(As required by Section 26 of Companies Act 2013 read with Rule 4 of Companies(Prospectus and Allotment of Securities) Rules 2014) To
The Board of Directors Quality RO Industries Limited
We have examined the attached Restated Audited Financial Information of Quality ROIndustries Limited (formerly known as Quality RO Industries Private Limited) ( hereunderreferred to "the Company" "Issuer") comprising the Restated Statementof Assets and Liabilities as at November 30 2021 the Restated Statement of Profit &Loss the Restated Cash Flow Statement for the stub period ended on November 30 2021 theSummary statement of Significant Accounting Policies and other explanatory Information(Collectively the Restated Financial Information) as approved by the Board of Directors intheir meeting held on December 15 2021 for the purpose of inclusion in the OfferDocument prepared by the Company in connection with its Initial Public Offer of EquityShares (IPO) and prepared in terms of the requirement of:-
a) Section 26 of Part I of Chapter III of the Companies Act 2013 as amended (the"Act");
b) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2018 ("ICDR
Regulations") as amended (ICDR Regulations"); and
c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by theInstitute of Chartered Accountants of India as amended from time to time. ("TheGuidance Note").
The Company's Board of Directors is responsible for the preparation of the RestatedFinancial Information for the purpose of inclusion in the offer document to be filed withStock Exchange Securities and Exchange Board of India and Registrar of CompaniesAhmedabad in connection with the proposed IPO. The Restated Financial Information havebeen prepared by the management of the Company for the stub period ended on November 30\on the basis of preparation stated in ANNEXURE D to the Restated Financial Information.The Board of Directors of the company's responsibility includes designing implementingand maintaining adequate internal control relevant to the preparation and presentation ofthe Restated Financial Information.
We have examined such Restated Financial Information taking into consideration:
a) The terms of reference and terms of our engagement agreed upon with you inaccordance with our engagement letter dated September 09 2021 in connection with theproposed IPO of equity shares of the Company;
b) The Guidance Note also requires that we comply with the ethical requirements of theCode of Ethics issued by the ICAI;
c) Concepts of test checks and materiality to obtain reasonable assurance based onverification of evidence supporting the Restated Financial Information; and
d) The requirements of Section 26 of the Act and the ICDR Regulations. Our work wasperformed solely to assist you in meeting your responsibilities in relation to yourcompliance with the Act the ICDR Regulations and the Guidance Note in connection with theIPO.
These Restated Financial Information have been compiled by the management from:
a) Audited financial statements of company as at and for the stub period ended onNovember 30 2021 prepared by us in accordance with the Accounting Standards as prescribedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 asamended and other accounting principles generally accepted in India.
The audit report on the financial statements were modified and included followingmatter(s) giving rise to modifications on the financial statements as at and for theperiod ended on November 30 2021: -
a) The Restated Financial Information or Restated Summary Financial Statement have beenmade after incorporating adjustments for the changes in accounting policiesretrospectively in respective financial period to reflect the same accounting treatment asper the changed accounting policy for all reporting periods if any; b) The RestatedFinancial Information or Restated Summary Financial Statement have been made afterincorporating adjustments for prior period and other material amounts in the respectivefinancial period to which they relate and there are no qualifications which requireadjustments;
c) Extra-ordinary items that needs to be disclosed separately in the accounts has beendisclosed wherever required;
d) There were no qualifications in the Audit Report issued by us for the Period EndedNovember 30 2021 which would require adjustments in this Restated Financial Statements ofthe Company;
e) Profits and losses have been arrived at after charging all expenses includingdepreciation and after making such adjustments/restatements and regroupings as in ouropinion are appropriate and are to be read in accordance with the Significant AccountingPolices and Notes to Accounts as set out in ANNEXURE D to this report;
f) Adjustments in Restated Financial Information or Restated Summary FinancialStatement have been made in accordance with the correct accounting policies
g) There was no change in accounting policies which needs to be adjusted in theRestated Financial Information or Restated Summary Financial Statement;
h) There are no revaluation reserves which need to be disclosed separately in theRestated Financial Information or Restated Summary Financial Statement
i) The Company has not paid any dividend since its incorporation.
In accordance with the requirements of Part I of Chapter III of Act including rulesmade there under ICDR Regulations Guidance Note and Engagement Letter we report that:
a) The "Restated Statement of Assets and Liabilities" as set out in ANNEXUREA to this report of the Company as at November 30 2021 is prepared by the Company andapproved by the Board of Directors. These Restated Summary Statement of Assets andLiabilities have been arrived at after making such adjustments and regroupings to theindividual financial statements of the Company as in our opinion were appropriate andmore fully described in Significant Accounting Policies and Notes to Accounts as set outin ANNEXURE D to this Report.
b) The "Restated Statement of Profit and Loss" as set out in ANNEXURE B tothis report of the Company for the stub period Ended on November 30 2021 is prepared bythe Company and approved by the Board of Directors. These Restated Summary Statement ofProfit and Loss have been arrived at after making such adjustments and regroupings to theindividual financial statements of the Company as in our opinion were appropriate andmore fully described in Significant Accounting Policies and Notes to Accounts as set outin ANNEXURE D to this Report.
c) The "Restated Statement of Cash Flow" as set out in ANNEXURE C to thisreport of the Company for the stub period ended on November 30 2021 is prepared by theCompany and approved by the Board of Directors. These Statement of Cash Flow as restatedhave been arrived at after making such adjustments and regroupings to the individualfinancial statements of the Company as in our opinion were appropriate and more fullydescribed in Significant Accounting Policies and Notes to Accounts as set out in ANNEXURED to this Report.
We have also examined the following other financial information relating to the Companyprepared by the Management and as approved by the Board of Directors of the Company andannexed to this report relating to the Company for the stub
Period ended on November 30 2021 proposed to be included in the Draft Prospectus /Prospectus ("Offer Document") for the proposed IPO.
|Restated Statement of Share Capital Reserves And Surplus ||Annexure A.1 & Annexure A.2 |
|Restated Statement of Long Term Borrowings ||Annexure A.3 |
|Restated Statement of Deferred Tax Liability/Assets ||Annexure A.4 |
|Restated Statement of Short Term Borrowing ||Annexure A.5 |
|Restated Statement of Trade Payables ||Annexure A.6 |
|Restated Statement of Other Current Liabilities And Short Term Provisions ||Annexure A.7 & Annexure A.8 |
|Restated Statement of Fixed Assets ||Annexure A.9 |
|Restated Statement of Long Term loans & Advances ||Annexure A.10 |
|Restated Statement of Inventories ||Annexure A.11 |
|Restated Statement of Trade Receivables ||Annexure A.12 |
|Restated Statement of Cash & Cash Equivalents ||Annexure A.13 |
|Restated Statement of Short Term Loans & Advances ||Annexure A.14 |
|Restated Statement of Other Current Assets ||Annexure A.15 |
|Restated Statement of Revenue from Operations ||Annexure B.1 |
|Restated Statement of Cost of Material Consumed ||Annexure - B.2 |
|Restated Statement of Change in Inventories of Finished Goods ||Annexure - B.3 |
|Restated Statement of Employee Benefit Expenses ||Annexure - B.4 |
|Restated Statement of Finance Cost ||Annexure B.5 |
|Restated Statement of Depreciation & Amortization ||Annexure B.6 |
|Restated Statement of Other Expenses ||Annexure B.7 |
|Restated Statement of Deferred Tax Expenses ||Annexure B.8 |
|Material Adjustment to the Restated Financial ||Annexure E |
|Restated Statement of Tax shelter ||Annexure F |
|Restated Statement of Capitalization ||Annexure G |
|Restated Statement of Contingent Liabilities ||Annexure H |
|Restated Statement of Accounting Ratios ||Annexure I |
|Restated Statement of related party transaction ||Annexure J |
In our opinion and to the best of information and explanation provided to us theRestated Financial Information of the Company read with significant accounting policiesand notes to accounts as appearing in ANNEXURE D are prepared after providing appropriateadjustments and regroupings as considered appropriate.
We M/s. A Y & Company Chartered Accountants have been subjected to the peerreview process of the Institute of Chartered Accountants of India ("ICAI") andhold a valid peer review certificate issued by the "Peer Review Board" of theICAI.
The preparation and presentation of the Financial Statements referred to above arebased on the Audited financial statements of the Company and are in accordance with theprovisions of the Act and ICDR Regulations. The Financial Statements and informationreferred to above is the responsibility of the management of the Company.
The report should not in any way be construed as a re-issuance or re-dating of any ofthe previous audit reports issued by any other Firm of Chartered Accountants nor shouldthis report be construed as a new opinion on any of the financial statements referred totherein.
We have no responsibility to update our report for events and circumstances occurringafter the date of the report.
In our opinion the above financial information contained in ANNEXURE A to J of thisreport read with the respective Significant Accounting Polices and Notes to Accounts asset out in ANNEXURE D are prepared after making adjustments and regrouping as consideredappropriate and have been prepared in accordance with the Companies Act ICDR RegulationsEngagement Letter and Guidance Note.
Our report is intended solely for use of the management and for inclusion in the OfferDocument in connection with the IPO-SME for Proposed Issue of Equity Shares of the Companyand our report should not be used referred to or distributed for any other purposewithout our prior consent in writing.
|For M/s A Y & CO. |
|Chartered Accountants |
|Firm Registration Number: - 020829C |
|Peer Review No. 013225 |
|CA Arpit Gupta |
|Membership No.421544 |
|UDIN - 21421544AAAAEB9961 |
|Date: 15.12.2021 |
|Place: Vadodara |