process control measures. Technology has been fully absorbed and adapted for all types of products of the Company.

Benefits derived as a result of the efforts, e.g.: product improvement, cost reduction, and product quality maintenance etc.

(a) Improvement of designs.

(b) Import Substitution.

(c) Cost Reduction

(d) Product Quality Maintenance & Improvement.

(e) New products development.

C. Foreign Exchange Earnings & Outgo

Foreign Exchange Earnings Nil

Foreign Exchange Outgo Nil

CORPORATE GOVERNANCE:

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchanges form a part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

A separate section on Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges forms a part of this Annual Report.

ACKNOWLEDGMENTS:

Your Directors place on record their gratitude to the Central Government, State Governments, Statutory Authorities and Companys Bankers for the assistance, co-operation and encouragement they extended to the Company. Your Directors also wish to place on record their sincere thanks and appreciation for the continuing support and unstinting efforts of Investors, Dealers, Business Associates and Employees in ensuing an excellent all around operational performance.

BY ORDER OF THE BOARD

Hyderabad November 08, 2010 SD/-

M. SRINIVASA REDDY

Chairman & Managing Director


Mar 31, 2009

We have pleasure in presenting the 14th Annual Report for the 7 months period ended 31st March 2009 together with audited accounts.

FINANCIAL RESULTS:

(Rupees in Lakhs)

Particulars 2008-09 2007-08 (for 7 months)

Gross Sales 1989.97 1681.87

Earnings before Interest, Depreciation, and Tax (EBIDT) 199.60 220.96

Profit Before Tax (PBT) 67.90 49.50

Provision for taxation including deferred tax and fringe benefit tax 25.45 17.90

Profit After Tax (PAT) 42.45 31.60

PERFORMANCE REVIEW:

During the year under review your Company achieved sales of Rs.1989.97 Lakhs as against 1681.87 Lakhs in the previous year. The Company made a gross profit (EBIDT) of Rs. 119.60 Lakhs. Further the company has registered profit after tax (PAT) of Rs. 42.45 Lakhs.

DIVIDEND:

Keeping the Company"s expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year.

ISO 9001: 2008:

Your Company continues to maintain its Certification as per International Standards ISO 9001:2008 Quality Management System and your Company is fully committed to continually improve upon the implemented QMS.

FINANCIAL YEAR:

The Operations as stated are related to only 7 months period starting from 01-09-2008 TO 31-03-2009 due to closure of books of accounts for the previous year on 31-08-2008 for consolidation of accounts of erstwhile Farmax Health & Food Products Private Limited (Amalgamated with the Company).

DIRECTORS:

Members may note that Mr. G. Raju and Mrs. P. Hymavathi retire by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment. Respective resolutions for the appointment of said persons as Directors of the Company are proposed for your approval.

AUDITORS:

Members are aware that M/s. S.S. Sravan & Associates, Chartered Accountants, Hyderabad have resigned as Statutory Auditors of the Company and Mr. S. Kishore Kumar, Chartered Accountant, Hyderabad, appointed in the Extra General Meeting of the shareholders held on December 29, 2008 who will retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had 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.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

PARTICULARS OF EMPLOYEES:

No employee was in receipt of remuneration exceeding the limits prescribed under section 217(2A) of the Companies Act, 1956 and the rules framed there under, as amended to date.

PUBLIC DEPOSITS:

Your company has not accepted any deposits falling under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules 1975 during the year.

INFORMATION UNDER SECTION 217 (1) (e) OF THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES. 1988:

Conservation of Energy

During the year under review your Company has incurred Rs.26,68,645/- towards conservation of energy.

Technology absorption, adaptation, and innovation

The Company constantly evolves and adapts in order to take advantage of technical innovation and advancements in process technology. The Company is planning to implement an ERP solution to complement and boost various process verticals including production planning, finance, purchase, inventory and management information system (MIS).

Research & Development

Research & Development (R&D) center set-up in Hyderabad has been concentrating in developing products and production process/ system to improve the quality of the product at minimal cost. R&D enhancements, innovative process and production technology bring additional value to all our customers. R&D continually concentrate to improve products, service and processes using the effective quality management system and testing methodology, by implementing changes required to maintain the quality standard.

Foreign Exchange Earnings & Outgo

Foreign Exchange Earnings : Nil

Foreign Exchange Outgo : Nil

MANAGEMENT DISCUSSION AND ANALYSIS:

A report on the Management Discussion and analysis for the year under review is annexed hereto and forms part of the Annual Report.

CORPORATE GOVERNANCE:

Your company has taken necessary measures to comply with the provisions of Clause 49 of the listing agreement with the Stock Exchanges in respect of Corporate Governance.

A report on Corporate Governance along with a certificate of compliance from the Auditors is annexed separately to this Annual report.

ACKNOLEDGMENTS:

The Directors wish to place on record their appreciation to for the co-operation and support from the Union Bank of India and the employees at all levels. Your directors would also acknowledge the continued support of the Companys Shareholders.

BY ORDER OF THE BOARD

Place: Hyderabad

Date: 12-05-2009 Sd/-

M. SRTNIVASA REDDY CHAIRMAN


Aug 31, 2008

Mr.Naveen does not hold any shares of the Company We have pleasure in presenting the 13th Annual Report for the 17 months period ended 31st August 2008 together with audited accounts.

FINANCIAL RESULTS:

(Rs. in Lakhs)

2007-08 Particulars 2006-07 (for 17 months)

Gross Sales 1681.87 606.24

Earnings before Interest, Depreciation, and Tax (EBIDT) 220.96 78.20

Profit Before Tax (PBT) 49.50 41.61

Provision for taxation including deferred tax and fringe 17.90 15.56 benefit tax

Profit After Tax (PAT) 31.60 26.05

PERFORMANCE REVIEW:

With the amalgamation of Farmax Health & Food Products Private Limited your Company achieved sales of Rs.1681.87 Lakhs during the year under review as against 606.24 Lakhs in the previous year. The Company made a gross profit (EBIDT) of Rs.220.96 Lakhs. Further the company has registered profit after tax (PAT) of Rs.31.60 Lakhs. The Board of Directors of your Company expects to achieve a turnover of Rs.4000 Lakhs for the financial year 2008-09.

DIVIDEND:

Keeping the Companys expansion and growth plans in mind, your Directors have decided nottodeclare dividend for the year.

CHANGE OF MANAGEMENT OF THE COMPANY:

As you are aware that during the year under review previous promoters of the Company have entered into a Share Purchase Agreement on 1st March 2007 with Mr. M. Srinivasa Reddy for sale of their entire stake of 31,00,000 equity shares in the Company. Accordingly a Public Announcement was given on 5th March 2007 in accordance with the provisions of SEBI (SAT) Regulations, 1997 for acquiring 20% of the total shares of the Company and for to take control of the management and the said offer was closed on 16th July 2007.

CHANGE OF NAME AND OBJECTS:

All of you are aware that in compliance with the object of the takeover as envisaged in the PublicAnnouncement the main objects of your Company were altered by diversifying into FMCG Sector in which the Acquirer has adequate experience and the name of the Company was also changed inconsonance with the altered objects.

ISO 9001: 2000:

Your Company continues to maintain its Certification as per International Standards ISO 9001:2000 Quality Management System and your Company is fully committed to continuallyimproveupon theimplemented QMS.

EXTENSION OF FINANCIAL YEAR:

In viewofamalgamationofFarmax Health&Food Products Private Limited your company obtained permission from the Registrar of Companies, Andhra Pradesh for the extension of financial year.

AMALGAMATION FARMAX HEALTH & FOOD PRODUCTS (P) LTD WITH THE COMPANY:

The Board of Directors of your Company pleasure to inform you that the Honble High Court ofAndhra Pradesh has sanctioned the scheme ofAmalgamation of Farmax Health & Food Products Private Limited by its Order dated 07-07-2008. This merger will result in better and efficient utilization of resources, and strengthening the cash flow position etc.

ACQUISITION OF OBEX HYGIENIC PRODUCTS:

As you are aware that during the year under review your Company has acquired business and assets of M/s. Obex Hygienic Products a partnership firm engaged in manufacturing and marketing of toilet soaps and mosquito coils for a total consideration of Rs.3,50,00,000/-. And your Company has allotted 7,00,000 equity shares to the partners of the said firm towards consideration for the acquisition. With this acquisition the Company is making a way to enter into manufacturing and marketing of toilet soaps, and mosquito coils.

PRODUCTS PROFILE:

Upon amalgamation of Farmax Health & Food Products Private Limited and acquisition of Obex the following products have cometothe foldof your Company.

a) Toothpaste White under the brand name TODAY: One of the first successful products of the Company. TODAY is competing with main brands in rural areas ofAndhra Pradesh.

b) Vermicelli under the brand name TODAY 365 days: This food product became very popular in a very short period and became one of top selling brandinsomeareas.

c) Coconut Oil Non-sticky Hair Oil under the brand name Monsoon: Monsoon isone of the first launching products of the Company. In some areas it became No.1 selling brand. FRL is planning to launch some more products in this range.

d) Coconut Oil under the brand name Today pure: As part of the FRLs plan to launch some more productsin lineof Monsoon launched this product.

e) OTC Pain Killer Drug Today Relief 500+: The Companys Research and Development Centre developed this product. It gained market in rural areas.

f) Soaps - Toilet "Today Beauty: As a part of FRLs plans to venture into skin care products this Today Beauty which is developed by the Companys R&D division launchedin the market.

g) Mosquito Coils Today Advanced: It is also one of the in house product developed by the FRLs R&D Division. The product is moving very fast in someareas.

Your Company manufactures all of the above products from its manufacturing facilities only. It is not outsourcing any of its products from outsiders. As mentioned else where it has very good stateofown manufacturing facilities with modern technology. Your Company is in the process of launching the following products by end of the financial year 2009-10:

a) Tooth Paste Gel

b) ToothBrushes

c) Shampoos

d) Detergent Soaps

e) Iodized Salt

f) Tooth Brushes

g) ShavingCream h) NoteBooks

i) Packaged Drinking Water

Your Company made and completed all tie-ups for producing the above products and launching the same into the market at any movement basing onthe ideas of market teams and to avail the emerging opportunities in the FMCG sector and utilize the spare capacities of plants the Company is entering into contracts to undertake contract manufacturing tocater the needs of the MNCs.

DISTRIBUTION/DEALER NET-WORK, COST ADVANTAGE AND MARKET PENETRATION:

Main idea of your Company is to provide the FMCG products at affordable rates to the lower middle class and low income groups which consists more than 60% country population. At the same time the Company is not compromising at Quality of the product with any other leading branded product. Farmax is able to provide its products at much lower price than leading branded products with the same Quality by saving huge advertisement and other marketing overheads which generally the Multi National FMCG Companies incur. Another main cost saving factor is the dealer net-work of the Company which has been a flat form for the Company to launch its products without any major advertisement and other costs. Farmax has been launching various FMCG products from time to time into the market. One important point to note that all the products of the Company are successful at the first point itself.

Farmax has successfully penetrated into rural markets particularly in the southern states ofAndhra Pradesh and Tamilnadu and has a total dealer net-work ofmore than 650 across the country. Presently the Company has spread its distributory net-work across the countryin13 States.

Farmax is primarily aiming at creating distribution network which is a basic need to any FMCG company for successfully launching its products. Farmaxs dealer net-work is very strong enough to launch any products of the Company into the market with in a short span without incurring any major advertisement campaign.

ISSUE OF SHARES:

As you are aware that during the year under review your Company has issued and allotted 53,43,000 equity shares out of which 40,00,000 equity shares were allotted to the shareholders of Farmax Health & Food Products Private Limited in pursuance of scheme of Amalgamation as sanctioned by the Honble High Court of Andhra Pradesh and 13,43,000 shares were allotted at a price of Rs.50/- per share (including premium of Rs.40/- per share) on preferential basis out of which 6,43,000 shares were allotted for cash consideration and remaining were allotted for a consideration for acquisition of assetsofM/s. Obex Hygienic Products.

FUTURE PLANS:

Your Company having very strong dealer net-work all over Andhra Pradesh and is in the process of expanding and strengthening its net-work to other states as well as in the existing states. Already started appointing dealers in various places with an aim to cover 70% to 80% area of southern India in the next 2 to 3 years. By doing this the Company is aiming to increase its sales by 15 to 20 folds from present level. This is also very cost effective and creates a rapport between the marketer and manufacturer to know the taste of consumer and make the changes in the products. The Company is also planning to create one plat-form to maintain distribution chain with major dealers to spread the productsof the Company to other areas.

As stated elsewhere the Company is in the process of launching various new products (about 10 products) in the market in the current and next financial years. Altogether the Companys product range takes to 22 to 25. To launch these products the Company got the market surveyed and test market of the product in various places to know the opinion and tastes of consumer. Basing on the reports the Company made some changes in the specifications of the product and made them to launch inthe market shortly.

Your Company is also planning to establish retail net-work in a big way by setting-up exclusive shops for the products of the Company through the dealers mainly in semi- urban and rural areas aiming the lower middle class and low income groups who can not afford Multi-National Companies branded products. For this the Company made a plan to open 50 to 100 retail outlets to market exclusively the Companys products in collaboration with local dealers/ shop owners with an understanding exclusively to market the Companys products in the segments where the products of the Company are available.

Your Company is planning to deploy about Rs.50 to Rs.70 Crores in the next 2 to 3 years to establish 50 to 100 retail shops and expand the existing production capacities to market exclusively the Companys product range.

Besides, Farmax is also looking at contract manufacturing as there is huge demand from the MNCs and big retailers due to cost advantages. Big retail shopping malls are giving good scope to the small players to launch their products in the market with minimal cost. Keeping in view this as and when the new plants are setup, the Company has been setting-up with maximum capacities as the differential cost is very minimum for the low capacity and high capacity machine.

DIRECTORS:

Members may note that Mr. Mr. I. Srinivasa Raju, retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Respective resolution for the appointment of said person as Director of the Company is proposed for your approval.

Members may also note that during the year under review Mr. M. Srinivasa Reddy, Mr. M.Malla Reddy, Mr. G. Raju, Mrs. P. Hymavathi, Mr. A N Sarma, Mr. K. Chalapati Reddy and Mr. N. Naveen were appointed as Additional Directors of the Company and the respective resolutions for the appointment of said persons as Directors are proposed for your approval.

Further note that Mr. P S R Brahmam, Mr. V. Vamsi Mohan, Mr.T V Satyanarayana, Mr. V. Shanti Kiran, and Mrs.T.Annapurna resignedas Directors ofthe Company.

The above changes in Board of Directors have been taken place consequent to the changeofmanagementinaccordancewith the SEBI(SAT) Regulations.

AUDITORS:

M/s. S.S. Sravan & Associates, Chartered Accountants, Hyderabad, will retire at the conclusionofthe ensuingAnnual General Meeting and are eligible for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the CompaniesAmendmentAct, 2000, your directors confirm --

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had 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.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of thisAct for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accountson the going concern basis.

PARTICULARS OF EMPLOYEES:

No employee was in receiptofremuneration exceeding the limits prescribed under section 217(2A) of the Companies Act, 1956 and the rules framed there under, as amended to date.

PUBLIC DEPOSITS:

Your company has not accepted any deposits falling under Section 58Aof the Companies Act, 1956 read with the Companies (Acceptance ofDeposits) Rules 1975 during the year.

INFORMATION UNDERSECTION 217(1)(e) OF THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES,1988:

Conservation of Energy

During the year under review your Company has incurred Rs.8,06,254/- towards conservation of energy.

Technologyabsorption,adaptation,andinnovation

The Company constantly evolves and adapts in order to take advantage of technical innovation and advancements in process technology. The Company is planning to implement an ERP solution to complement and boost various process verticals including production planning, finance, purchase, inventory and management information system (MIS).

Research & Development

The Company made a significant leap forward in the product range and commitment to move closer to the customers with the dedicated R&D team. Research & Development center set-up in Hyderabad has been concentrating in developing products and production process/ system to improve the quality of the product at minimal cost. R&D enhancements, innovative process and production technology bring additional value to all our customers. R&D continually concentrate to improve products, service and processes using the effective quality management system and testing methodology, by implementing changes required tomaintain the quality standard.

Foreign Exchange Earnings & Outgo

Foreign Exchange Earnings: Nil

Foreign ExchangeOutgo : Rs.968753/-

MANAGEMENT DISCUSSION AND ANALYSIS:

Areport on the Management Discussion and analysis for the year under review isannexed hereto and forms part oftheAnnual Report.

CORPORATE GOVERNANCE:

Your company has taken necessary measures to comply with the provisions of Clause 49 of the listing agreement with the Stock Exchangesin respectof Corporate Governance.

Areport on Corporate Governance along with a certificate of compliance from theAuditors and also the Management Discussion and Analysis report are annexed separately to this Annual report.

ACKNOLEDGMENTS:

The Directors wish to place on record their appreciation to for the co-operation and support from the Union Bank of India and the employees at all levels. Your directors would also acknowledge the continued support ofthe Companys Shareholders.

By order of the board

Place: Hyderabad

Sd/- Date: 12-09-2008

(M. SRINIVASA REDDY)

CHAIRMAN & MANAGING DIRECTOR

 
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