The Members of
Farmax India Limited.
We have audited the accompanying financial statements of M/s Farmax India Limited,which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit andLoss and Cash Flow Statement for the year then ended, and a summary of significantaccounting policies and other explanatory information.
Management's Responsibility for Financial Statements:
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position, financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956(the 'Act'). This responsibility includes thedesign, implementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
a) In the case of the Balance Sheet, of the state of affairs of the Company as at March31, 2013;
b) In the case of the Profit and Loss Account, of the loss for the year ended on thatdate; and
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.z
Report on other Legal and Regulatory Requirements.
1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books
c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Companies Act, 1956;
e) On the basis of written representations received from the directors as on March 31,2013, and taken on record by the Board of Directors, none of the directors is disqualifiedas on March 31, 2013, from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
Emphasis of Matter:
We draw your attention to Note.26 on exceptional items of expenditure of Rs.1025.94Million provided in the current year which include Bad Debts for trade receivables,Diminution in value of investment in subsidiary and amount receivables from Subsidiarywritten off.
For M/s Bhaskara Rao & Associates
Firm Regn. No. 006171S
Membership No. : 211208
Annexure to Independent Auditor's Report
The Annexure referred to in paragraph 1 of the Our Report of even date to the membersof Farmax India Limited. On the accounts of the company for the year ended 31 March, 2013.
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit, we report that:
1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us, fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us, nofixed asset has been disposed during the year and therefore does not affect the goingconcern assumption.
2. (a) As explained to us, inventories have been physically verified during the year bythe management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
(c) In our opinion and on the basis of our examination of the records, the Company isgenerally maintaining proper records of its inventories. No material discrepancy wasnoticed on physical verification of stocks by the management as compared to book records.
3. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account, the Company has shown a sum of Rs.698.26 Millionsas amount receivable from subsidiary and outstanding on balance sheet date. The entireamount has been written off as Bad Debts and provided for accordingly. For this purpose wedraw your attention to Note.26 (ii) of notes to accounts.
(b) According to the information and explanations given to us and on the basis of ourexamination of the books of account, the Company has not taken loans from companies, firmsor other parties listed in the register maintained under Section 301 of the Companies Act,1956.
4. In our opinion and according to the information and explanations given to us, thereis generally an adequate internal control procedure commensurate with the size of thecompany and the nature of its business, for the purchase of inventories & fixed assetsand payment for services & for sale of goods. During the course of our audit, no majorinstance of continuing failure to correct any weaknesses in the internal controls has beennoticed.
5. a) Based on the audit procedures applied by us and according to the information andexplanations provided by the management, the particulars of contracts or arrangementsreferred to in section 301 of the Act have been entered in the register required to bemaintained under that section.
b) As per information & explanations given to us and in our opinion, thetransaction entered into by the company with parties covered u/s 301 of the Act does notexceed five Lacs rupees in a financial year therefore requirement of reasonableness oftransactions does not arise.
6. The Company has not accepted any deposits from the public covered under section 58Aand 58AA of the Companies Act, 1956.
7. As per information & explanations given by the management, the Company has aninternal audit system commensurate with its size and the nature of its business.
8. As per information & explanation given by the management, maintenance of costrecords has been prescribed by the Central Government under clause (d) of sub-section (1)of section 209 of the Act and we are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.
9. (a) According to the records of the company, undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund, Employees' State Insurance,Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to theextent applicable and any other statutory dues have regularly deposited with theappropriate authorities. According to the information and explanations given to us therewere no outstanding statutory dues as on 31 of March, 2013 for a period of more than sixmonths from the date they became payable except central sales tax ofRs.1.97Millions.
(b) According to the information and explanations given to us, there are amountspayable in respect of income tax and excise duty which have not been deposited on accountof disputes as detailed below.
|Name of the Statute ||Nature of Dues || |
Amou nt in millio ns
|Period to which the Amount Relates ||Forum Where Pending |
|The Central Excise Act 1944 ||Excise Duty and Penalty || |
|2007-08, 2008-09, 2009-10 & 2011-12 ||Appellate Authority - Commissioner |
|The Income Tax Act, 1961 ||Income Tax || |
|2008-09 2009-10 & 2010-11 ||CIT Appeals |
10. The company has accumulated losses of Rs.1229.75 Millions which have exceededthe net worth of the company by more than 50% during the current year. The company hasincurred cash losses of Rs.214.60 millions during the current year but not in thepreceding year.
11. Based on our audit procedures and on the information and explanations given bythe management, we are of the opinion that, the Company has defaulted in repayment of duesto a financial institution, bankor debenture holders. We draw your attention to Note. 5& 7 of Notes to accounts.
12. According to the information and explanations given to us, the Company has notgranted loans and advances on the basis of security by way of pledge of shares, debenturesand other securities.
13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore,the provision of this clause of the Companies (Auditor's Report) Order, 2003 (as amended)is not applicable to the Company.
14. According to information and explanations given to us, the Company is not tradingin Shares, Mutual funds & other Investments.
15. According to the information and explanations given to us, the Company has notgiven any guarantees for loan taken by others from a bank or financial institution.
16. Based on our audit procedures and on the information given by the management, wereport that the company has not raised any term loans during the year.
17. Based on the information and explanations given to us and on an overall examinationof the Balance Sheet of the Company as at 31 March, 2013, we report that no funds raisedon short-term basis have been used for long-term investment by the Company.
18. Based on the audit procedures performed and the information and explanations givento us by the management, we report that the Company has made preferential allotment ofshares during the year the terms of which are not prejudicial to the interests of theshare holders.
19. The Company has no outstanding debentures during the period under audit.
20. The Company has not raised any money by public issue during the year.
21. Based on the audit procedures performed and the information and explanations givento us, we report that no fraud on or by the Company has been noticed or reported duringthe year, nor have we been informed of such case by the management.
For M/s Bhaskara Rao & Associates
Firm Regn. No. 006171S
Membership No. : 211208