| We have audited the accompanying financial statements of FARMAX INDIA
LIMITED ("the Company"), which comprise the Balance Sheet as at 31st
March, 2015, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of the significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
Cash flow of the company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are to be included in the
audit report under the provisions of the Act and rules made there
under.
We conducted our audit in accordance with the Standards on Auditing
specified under section 143(10) of the Act. Those Standards require
that we comply with the ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31st March, 2015, and its profit and its cash flows for the year
ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books.
c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the
directors as on 31st March, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER
LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF FARMAX INDIA LIMITED
On the basis of such checks as we considered appropriate and according
to the information and explanations given to us during the course of
audit, we state that:
(I) (a) The Company is maintaining proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) The assets have been physically verified by the management in
accordance with the phased program of verification adopted by the
Company, which in our opinion is reasonable having regard to the size
of the Company and nature of its assets. According to the information
and explanations given to us, no discrepancy between the book records
and physical inventory was noticed on such verification.
(ii) (a) The inventory has been physically verified by the management
at reasonable intervals during the year. Inventory lying with third
parties and in-transit have been verified by the management with
reference to the confirmations received from them and/or with reference
to subsequent receipt of goods.
(b) In our opinion, the procedures for physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between the physical stock
and book records were not material in relation to the operations of the
Company and have been properly dealt with in the books of account.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Consequently, paragraphs iii (a) and iii
(b) of the said Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in the internal control
system.
(v) No deposits within the meaning of directives issued by RBI (Reserve
Bank of India) and Sections 73 to 76 or any other relevant provisions
of the Act and rules framed thereunder have been accepted by the
Company.
(vi) On the basis of the records produced, we are of the opinion that
prima facie, the cost records and accounts prescribed by the Central
Government under subsection (1) of section 148 of the Act have been
maintained by the Company. However, we are not required to and thus,
have not carried out any detailed examination of such accounts and
records, with a view to ascertain whether these are accurate and
complete.
(vii) (a) The Company is generally regular in depositing undisputed
statutory dues including provident fund, employees' state insurance,
income-tax, sales-tax, wealth tax, service tax, duty of customs, duty
of excise, value added tax, cess and any other statutory dues
applicable with the appropriate authorities. According to the
information and explanations given to us there were no outstanding
statutory dues as on 31st of March, 2015 for a period of more than six
months from the date they became payable except central sales tax of
Rs. 19,65,912.
(b) According to the information and explanations given to us there are
amounts payable in respect of income tax and excise duty which have not
been deposited on account of disputes as detailed below:
Name of Nature Amount Period to which the
The Statute of Dues Amount Relates
The Central Excise 37,39,962 2007-08,
Excise Act Duty 2008-09
1944 and
Penalty 2009-10 &
2011-12
The Income Income 1,74,89,574 2008-09,
Tax Act, Tax 2009-10 &
1961 2010-11
AP VAT VAT 23,84,775 2007-08,
Act, 2005 Audit 2008-09,
Tax 2009-10
Name of Forum Where
The Statute Pending
The Central Appellate Authority
Excise Act - Commissioner
1944
The Income CIT/Tribunals -
Tax Act, Appeals
1961
AP VAT Commercial Tax
Act, 2005 Office, Hydemagai
Circle
(viii) The company has accumulated losses of Rs.133,91,90,300 which
have exceeded the net worth of the company by more than 50% during the
current year. The company has earned cash profit of Rs.11,94,458 during
the current year and incurred cash loss of Rs. 6,82,18,815 in the
preceding year.
The Company has made an application in Form A (Annexure 1) on
01-08-2013for the registration as a sick unit under provision of Sick
Industrial Companies (Special provisions) Act, 1985 as the net worth of
the Company is completely eroded. The same has been registered in the
Board as Case No. 91/2013 as per order dated 17-12-2013 of the
Secretary, Board for Industrial and Financial Reconstruction. It is
pending for determination of sickness.
(ix) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that, the
Company has defaulted in repayment of dues to the bank. We draw your
attention to Note.5 & 7 of Notes to accounts.
(x) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
(xi) In our opinion and according to the information and explanations
given to us, the term loans outstanding at the beginning of the year
were applied, for the purpose for which they were obtained.
(xii) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanations given to us, we have neither come across any instances of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of any such case by the management.
For Vijay Sai Kumar & Associates
Chartered Accountants
Firm Registration No.: 004694S
Sd/-
B. Vijay Sai Kumar
Place : Hyderabad Proprietor
Date : 28.05.2015 Membership No. : 027813
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