To the Members of ICSA (INDIA) LIMITED.
Report on the Financial Statements
We have audited the accompanying financial statements of ICSA(INDIA)LIMITED ("theCompany") which comprise the Balance Sheet as at March 31 2016 the Statement ofProfit and Loss and the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 there under and the Order under Section 143(11)of the Act.
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 theauditors 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 Companyspreparation 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 Companys Directors as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
Basis for Qualified Opinion
i) Attention is invited to Note No. 7 to Notes on Financial statements regardingnon-provision of interest on working capital loans for an amount of Rs. 13294.17lakhs.(Cummulative) The loss of the company is understated to an extent of Rs.13294.17lakhs and the liability of the company is understated to that extent.
ii) Attention is invited to Note No.9 to Notes on Financial statements regardingnon-provision of interest on Term Loans from banks for an amount of Rs.11354.81lakhs.(Cummulative) The loss of the company is understated to an extent of Rs.11354.81lakhs and the liability of the company is understated to that extent.
iii) Attention is invited to Note No.9 to Notes on Financial statements regardingnon-provision of interest on corporate dividend tax for an amount of Rs.77.09 lakhs(Forthe year Cummulative) which was provided for the financial year 2010-11. The loss of thecompany is understated to an extent of Rs.77.09 lakhs and the liability of the company isunderstated to that extent.
iv) Attention is invited to Note No.24 (a)(iii) to Notes on Financial statementsregarding non-provision of Rs. 6427.58 lakhs towards differential interest for nonacceptance of CDR package by banks. The loss of the company is understated to an extent ofRs. 6427.58 lakhs and the liability of the company is understated to that extent.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2016 and its loss and its cash flows for theyear ended on that date.
Emphasis of Matters
We draw attention on the following matters in the notes to the financial statements
i) Note No. 12 in respect of Long term loans and advances Rs.7831 lakhs. Loans andAdvances are subject to confirmation and reconciliation.
ii) Note no. 14 in respect of Inventory Rs.4913.79 lakhs. The physical verification wasnot carried by the management during the year and valuation is done by the management. Werelied upon the representations given by the Management.
iii) Note no. 15 in respect of trade receivables Rs.15164.38 lakhs (net of provision).Receivables are subject to confirmation and reconciliation.
iv) Financial statements being prepared on going concern basis notwithstanding the factthat the consortium banks recalled their debts and issued notices under SARFAESI Act 2002to take the possession of the assets of the Company and majority of the customers havecancelled their contracts with the Company. These events cast significant doubt on theability of the Company to continue as going concern. The appropriateness of assumption ofgoing concern is dependent upon the Companys ability to infuse funds to meet itsdebt and resuming normal operations.
Our opinion is not modified in respect of these matters Report on Other Legal andRegulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") as amended issued by the Central Government of India in terms ofsub-section (11) of section 143 of the Act we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order.
2. 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 purpose 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 financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e. On the basis of written representations received from the directors as on March 312016 taken on record by the Board of Directors none of the directors is disqualified ason 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:
The system of internal financial controls over financial reporting with regard toCompany were not made available to us to enable us to determine if the Company hasestablished adequate internal financial control systems over financial reporting at theaforesaid Company and whether such internal financial controls were operating effectivelyas at March 312016.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of Company and thedisclaimer does not affect our opinion on the financial statements of the said Company.
g. With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 and in ouropinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31st March 2016 onits financial position in its financial statements as referred to in note 24(a) (i) (ii)and (iii) to the financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any and on long term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
| ||For RAMBABU & Co. |
| ||Chartered Accountants |
| ||Firm Reg No: 002976S |
| ||Ravi Rambabu |
|Place: Hyderabad ||Partner |
|Date: 31-05-2016 ||M No. : 018541 |
"Annexure A" to the Independent Auditors Report:
Referred to in paragraph 1 under the heading Report on Other Legal &Regulatory Requirement of our report of even date to the financial statements of theCompany for the year ended March 31 2016:
1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. However fixed assets register is notupdated during the year.
(b) As explained to us the fixed assets have not been physically verified by themanagement according to the phased program designed to cover all the fixed assets over theyear.
(c) Banks have issued notices under SARFAESI Act 2002 to take possession of the assetsof the Company. This event cast significant doubts on the ability of the Company tocontinue as a going concern.
2) In respect of its inventories:
(a) As explained to us inventories have not been physically verified during the yearby the management.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management are notreasonable and adequate in relation to the size of the company and the nature of itsbusiness.
(c) The company has maintained proper records of inventories. However the physicalverification of inventory was not carried out by the management during the year.
3) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained underSection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder are not applicable to the Company and hence not commented upon.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013In respect of loans investments guarantees and security.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6) We have broadly reviewed the cost records maintained by the Company pursuant to therules prescribed by the Central Government of India under Section 148(1) of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
7) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has not been generallyregular in depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income-Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us no undisputed amounts payable in respectof the above were in arrears as at March 31 2016 for a period of more than six monthsfrom the date on when they become payable except the following:
|Nature of Due ||Rs. In Lakhs |
|Corporate Dividend Tax ||142.76 |
|PF Employee Contribution ||1.62 |
|PF Employer Contribution ||1.87 |
|Professional Tax ||0.33 |
|TDS Payable ||1259.20 |
|Employees State Insurance ||0.55 |
|Sales Tax ||43.46 |
|Service Tax ||1233.99 |
b) Details of statutory dues which have not been deposited as on 31st March 2016 onaccount of disputes are given below:
|Name of the Statute ||Nature of the dues ||year to which the amount relates ||Forum where dispute is pending ||Amount. (Rs. In Lakhs) ||Deposit Amount (Rs.in Lakhs) ||Unpaid Deposit Amount (Rs.in Lakhs) |
|Income Tax Act1961 ||Income Tax ||2009-10 ||The Commissioner of Income Tax (Appeals) ||2188.06 ||- ||2188.06 |
|Income Tax Act1961 ||Income Tax ||2010-11 ||The Commissioner of Income Tax (Appeals) ||40361.92 ||- ||40361.92 |
|Income Tax Act1961 ||Income Tax ||2011-12 ||The Commissioner of Income Tax (Appeals) ||26270.36 ||- ||26270.36 |
|Income Tax Act1961 ||Income Tax ||2012-13 ||The Commissioner of Income Tax (Appeals) ||8401.29 ||- ||8401.29 |
|Total || || || ||77221.63 || |
8. According to the records of the Company examined by us and the information andexplanations given to us the company has defaulted in repayment of dues to financialinstitution and banks as at the Balance sheet date.
(Rs. in Lakhs)
|S. No ||Name of the Bank ||Principal ||Interest |
|1 ||Andhra Bank ||3615.62 ||827.30 |
|2 ||Oriental Bank of Commerce ||9991.91 ||2509.02 |
|3 ||Bank of India ||- ||1909.63 |
|4 ||Punjab National Bank ||- ||2591.41 |
|5 ||State Bank of India || |
|6 ||Union Bank of India || |
|7 ||IDBI Bank Limited || |
|8 ||Andhra Bank ||- ||3159.66 |
|9 ||Bank of India ||3050.60 ||- |
|10 ||Punjab National Bank ||1845.82 ||- |
|11 ||State Bank of India ||3543.51 ||- |
|12 ||Union Bank of India ||2153.18 ||- |
|13 ||IDBI Bank Limited ||125.67 || |
|14 ||Andhra Bank ||1220.46 ||- |
9. Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3(ix) of the Order are not applicable to the Company and hence notcommented upon.
10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not paid/provided any managerial remunerationduring the year under Audit.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4(xii) of the Order are not applicable to the Company.
13. In our opinion all transactions with the related parties are in compliance withSection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3(xiv) of the Order are not applicable tothe Company and hence not commented upon.
15. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3(xv) ofthe Order are not applicable to the Company and hence not commented upon.
16. In our opinion the company is not required to be registered under Section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi) ofthe Order are not applicable to the Company and hence not commented upon.
| ||For RAMBABU & Co. |
| ||Chartered Accountants |
| ||Firm Reg No: 002976S |
| ||Ravi Rambabu |
|Place: Hyderabad ||Partner |
|Date: 31-05-2016 ||M No. : 018541 |