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 31,2014, and the Statement of Profit and Lossand Cash Flow Statement for the year then ended, and a summary of significant accountingpolicies 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 Act1) read with General circular 15/2013 dated13th September, 2013 of the Ministry Of Company Affairs in respect of Section.133 of theCompanies Act,2013. This responsibility includes the design, implementation andmaintenance of internal control relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement, 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 involvesperforming procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, includingthe assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditor considers internalcontrol relevant to the Company's preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity'sinternal control. 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.
Basis for qualified opinion:
a) The company has not complied with AS-15 "Employee Benefits" with regard toprovision for gratuity and disclosure requirements specified in the accounting standardand
b) Confirmations for balances outstanding in sundry debtors, advances, trade payables,secured loans and bank balances are not obtained.
Consequently, we are unable to determine whether any adjustments to these amounts arerequired and if there is any impact on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us, except for the possible effects of the matter described in the Basis forQualified opinion Paragraph, the financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:
a) In the case of the Balance Sheet, of the state of affairs of the Company as at March31,2014;
b) In the case of the statement of Profit and Loss, of the loss for the year ended onthat date; and
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.
Report on other Legal and Regulatory Requirements.
1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order"),as amended, issued by the Central Government of India in terms of sub-section (4A) ofsection 227 of the Act, we give in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the best of 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) Except for the possible effects of the matter described in the Basis for Qualifiedopinion Paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, andCash Flow Statement comply with the Accounting Standards referred to in subsection (3C) ofsection 211 of the Companies Act, 1956 read with General circular 15/2013 dated 13thSeptember,2013 of the Ministry Of Company Affairs in respect of Section.133 of theCompanies Act,2013 except non-compliance of AS-15: and
e) On the basis of written representations received from the directors as on March31,2014, and taken on record by the Board of Directors, none of the directors isdisqualified as on March 31, 2014, from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at 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.
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 31st March,2014.
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. In respect of Fixed Assets:
(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 managementduring the year in a phased, periodical manner which in our opinion is reasonable havingregard to size of the Company and nature of its assets. No material discrepancies werenoticed on such physical 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 going concern status of theCompany is not affected.
2. In respect of Inventories:
(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. The Company has neither granted or taken any loans \,secured or unsecured to/fromcompanies, firms or other parties covered in the register maintained under Section.301 ofthe Act. Accordingly sub clause (b), (c) & (d) of clause 4(3) of this order is notapplicable.
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. In respect of transactions covered under Section 301 of the Companies Act, 1956:
a) According to the information & explanations given to us, there have been nocontracts or arrangements referred to in Section 301 of the Companies Act, 1956 during theyear to be entered in the register required to be maintained under that section.Accordingly commenting on the transactions made in pursuance of such contracts orarrangements does not arise; hence clause 5(b) is not applicable.
6. The Company has not accepted any deposits from the public within the meaning ofSection 58A and 58AA and other relevant provisions of the Companies Act, 1956 and theCompanies (Acceptances of Deposits) Rules 1975 are not applicable.
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. In respect of Statutory dues:
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 According to theinformation and explanations given to us there were no outstanding statutory dues as on31st of March, 2014 for a period of more than six months from the date they became payableexcept central sales tax of Rs.19,65,912 and TDS of Rs.69,104.
(b) According to the information and explanations given to us, there are 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||Amount||Period to which the Amount Relates||Forum Where Pending|
|The Central Excise Act 1944||Excise Duty and Penalty||37.40||2007- 08, 2008- 09, 2009- 10 & 2011-12||Appellate Authority - Commissioner|
|The Income Tax Act, 1961||Income Tax||473.48||2008- 09, 2009- 10 & 2010- 11||CIT/Tribunals -Appeals|
|AP VAT Act, 2005||VAT Audit Tax||23.85||2007- 08, 2008- 09, 2009- 10||Commercial Tax Office, Hydernagar Circle|
10. The company has accumulated losses of Rs.131,81,79,136 which have exceeded the networth of the company by more than 50% during the current year. The company has incurredcash losses of Rs.6,82,18,815 during the current year and Rs. 21,45,98,915 in thepreceding year.
The Company has made an application in Form A (Annexure 1) on 01-08-2013 for theregistration as a sick unit under provision of Sick Industrial Companies (Specialprovisions) Act, 1985 as the net worth of the Company is completely eroded. The same hasbeen registered in the Board as Case No. 91 /2013 as per order dated 17-12-2013 of theSecretary, Board for Industrial and Financial Reconstruction. It is pending fordetermination of sickness.
11. Based on our audit procedures and on the information and explanations given by themanagement, we are of the opinion that, the Company has defaulted in repayment of dues tothe bank. We draw your attention to Note.5 & 7 of Notes to accounts.
12. According to the information and explanations given to us, the Company has 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 31st March, 2014, 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 not 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
M Srinivasa Reddy , Chairman & Managing Director
A V Rama Raju , Director
Priyanka Palacarla , Director
Sudheer Reddy , Director
Company Head Office / Quarters:
Big Share Services Pvt Ltd
3rd Flr 306 Rightwin,Amrutha Ville,Somajiguda,Hyderabad-500082