The Shareho Iders,
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.
Key aspects of your Company's consolidated financial performance and standalone financial results for the year 2013-14 are tabulated below:
|Sales and other income||1778.33||5233.54||1778.33||5229.67|
|Total Expenditure other than Depreciation||2464.6||7379.35||2460.51||7375.66|
|Gross Profit before Depreciation and Tax||(686.27)||(2145.81)||(682.18)||(2145.99)|
|Profit Loss Before Tax||(888.39)||(2399.64)||(884.30)||(2399.81)|
|Provision for Tax||-||72.28||-||72.28|
|Profit Loss after tax||(888.39)||(14375.67)||(884.30)||(12731.52)|
|Surplus/Loss brought forward from previous year||456.78||434.03|
|Balance available for appropriations||(13991.18)||(12297.49)|
|Balance Carried to Balance Sheet||(13991.18)||(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.
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.
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.
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.
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.
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 f inancials.
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.
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.
Your Company continuously invests in people development, identifying and grooming management talent and has a culture of harnessing people power to the maximum.
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|
|Date: 20.08.2014||M. Srinivasa Reddy|
|Place: Hyderabad||Managing Director|
Annexure to Directors' Report for the year ended 31st March, 2014
A. Power & Fuel Consumption
|Total Amount (Rs.)||65,07,662||54,86,282|
|(b) Own Generation|
|i. Through Diesel Generator|
|Total Amount (Rs.)||762792||23,34,208|
|ii. Through Steam/Turbine Generator||N.A.||N.A.|
|2. Coal (Specific Quality and where used)||N.A||N.A|
|3. Furnace Oil (Rs.)||1,28,535||59,01,663|
|4. Others/Internal Generation||N.A||N.A.|
Since Company's operations involve low energy consumption, the Company has no comments to offer under Para Assignment (a) to (c) of Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
I. Research & Development
1. Specific areas in which R&D carried out by the Company:
During the Financial Year, the Company continued its Research and Development thrust for improvement of its existing products, process and import substitution. Research work is also being done for the development of new products.
2. Benefits derived as a result of the above R&D:
R&D efforts have helped bringing about an improvement in processes and have resulted in cost reduction and import substitution.
3. Future Plan of Action:
Emphasis will continue to be laid on the existing products and new products.
II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. Efforts, in brief, made towards technology absorption, adaption and innovation: Continued implementation of QC/QA procedures of natural products; new products and processes were successfully adapted on commercial scale to utilize local raw materials and machinery; Technical Services for reliability, quality, cost savings and technology transfer from overseas.
2. Benefits derived as a result of above efforts e.g. product improvement, cost reduction, product development, import substitution, etc. All the above efforts resulted in improving process efficiencies, consistent quality of our products, introduction of new products and import substitution and successful absorption of technology.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Foreign Exchange earnings : Nil
Foreign Exchange Outgo : Nil
|For and onn behalf of the|
|Board of Directors of Farmax India Limited|
|Date: 20.08.2014||M. Srinivasa Reddy|
|Place: Hyderabad||Managing Director|
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