Farmax India Ltd

The Members

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

FINANCIAL RESULTS (Rupees in Lakhs)

PERFORMANCE REVIEW:

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

DIVIDEND:

Keeping the Company's expansion and growth plans in mind, your Directors have decidednot to recommend dividend for the year.

ISO 9001: 2008:

Your Company continues to maintain its Certification as per International Standards ISO9001:2008 Quality Management System and your Company is fully committed to continuallyimprove upon the implemented QMS.

DIRECTORS:

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

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

EXTENSION OF TO HOLD AGM:

The Board of Directors of your company inform you that your company has been grantedpermission from the office of the Registrar of Companies, Andhra Pradesh for extension oftime of 1 month to hold Annual General Meeting for the financial year 2010-2011.

DIRECTORS' RESPONSIBILITY STATEMENT:

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

i) That the directors in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanations relating tomaterial departures.

ii) That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year.

iii) That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and deleting fraud and otherirregularities.

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 firmwas appointed as Statutory Auditors of the company and are eligible for reappointment asstatutory auditor for the financial year 2011-2012. They have furnished a certificate tothe effect that their proposed re-reappointment, if made, would be within the limitprescribed under section 224(1B) of the Companies Act, 1956, and that they are notdisqualified for such re-appointment within the meaning of Section 226 of the CompaniesAct, 1956. Your Board recommends their appointment.

EMPLOYEE STOCK OPTION SCHEME:

Farmax has introduced Employees Stock Option Scheme-2009 (Farmax ESOS - 2009) to enablethe employees of the Company to participate in the future growth and financial successesof the Company. As per the ESOS scheme 80% of the options have been granted and vestedduring 2009-2010 and the balance 20% of options vesting & exercise period is dueduring 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 ConsolidatedAccounts of your subsidiary are presented along with your company's financials.

Vide General Circular.No: 2/2011, Dated: 8th February 2011, the Ministry of CorporateAffairs, 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 theAct in respect of its subsidiary companies, subject to fulfillment of the conditionsmentioned 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 iscontained in the report. The Annual Accounts of the subsidiary company is open forinspection 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 subsidiarycompany who may be interested in obtaining the same. Further , the Annual Accounts of thesubsidiary company will be kept open for inspection by any investor at the Companysregistered office.

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

PARTICULARS OF EMPLOYEES:

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

PUBLIC DEPOSITS:

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

A. Conservation of Energy

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

1. Research & Development

Research & Development (R&D) center set-up in Hyderabad has been concentratingin developing products and production process/ system to improve the quality of theproduct at minimal cost. R&D enhancements, innovative process and productiontechnology bring additional value to all our customers. R&D continually concentrate toimprove products, service and processes using the effective quality management system andtesting 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 controlmeasures. Technology has been fully absorbed and adapted for all types of products of theCompany.

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

CORPORATE GOVERNANCE:

A separate section on Corporate Governance and a certificate from the statutoryauditors of the Company regarding compliance of the conditions of corporate governance asstipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchangesforms a part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

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

ACKNOWLEDGMENTS:

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

BY ORDER OF THE BOARD

Hyderabad

27 September 2011.

Sd/-

M. SRINIVASA REDDY

Chairman & Managing Director