1.  We have audited the attached Balance sheet of M/s. FARMAX INDIA
 LIMITED, Hyderabad as at 31st March 2011 and also the profit and Loss
 Account for the period ended on that date annexed thereto.  These
 Financial statements are the responsibility of the Company''s
 Management. Our responsibility is to express an opinion on these
 financial statements based on our Audit.
 
 2.  We conducted the Audit in accordance with auditing standards
 generally accepted in India.  Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation.
 
 We believe that our audit provides a reasonable basis for our opinion.
 
 3.As required by the Companies (Auditor''s Report) Order, 2003 issued by
 the Central Government of India, in terms of section 227(4A) of the
 Companies Act, 1956 and as amended from time to time, we enclose a
 statement on the matters specified in Paragraphs 4 and 5 of the said
 Order to the extent applicable.
 
 4. Further to my comments in the Annexure referred to in paragraph (3)
 above, we report that:
 
 i.  We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit.
 
 ii. In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of the
 Books and proper returns and proper returns adequate for the purposes
 of our audit have been received from the branches not visited by us.
 
 i.  The Balance Sheet and Profit and Loss Account dealt with by this
 Report are in Agreement with the Books of account of the Company and
 with the returns from the Branches.
 
 ii.  In our opinion, the balance Sheet and Profit and Loss Account
 dealt with by this report comply with the, Accounting Standards
 referred to in sub-section (3C) of section 211 of the companies Act
 1956.
 
 iii.  On the basis of written representations received from the
 Directors as on 31st March, 2011, and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March 2011 from being appointed as a director in terms of Clause
 (g) of sub-section (1) of the section 274 of the Companies Act, 1956.
 r»s
 
 iv.  In our opinion and to the best of our information and according to
 the explanations given to us said accounts read with the notes thereon,
 give the information required by the Companies Act,1956, in the manner
 so required and giveatrue and fairview in conformity with the
 accounting principles generally accepted in India.
 
 a) In the case of the Balance Sheet, of the state of the Company as at
 March 31, 2011 and
 
 b) In the case of the Profit and Loss Account, of the profit for the
 period ended on that date.
 
 ANNEXURE TO AUDITOR''S REPORT:
 
 Referred to in Paragraph 3 of our Report of even date: 1) In respect of
 Fixed Assets:
 
 a) The Company has maintained proper records showing full particulars
 including Quantitative details and situation of fixed assets.
 
 b) As explained to us, the fixed assets have been physically verified
 by the management at regular intervals during the year, which in our
 opinion is reasonable, having regard to the size of the company and
 nature of its assets. No material discrepancies were noticed on such
 physical verification.
 
 c) In our opinion, the Company had not disposed of any substantial part
 of fixed assets during the year.
 
 2)In respectofInventory:
 
 a) As explained to us, the inventory comprises of Raw - Material and
 finished goods have been verified and reconciled during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 b) In our opinion and according to the information as explanations
 given to us, the procedures of verification of inventory comprises of
 raw material, finished goods and packing material, followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 c) The Company has maintained proper records of inventory comprise of
 raw-material and finished goods. As explained to us, there were no
 discrepancies noticed on verification of such securities when compared
 to the records.
 
 3) In respect of Loans given and taken:
 
 a) According to the information and explanations given to us, the
 Company has not granted loans (Secured or unsecured) to the Companies,
 Firms or other parties listed in the register maintained under Section
 301 of the Companies Act 1956.
 
 b) The company has advanced an amount of Rs. 66,88,08000/- as unsecured
 loans to its wholly owned subsidiary company M/s. FARMAX INTERNATIONAL
 (FZE), SAIF ZONE-SHARJAH, UAE. Rate of interest and other terms and
 conditions of such loans are not prima-facie not prejudicial to the
 interest of the company.
 
 c) The Company has kept an amount of Rs.64,11,489/- as Inter Corporate
 Deposit in M/s.  REMIDICHERLA INFRA AND POWER LIMITED in which Mr.
 Srinavasa Reddy is also the MD.
 
 4). In our opinion and according to the information and explanations
 given to us, there are adequate internal, control procedures
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory, fixed assets and also for the
 sale of goods.
 
 5).  In respect of transactions covered under Section 301 of the
 Companies Act, 1956:
 
 a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements, that needed
 
 to be entered into in the register maintained under Section 301 of the
 Companies Act, 1956 have been so entered,
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five Lakhs in
 respect of any party during the year have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 6) In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from the public and
 therefore the provisions of Section 58 A and 58 AA of the Companies
 Act, 1956 and Rules there under are not applicable to the company.
 
 7) In our opinion, and according to the information and explanations
 given to us, the Company does not have internal audit system
 commensurate with its size and nature of its business. We have been
 informed by the company that, they are in the process of appointing
 internal auditors to commensurate with the size and nature of
 
 its business.
 
 8) As per the information and explanation provided to us, the Central
 Government has not prescribed maintenance of Cost Records under section
 209(1) (d) of the Companies Act, 1956 in respect of activities carried
 out by the company.
 
 9) In respect of statutory dues:
 
 a) The Company has not provided liability on ESOPS; however management
 has informed that the liability does not arise at this juncture. The
 Company is advised to obtain a proper legal opinion from a legal firm
 on this subject matter.
 
 b) According to the information and explanation given to us, there are
 no statutory dues of any nature, which have not been deposited on
 account of any dispute.
 
 10) The Company does not have accumulated losses at the end of the
 financial year more than 50% of its net worth and the Company has not
 incurred cash loss during the financial year covered by our Audit and
 in the financial year immediately preceding the financial year.
 
 11) Based on our audit procedures and as per the information and
 explanations given to us by the management. We are of the opinion that
 the company has not defaulted in repayment of dues to a financial
 institution and bank or debenture holders.
 
 12) According to the information and explanations given to us, the
 company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities. |
 
 13) The provisions of any Special statue applicable to Chit Fund, Nidhi
 or Mutual Benefit Fund/ Society are not applicable to the Company.
 
 14) In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly Provisions of
 Paragraph 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are
 not applicable to this company.
 
 15) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks and financial institutions.
 
 16) According to information and explanations given to us, in my
 opinion the term loans were applied for the purpose for which they were
 obtained.
 
 17) According to information and explanations given to us and on an
 overall examination of the Balance sheet of the Company, we report that
 the no funds raised on short-term basis have been used for long-term
 investment. No long-term, funds have been used to finance short-term
 assets except permanent working capital.
 
 18) The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956, during the year.
 
 19) According to the information and explanations given to us the
 company has not issued any debentures during the period covered by our
 audit report
 
 20) The Company has not raised money by way of public issue during the
 year. Accordingly provisions of Paragraph 4(xiv) of the Companies
 (Auditor''s Report) Order, 2003 are not applicable to this company.
 
 21) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 has been noticed or reported during the year.
 
                                              For K. PRAHLADA RAO & CO
 
                                                 Chartered Accountants
 Hyderabad
 September 21,2011                                        Sd/-
                                                   K. PRAHLADA RAO
 
                                                       Partner
 M.No. 018477