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ICDS Ltd.

BSE: 511194 Sector: Financials
NSE: ICDSLTD ISIN Code: INE613B01010
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ICDS Ltd. (ICDSLTD) - Auditors Report

Company auditors report

TO THE MEMBERS OF ICDS LIMITED

Report on the standalone Financial Statements

We have audited the accompanying standalone financial statements of ICDS LIMITED("the Company") which comprise the Balance Sheet as at March 312016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the standalone Financial Statements

The Company’s Board of Directors is 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 and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2016 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 2016 ("theOrder") isdued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the ‘Annexure A' a statement on the mattersspecified in the paragraph 3 and 4 of the order.

2. The Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions2008 issued by Reserve Bank of India (RBI) is not reported in view of the cancellation ofCertificate of Registration of Non-Banking Financial Company of the Holding Company byReserve Bank of India on October 9 2002.

3. 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 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) on the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct;

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’; and

g) with respect to the other mptters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer note nos. 2.27 to the standalone financialstatements.

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been delay in transferring the amount due to investor education andprotection fund (IEPF) amounting to Rs.8466 thousands. Further the Company's liabilities(including public deposits along with interest accrued thereon) were restructured as perthe Scheme of Arrangement sanctioned by the Flon'ble High Court of Karnataka vide itsOrder dated October 15 2004 which remains unclaimed by the instrument holders (includingcheques issued but not encashed by the instrument holders) to the extent of Rs. 3052thousands Rs. 5916 thousands Rs.7496 thousands and Rs.5526 thousands were requiredto be transferred to IEPF on June 3'0 2012 June 30 2013 June 30 2014 and June 302015 respectively and not transferred to IEPF in accordance with the relevant provisionsof the Companies Act 1956 (1 of 1956) and rules made there under. However the managementis of the opinion that same is not due to IEPF as explained in note no. 2.06 (b) of thestandalone financial statements.

For CHATURVEDI & SHAH

Chartered Accountants

Firm Registration Number: 101720W

Chandan Lala

Partner

Membership Number: 35671

Place : Mumbai

Date : 18.05.2016 .

ANNEXURE - A TO THE INDEPENDENT AUDITOR’S REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF ICDS LIMITED

(Referred to in paragraph 1 under ‘Report on other legal and regulatoryrequirements' section of our report of even date) Report on Companies (Auditor’sReport) Order 2016 (‘the order issued by the Central Government in terms of Section143(ii) of the Companies Act 2013 (‘the Act’)

i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) All the fixed assets of the Company other than those under lease have beenphysically verified by the management during the year. In our opinion the frequency ofsuch verification is reasonable having regard to the size of the Company and the nature ofits assets. As explained to us no discrepancies were noticed on such verification.

c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii) The inventory has been physically verified by the management at the year end and inour opinion the frequency of such verification is reasonable.The discrepancies noticed onphysical verification of inventory as compared to book records were not material.

iii) As per the information and explanation given to us the Company has grantedinterest bearing unsecured loans to one of its wholly owned subsidiary listed in theregister maintained under Section 189 of the Act.

a) The terms and conditions of the grant of such loans are not prejudicial to theCompany’s interest.

b) The entire loan amount has been recovered during the year along with interest asstipulated.

c) There are no overdue amounts remaining outstanding as at the year-end.

iv) As per the information given to us the Company during the year has not grantedany loan made investment and provided guarantees and securities to the parties coveredunder Section 185 and Section 186 of the Act. Accordingly Paragraph 3(iv) of the order isnot applicable.

v) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposits from public after the enactment of this Act. Hencethe directives issued by the Reserve Bank of India and the provisions of Section 73 to 76or any other relevant provisions of the Act and the rules framed there under is notapplicable to the Company.

The Company’s liabilities existing prior to enactment of this Act (includingpublic deposits along with interest accrued thereon) were restructured as per the Schemeof Arrangement sanctioned by the Hon’ble High Court of Karnataka vide its order datedOctober 15 2004. Accordingly the Company has repaid its public liabilities except tothe extent unclaimed / cheques issued but not encashed by the instrument holders. We areinformed by the management of the Company that there are no other orders by Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.

vi) The Central Government has not prescribed maintenance of cost records undersub-section (1) of Section 148 of the Act for the Company.

vii) a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employee’sstate insurance income-tax sales tax service tax value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of due of customs and duty of excise. According to the information andexplanations given to us there are no undisputed statutory dues which were outstanding ason the last day of the financial year concerned for a period of more than six months fromthe date they became payable b) According to the records of the Company there are nodues of income tax sales tax service tax value added tax or cess which have not beendeposited on account of any dispute except the following:-

Nature of the Statute Nature of Dues Year to which it pertains Amount Demanded (Rs. in lacs) Forum where dispute is pending
Income Tax Act 1961 Disallowance of depreciation on leased assets Block assessment year 1987-88 to 1997-98 51660* Special Leave Petition before Hon’ble Supreme Court of India.

* - net of amount paid under protest/refund adjusted aggregating to Rs. 50744thousands.

viii) Based on our audit procedures and on the information and explanations given bythe management we are of the opinion that the Company has not defaulted in repayment ofloans to financial institution / banks. In respect of matured debentures and interestaccrued thereon upto July 15 2002 the Company has repaid all the installments todebenture holders as per the Scheme of Arrangement as sanctioned by the Hon'ble High Courtof Karnataka on October 15 2004 except to the extent unclaimed / cheques issued but notencashed by the instrument holders.

ix) According to the information and explanation given to us and records of theCompany the Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

Further in our opinion and according to the information and explanation given to uson an overall basis the loans taken from banks has been applied for the purpose for whichit was obtained.

x) During the course of examination of Books of Account and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have not come across withany material fraud on or by the Company noticed or reported during the year nor havebeen informed of such case by the Management.

xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not paid / provided for anymanagerial remuneration in accordance with the provisions of Section 197 read withSchedule V to the Act. Accordingly paragraph 3(xi) of the Order is not applicable

xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable. •

xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company during the year has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures. Accordingly paragraph 3(xiv) of the Order is not applicable

xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi) The Company was registered as Non-Banking Financial Company (NBFC) under theprovisions of the Reserve Bank of India (RBI) Act 1934 and the certificate of 'registration had been cancelled by the RBI vide its order dated October 9 2002.

For CHATURVEDI & SHAH

Chartered Accountants

Firm Registration Number: 101720W

Chandan Lala

Partner

Membership Number: 35671

Place : Mumbai

Date : 18.05.2016

ANNEXURE - B TO THE INDEPENDENT AUDITOR’S REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF ICDS LIMITED

(Referred to in Paragraph 3(f) under ‘Report on other Legal and RegulatoryRequirements’ section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of ICDSLimited ("the Company") as of March 31 2016 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgment includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 controlssystem over 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.

Inherent 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components tof internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For CHATURVEDI & SHAH

Chartered Accountants

Firm Registration Number: 101720W

Chandan Lala

Partner

Membership Number: 35671

Place : Mumbai *

Date : 18.05.2016