Independent Auditor's Report on Standalone Financial Statements
To The Members of PAOS Industries Limited formerly Raj Agro Mills Limited Report on theAudit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of PAOS IndustriesLimited (formerly known as Raj Agro Mills Limited) ("the Company") whichcomprise the Balance Sheet as at 31st March 2019 the statement of Profit andLoss (including Other Comprehensive Income) the statement of changes in Equity and theStatement of Cash Flows Statement for the year then ended and a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 its loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs).Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made there-under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. We havedetermined that there are no key audit matters to communicate in our report.
Information Other than the Financial Statements and Auditor's Report Thereon
The other information comprises the Board's Report and the Corporate Governance Reportbut does not include the consolidated financial statements standalone financialstatements and our auditor's report thereon.
The Company's Board of Directors are responsible for the other Information. The otherinformation comprises the Board's Report and the Corporate Governance Report but does notinclude the consolidated financial statements standalone financial statements and ourauditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with out audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the Indian Accounting Standards (IndAS) prescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablethe matters related to going concern and using the going concern basis of accountingunless the management either intends to liquidate the company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the company's financial reportingprocess.
Auditors' Responsibility for the Audit of Standalone Financial Statements:
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrols.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's However future events or conditions may cause the Company to cease to continueas a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Obtain sufficient appropriate audit evidence regarding the financial informationof the entities or business activities within "the Company" to express anopinion on the standalone financial statements. We are responsible for the directionsupervision and performance of the audit of the financial statements of such entitiesincluded in the consolidated financial.
Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure "A" a statement on the matters specified inparagraphs 3 and 4 of the said Order to the extent applicable.
2. As required under the provisions of section 143(3) of the Act we report that;
a) we have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.
c) the Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the relevant books of account.
d) in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Actread with the Companies(Indian Accounting Standards) Rules 2015 as amended.
e) on the basis of the written representations received from the directors of theCompany as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 312019 from being appointed as a director in termsof Section 164(2) of the Act.
f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company does not have any pending litigations as on March 312019;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There is no such amount which is required to be transferred to the InvestorEducation and Protection Fund by the Company.
For Rajiv Rajeev & Associates Chartered Accountants Sd/-
(CA Rajeev Puri)
Partner M. No: 098937 FRN:019136N
Place: Ludhiana Date: 29.05.2019
ANNEXURE - "A" TO THE INDEPENDENT AUDITORS REPORT ON STANDALONE FINANCIALSTATEMENTS
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the members of PAOS Industries Limited of even date)
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. However presently the company is not maintainingany fixed assets.
(c) The company does not own any immovable property.
(ii) There is no business operation in the company as such it does not have anyphysical inventory. Accordingly reporting under clause 3 (ii) of the Order is notapplicable to the Company.
(iii) The Company has not granted any loan secured or unsecured to the companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013.
(iv) In our opinion and according to the information and explanations given to us thecompanies has not provided any loans investments guarantees and security stated insection 185 and 186 of the Companies Act 2013.
(v) In our opinion and according to the information and explanations given to us thecompany has not accepted any deposit during the year therefore the provisions of clause(v) of paragraph 3 of the Order is not applicable to the company.
(vi) In our opinion and according to information and explanations given to us theCompanies (Cost Records and Audit) Rules 2014 are not applicable to the Company. Hencethe maintenance of cost accounts and records are not required.
(vii) According to information and explanations given to us in respect of statutorydues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 312019 for a period of more than six months fromthe date they became payable.
(viii) The Company has not taken any loans or borrowings from financial institutionbanks government or debenture-holders during the year. Accordingly paragraph 3(viii) ofthe Order is not applicable.
(ix) However the company has not raised any money by way of initial public offer orfurther public offer(including debt instruments) or term loans during the year.Accordingly paragraph 3(ix) of the Order is not applicable.
(x) According to information and explanation given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe year.
(xi) According to information and explanation given to us and based on our examinationof records of the company the company has not paid or provided any managerialremuneration during the year.
Accordingly paragraph 3(xi) of the Order is not applicable.
(xii) In our opinion the company is not a chit fund or a nidhi company. Accordinglyparagraph 3(xii) of the Order is not applicable.
(xiii) According to information and explanation given to us and based on ourexamination of records of the company during the year under review the company has notentered into any transactions with the related parties in terms of section 177 and 188 ofthe Act. Accordingly the provisions of clause (xiii) of paragraph 3 of the Order are notapplicable to the company.
(xiv) The company has made preferential allotment/ private placement of Equity sharesand warrants during the year. The company has raised:-
a) Rs.20000000/- by way of issuing 2000000 (Twenty Lakhs) Equity Shares onPreferential allotment basis at the price of Rs.10/- (Rupees Ten only) per equity shares;and
b) Rs. 2500000/- by way of issuing 1000000 (Ten Lakhs) warrants of Rs. 10/- (RupeesTen only) each convertible into equal number of equity shares of the Company of the facevalue of Rs. 10/- (Rupees Ten only) each at any time within 18 months from the date ofallotment of the Warrants at the price of Rs. 10/- each with nil premium on PreferentialAllotment basis. The allottee of the warrant has paid 25% of the issue price at the timeof subscription and balance 75% of issue price shall be payable within 18 months from thedate of allotment which is 23/08/2018. The Company has complied with the relevantprovisions of the Companies Act 2013 Rules made there-under and the SEBI Regulations.The money so raised has been applied for and used for the purpose for which it was raised.
(xv) According to information and explanation given to us and based on our examinationof records of the company during the year under review the company has not entered intonon-cash transactions with directors or persons connected with him.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Rajiv Rajeev & Associates
(CA Rajeev Puri)
Date : 29.05.2019
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT ON STANDALONE FINANCIALSTATEMENTS
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial control over the financial reporting of"PAOS Industries Limited formerly Raj Agro Mills Limited" ('the company') as of31st March 2019 in conjunction with our audit of the standalone financialstatements of the company for the year ended on that date:
Management's Responsibility for Internal Financial Controls:
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting:
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that-
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Limitations of Internal Financial Controls Over Financial Reporting:
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For Rajiv Rajeev & Associates Chartered Accountants Sd/
(CA Rajeev Puri)
Partner M.No:098937 FRN:019136N
Place: Ludhiana Date : 29.05.2019