TO THE MEMBERS
Your Directors have the pleasure in presenting the 30thAnnual Report of theCompany together with the Audited Accounts (Standalone and Consolidated) for the financialyear ended 31stMarch 2020.
The financial figures for the year under review are given below:
| || ||(Rs. In Lakhs) |
|PARTICULARS ||CURRENT YEAR ||PREVIOUS YEAR |
| ||2019-2020 ||2018-2019 |
|Revenue from operations ||-- ||-- |
|Other income ||0.53 ||25.22 |
|Profit/(Loss) before Interest Depreciation and Tax ||(14.89) ||(7.27) |
|Less : Interest & Bank charges ||(24.50) ||(22.27) |
|Profit/(Loss) ||(39.39) ||(29.54) |
|Depreciation ||-- ||-- |
|Profit/(Loss) before Tax ||(39.39) ||(29.54) |
|Provision for Current Tax ||0.00 ||0.00 |
|Provision for Deferred Tax ||-37.77 ||-3.92 |
|Profit/(Loss) after Tax ||(1.62) ||(25.62) |
|Transfer to General Reserve ||(1.62) ||(25.62) |
|Other Comprehensive Income for the period ||-- ||-- |
|Basic- Earning per equity share of Rs.10/- ||(0.03) ||(0.50) |
The company has not carried on any business activity during the year under review.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The financial statements have been prepared as per the Ind-AS whereby the preferentialshare capital has been classified into debt liability and to find out the present valuethe nominal value of these preference shares has been discounted @10% being rate ofdividend payable on these shares. The dividend/interest accrued there-upon for therelevant financial year has been included and booked as "finance cost" howeverduring the year under review the amortization of Deferred Revenue through the Statementof Profit & Loss Account has been discontinued in order to stop booking notional"Other Income". As a result of which the loss after tax for the FY 2020 standsat Rs.1.62 lakhs as compared to Rs.25.61 lakhs in FY 2019.
INFORMATION ON STATE OF COMPANY'S AFFAIR
The company has not carried any commercial activity during the year under review. Ithas no labour force but employed only administrative personnel.
The company has entered into joint venture by becoming a Partner in a Partnership Firmnamely "PAOS Productions". The said firm intends to enter into new project ofLaundry Soap Toilet Soap and detergents powder formulations without manufacturing ofLABSA facility. However the said Joint Venture could not start its production during theyear under review. Hence all the expenses incurred on the project during the financialyear 2019-2020 and 2018-2019 were capitalized and accordingly the company's share of Lossfrom the Joint Venture firm in FY 2018-2019 has been re-casted and a corresponding entryhas been passed in company books during the year under review to nullify the effect ofexpenses claimed in the previous year by the Joint Venture Firm. The said Joint venturehas started its commercial production and sales in the ongoing Financial Year 2020-2021.
Your Directors express their inability to recommend any dividend for the year.
During the year under review the Company has not accepted or renewed any depositsfalling within the purview of the Companies Act 2013 and the rules made there-underhowever the company has received and accepted money/loan only from its Managing Directornamely Mr. Sanjeev Bansal which does not fall within the definition of deposits in termsof Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rule 2014 as amended. Theamount of said money/loan stands at Rs.124226641/- as on 31.03.2020. These borrowingsfrom directors are interest free and presently the exact date of their repayment is notcertain because the company is not carrying on any commercial or business activity anddoes not have any operating assets as on date to repay it hence its classification as perInd AS is not presently feasible. However these loans are financial liability and havebeen presented and disclosed under Current Borrowings.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
Since no Dividend declared and paid during last year the provisions of Section 125 ofthe Companies Act 2013 does not apply.
TRANSFER TO RESERVES IN TERMS OF SECTION 134 (3) (J) OF THE COMPANIES ACT 2013
The profit/loss of the current year has been transferred to the Reserves& Surplus.
INCREASE IN EQUITY SHARE CAPITAL
During the year under review the company has allotted 1000000 Equity Shares ofRs.10/- each whereby the Paid Equity Share Capital of the company has been increased fromRs.51036000/- to Rs.61036000/-. The increased equity share capital has been listedon the Bombay Stock Exchange and is eligible for trading on BSE.
On 23-08-2018 the Company had issued and allotted 1000000 warrants("Warrants") of Rs.10/- each convertible into 1000000 equity shares of theface value of Rs. 10/- (Rupees Ten only) each at any time within 18 months from the dateof allotment (23.08.2018) of the Warrants at a price of Rs.10/- each (nil premium). Thesaid Warrants were issued to Promoter & Promoter Group through a preferential issue inaccordance with the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2009 ("ICDR Regulations") and subject tothe approval of members of the Company and other necessary approval(s) of the regulatoryauthorities from time to time (Equity Shares and Warrants collectively referred to as"Securities").
As per the terms of issue of these Warrants the allottees of Warrants were required topay an amount equivalent to 25% of the issue price at the time of subscription andallotment of each Warrant. The balance 75% of the issue price was payable upon exercise ofthe entitlement attached to Warrant(s) to subscribe for equity share(s) within a period ofeighteen months from the date of allotment of Warrants. The initial amount of 25% paidagainst the Warrants was to be adjusted/ set off against the issue price of the resultantequity shares.
The warrant holders have exercised their option to convert the warrants into equityshares and have paid on 13.02.2020 balance 75% allotment amount of Rs.7500000/- againstthe allotment of 1000000 Equity Shares of Rs.10/- each on the conversion of said1000000 warrants. The Board of directors of the company in its meeting held on13.02.2020 has allotted 1000000 equity shares of Rs.10/- each to the warrant holders inrespect of conversion of warrants into equity shares. The company has complied with theapplicable provisions of the Companies Act and filed the return of allotment.
CHANGES IN DIRECTORS
During the year under review Mr. Jatinder Singh resigned from the Board whereas in hisplace Mr. Puneet Singhania was appointed as Independent Directors for a period of 5 yearsin the 29th Annual General Meeting held on 30-09-2019.
Also Mrs Meenu Uppal was appointed as Independent Directors of the Company pursuant toSection 149 of the Companies Act 2013 ("the Act") read with Companies(Appointment and Qualification of Directors) Rules 2014 by the Members at the 25thAnnual General Meeting held on 30th September 2015 to hold office for a period of fiveyear ("first term" as per the explanation to Section 149(10) and 149(11) of theAct). As such the term of Mrs. Meenu Uppal as an Independent Director of the company hadexpired on 30-09-2020 and she ceased to be independent director due to retirement onaccount of termination of her term with effect from that date. However the Board ofDirectors of the company on the recommendation of Audit Committee and Nomination &Remuneration Committee in its Board Meeting held on 23rd October 2020 hasappointed Mrs. Meenu Uppal as Additional Director of the company with effect from 1stOctober 2020 and also proposed her appointment as Independent Director of the Company fora further period of five years.
The Nomination & Remuneration Committee also at its Meeting held on 23-10-2020after taking into account the performance evaluation of Mrs Meenu Uppal as IndependentDirector during her first term of five years and considering the knowledge acumenexpertise and experience in the respective field and the substantial contributions made byher during her first tenure as an Independent Director has recommended to the Board thatcontinued association of her as an Independent Director would be in the interest of theCompany.
The Board has recommended the re-appointment of Mrs Meenu Uppal as an IndependentDirector on the Board of the Company to hold office for the further period of five yearswhich may also be considered as second term of five consecutive years commencing from 1stOctober 2020 and lasting up-to 30th September 2025.
Mr. Sanjeev Bansal is liable to retire by rotation and being eligible offer himself forre-appointment.
PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS UNDER SECTION 185
During the Financial Year 2019-20 the Company has not given any loan or Guarantee orprovided security in connection with a loan to any other body corporate and person andalso the company has not made any investment in any other body corporate. However as thecompany has entered into a Joint Venture by becoming partner in firm PAOS Productionshence in order to provide financial assistance by way of loan to PAOS Productions or otherentities in the group or give guarantee or provide security in respect of loans taken byPAOS Productions or such entities for their principal business activities. The membersmay note that board of directors would carefully evaluate proposals and provide such loanguarantee or security proposals through deployment of funds out of internal resources /accruals and / or any other appropriate sources from time to time only for principalbusiness activities of the entities in its Group. Hence in order to enable the company toadvance loan to or provide guarantee or security in respect of loan taken by theSubsidiaries/ Joint Ventures /associates/ other Companies/ Firms in which Directors areinterested directly or indirectly under section 185 of the Companies Act 2013 theapproval of members by way of a Special Resolution is required.
INDIAN ACCOUNTING STANDARDS (Ind AS)
As mandated by the Ministry of Corporate Affairs the Company has adopted IndianAccounting Standards ("Ind AS") and the Standalone and Consolidated FinancialResults for the year 2019-2020 have been prepared in accordance with Ind AS prescribedunder Section 133 of the Companies Act 2013 read with the relevant rules issued thereunder and the other recognized accounting practices and policies to the extent applicable.
Under section 139 of the Companies Act 2013 and the Rules made there-under it ismandatory to rotate the statutory auditors on completion of maximum term permitted underthe Act. In line with these requirements of the Companies Act 2013 M/s Rajiv Rajeev& Associates Chartered Accountants Ludhiana was appointed as the statutory auditorsof the company to hold office from the conclusion of 27th Annual General Meeting held on29th September 2017 till the conclusion of 32nd Annual GeneralMeeting to be held in the year 2022 subject to ratification by the members at the generalmeeting or as may be necessitated by the Act from time to time. But the company hasreceived a letter dated November 21 2020 from M/s Rajiv Rajeev & AssociatesChartered Accountants Ludhiana whereby they have expressed their intention not tocontinue further and have resigned from their post of Statutory Auditors. Accordingly theratification of their appointment at the ensuing Annual General Meeting cannot beconsidered by the Members.
The Board of Directors on the recommendations of Audit Committee has recommended forthe kind consideration and approval of the Members the appointment of M/s Rakshit Khosla& Associates Chartered Accountants (FRN.017151N) Ludhiana as Statutory Auditors ofthe Company to hold office from the conclusion of 30th Annual General Meeting until theconclusion of 35th Annual General Meeting of company subject to ratification of theappointment by the members at every AGM in accordance with the provisions of the CompaniesAct 2013 and the Rules made there-under. The appointment of M/s Rakshit Khosla &Associates Chartered Accountants (FRN.017151N) Ludhiana as Statutory Auditors shall befor the Statutory Audit of FY 2020-2021 to FY 2024-2025 (both inclusive). The new auditorswho meet the criteria of the said appointment have provided their consent to act asStatutory Auditors of the company.
As the retiring auditors are not being re-appointment hence the business of appointmentof Statutory Auditors has been taken as Special Business instead of Ordinary Business.
Statutory Auditor's Report
The Auditor's Reports on the Standalone and Consolidated Financial Statements for thefinancial year 2020 do not contain any qualification reservation or adverse remark. TheAuditor's Reports are enclosed with the financial statements in this report.
The Statutory Auditors in their report has pointed out that the Gratuity amount hasbeen worked out without going for Actuarial Valuation. The reason for not undertakingActuarial Valuation is that the company has approached LIC for conducting ActuarialValuation of Gratuity but the Ludhiana office of Life Insurance Corporation of India hasopined that as the required number is less than 10 hence they could not proceed forvaluation. There are only two employees that too KMPs in the company as on reporting dateand out of them only one is eligible for Gratuity as on reporting date i.e. 31-03-2020.
As the company is not into operation and does not carry on any manufacturing activitieshence the provisions regarding applicability of Cost Audit are not applicable to thecompany.
As required under section 204 of the Companies Act 2013 and Rules there-under theBoard has appointed M/s Rajeev Bhambri &Associates Practicing Company Secretaries asthe Secretarial Auditor and the said firm had conducted the secretarial audit for thefinancial year 2019-2020. The Secretarial Auditors' Report for the financial year 2020does not contain any qualification reservation or adverse remark. The Auditor's Report isenclosed with this report.
The Company is not in Operation so no independent internal Auditor is appointed inCompany. However the Company has adequate internal financial controls in place and thesame is operating effectively having regard to company's size and operations.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Pursuant to Section 197(12) of the Act read with rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 every listed companyis required to disclose information related to remuneration paid during the year. Thedetailed information in this regard is annexed to this report as
RELATED PARTY TRANSACTIONS
The company has not entered into any specific contract arrangement and transactionwith any of related parties during the year under review. However during the year underreview the company had paid remuneration to the Company Secretary and Chief FinancialOfficer (KMPs) and had obtained loan from Managing Director the detail of thesetransactions is stated in the Notes to accounts to Financial Statements. However asalready reported the company has entered into Joint Venture by becoming a Partner in thefirm namely PAOS Productions wherein the other partners are promoter/persons acting inconcert of promoters of the company. However the company will received only its share ofprofit or loss from the said firm PAOS Productions.
DETAILS AND INFORMATION AS REQUIRED UNDER SECTION 134(3) (l) OF THE COMPANIES ACT 2013
No material changes and commitments have taken place between the end of the financialyear of the Company to which balance sheet relates and date of report which affects thefinancial position of the Company.
The Company is committed to provide the best services to the shareholder/investors. M/sLink Intime India Private Limited New Delhi is working as Registrars and Share TransferAgents (RTA) of the Company for transfer dematerialization of shares and other investorrelated services. No correspondence/ enquiry from any shareholder/investor is pending withthe company for reply.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The company is not engaged in the manufacturing activities or any other commercialactivity as such your Directors express their inability to comment upon the conservationof energy technology absorption measures and there is no the foreign exchange earningsand outgo during the year under review.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return in format MGT-9 for the financial year 2019-20 has beenenclosed with this report as "Annexure II".
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
The company has entered into Joint Venture by becoming a Partner in the firm namelyPAOS Productions wherein the other partners are promoter/persons acting in concert ofpromoters of the company. However the company will received only its share of profit orloss from the said firm PAOS Productions. The company does not have any subsidiary orassociate company neither company is a subsidiary of any company.
DETAILS OF KEY MANAGERIAL PERSONNEL
There is one no change in composition of Key Managerial Personnel during the year underreview.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director inaccordance with section 149 (7) of the Companies Act 2013 that he/she meets the criteriaof independence as laid out in sub section (6) of section 149 of the Companies Act 2013.
DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL
No material order has been passed by any regulator/court/tribunal during the year underreview except that of Consumer Grievance Redressal Forum (CGRF) PSPCL Ludhiana thedetail of which is provided in the Note 5 of Notes to Accounts forming part of FinancialStatements whereby the demand of Rs.15.23 Lakhs has been reduced to Rs.4.99 Lakhs by thesaid Forum along with giving directions to the PSPCL to refund the ACD and Interest on ACDfor the period 2015-16 to 2018-2019.
STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed.
NUMBER OF MEETINGS
During the Financial year 2020 total 4 (Four) Meetings of Board of Directors wereheld. The detailed information about the meetings is given in corporate governance reportwhich forms the part of Annual Report.
RISK MANAGEMENT POLICY
The Board of Directors of your Company has adopted the Risks Management Policy. Thepolicy establishes the process for the management of risk faced by the Company. The aim ofrisk management is to maximize opportunities in all activities and to minimize adversity.This policy applies to all activities and processes associated with the normal operationsof company.
The Policy is to assist the Board of Directors in fulfilling its responsibilities withregard to enterprise risk management. Further the Policy strives to assist the Board inframing implementing and monitoring the risk management plan for the Company andreviewing and guiding the risk policy.
EVALUATION BY BOARD OF ITS OWN PERFORMANCE ITS COMMITTEE AND INDIVIDUAL DIRECTORS WITHREFERENCE TO SECTION 134 (3) (p) OF THE COMPANIES ACT 2013 AND RULE 8(4) OF THE COMPANIES(ACCOUNTS) RULES 2014
Pursuant to the above said provisions of the Companies Act 2013 the Board has carriedout an evaluation of its own performance directors individually as well as the evaluationof the Committees as per the Criteria laid down in the Nomination Remuneration Evaluationpolicy. Further the Independent directors have also reviewed the performance of theNon-Independent Directors and Board as a whole including reviewing the performance of theChairperson of the Company taken into account the views of the Executive Directors and NonExecutive Directors vide their separate meeting held on 13-02-2020 at the Registeredoffice of the Company.
DISCLOSURE ON THE NOMINATION AND REMUNERATION POLICY OF THE COMPANY PURSUANT TO SECTION134(3) (e) AND SECTION 178(3)
SEBI vide notification dated September 02 2015 amended the existing Listing Agreementand bring in force SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 with effect from December 01 2015. So in order to align with the provisions ofRegulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Board of Directors of your Company has re-defined the requisite terms of thereference of Nomination & Remuneration Committee as required under Section 178 of theCompanies Act 2013 and Regulation 19 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The said Committee has framed adopted and recommended"Nomination &Remuneration Evaluation Policy" vide its committee meetingdated February 02 2016. The said policy forms the part of this report which is annexed at"Annexure III".
SEBI vide its notification dated September 02 2015 amended the existing ListingAgreement and bring in force SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with effect from December 01 2015. So in order to align with theprovisions of Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the terms of reference of Audit Committee of the company has beenredefined with the objectives to monitor supervise and effective management of company'sfinance to ensure effective internal financial controls and risk management systems withhigh level of transparency and accuracy.
The Chairman of Audit Committee is an Independent Director and all the members of theAudit Committee are non-executive directors. The composition of the Audit Committeeconsists of two Independent Directors viz. Mrs Meenu Uppal (Chairperson) & Mr. PuneetSinghania (Member) and one Non-Executive Director namely Mrs Rama Bansal. The AuditCommittee met four times during the year the details of which are given in the CorporateGovernance Report which forms the part of this Annual Report.
SEBI vide its notification dated September 02 2015 amended the existing ListingAgreement and bring in force SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with effect from December 01 2015. So in order to align with theprovisions of Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Board of Directors of the Company in its meeting held on February 022016 adopted the Vigil Mechanism Policy in compliance of Companies Act 2013. The Policyis formulated to provide opportunity to employees and directors to report to managementconcerns about unethical behavior actual or suspended fraud or violation of the Code ofconduct or policy. The mechanism provides for adequate safeguards against victimization ofemployees and directors who express their concerns and also provides for direct access toChairman/ Members of Audit Committee in exceptional cases. The policy is applicable to allemployees and directors of the Company.
The policy on Vigil Mechanism and Whistle Blower Policy as approved by the Board may beaccessed on the Company's website at the link:https://www.paosindustries.in/p/investor-services.html
SECRETARIAL AUDIT REPORT
Secretarial Audit Report in format MR-3 by M/s Rajeev Bhambri & Associates CompanySecretaries is annexed with the Board Report. Secretarial Audit Report is annexed herewithas "Annexure IV". There is no adverse remark in it requiringexplanation(s) by the Board.
DIRECTORS RESPONSIBILTY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors of theCompany confirms that-
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) They had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the loss ofthe company for that period;
(c) They had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) They had prepared the annual accounts on going concern basis;
(e) They had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively; and
(f) They had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANLYSIS REPORT
Management Discussion and Analysis Report as required under the Regulation 34 (2) (e)of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are given inthe Annexure-V forming part of this report.
CORPORATE GOVERNANCE REPORT
Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements)Regulations2015 the report on Corporate Governance together with Practicing CompanySecretary's Certificate on compliance with this regard and Managing Director's declarationin this regarding compliance of code of conduct by Board Members and Senior ManagementPersonnel is attached as Annexure-VI and forms part of this Annual Report.
Your Director state that no Disclosure or Reporting is required in respect of thefollowing items as there is no transaction on these items during the year under review.
1. Details relating to Deposits covered under Chapter V of the Act.
2. Issue of Equity Shares with Differential right as to dividend voting orotherwise.
3. Issue of shares with including sweat equity shares to employees of the Companyunder any scheme.
4. No significant or Material order were passed by the regulators or courts ortribunal which impact the going concern status and company's operation in future yourdirector further state that during the year under review there were no case filedpursuant to Sexual Harassment of Women at workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors wish to express their grateful appreciation for the valuable support andco-operation received from sub-brokers business associates vendors bankers financialinstitutions investors stakeholders registrar and share transfer agent other businessaffiliates and media.
The Board places on record its sincere appreciation towards stakeholders for theircontinued co-operation and support to the company and look forward to the continuance ofthis supportive relationship in future.
Your Directors also places on record their deep sense of appreciation for the devotedservices of the employees during the period under review.
| || |
FOR AND ON BEHALF OF THE BOARD
| ||Sd/- ||Sd/- |
| ||(Sanjeev Bansal) ||(Meenu Uppal) |
| ||Managing Director ||Director |
| ||DIN:00057485 ||DIN: 07144268 |
| ||662/2 Premjit Road ||B-34/2129 New Chander Ng |
|Date: 21-11-2020 ||Gurdev Nagar Ludhiana-01 ||Ludhiana-141001 Punjab |
|Place: Ludhiana ||Punjab || |