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ICSA (India) Ltd.

BSE: 531524 Sector: IT
NSE: ICSA ISIN Code: INE306B01029
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VOLUME 4148
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OPEN 2.51
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VOLUME 4148
52-Week high 3.85
52-Week low 2.30
P/E
Mkt Cap.(Rs cr) 12
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ICSA (India) Ltd. (ICSA) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 22nd Annual Report of the Companytogether with the audited accounts for the year ended March 31 2016

Financial Results

(Rs. Lakhs)

Sl. No. DESCRIPTION 2015-16 2014-15 (09 MONTHS)
1 Revenue (net of duties & taxes) 485.47 2365.13
2 Profit/(Loss) before depreciation & amortization finance cost and exceptional items (373.34) (11162.74)
3 Finance Cost 27.13 15.09
4 Depreciation & Amortization 1086.61 1163.41
5 Exceptional items
- Bad debts written off 593.31 19391.54
- Prior period expenses -
- Provision for doubtful advances - 2575.58
6 Profit/(loss) before tax (2-3-4-5) (2080.39) (34308.36)
7 Provision for tax -
8 Profit/(loss) after tax (6-7) (2080.39) (34308.36)

OVERVIEW OF COMPANY’S FINANCIAL PERFORMANCE

Your Company has recorded a consolidated income (as per Indian GAAP) of Rs. 485.47Lakhs for the Financial Year under review and Loss of Rs. 2080.39 Lakhs.

DIVIDEND

Due to losses no dividend has been recommended by directors for the financial year2015 - 16.

SHARE CAPITAL

The Paid up Equity Share Capital as on 31st March 2016 was Rs. 9.62 crores. During theyear under review the Company has not issued any shares. The Company has not issuedshares with differential voting rights. It has neither issued employee stock options norsweats equity shares and does not have any scheme to fund its employees to purchase theshares of the Company.

DIRECTORS

All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Act. In the opinion of the Boardthey fulfill the conditions of independence as specified in the Act and the Rules madethere under and are independent of the management.

At the board meeting held on 13th August 2016 resignation of Mrs. LALITHA GUDIMETLADirector of the company was accepted by the board.

CHANGES IN CAPITAL STRUCTURE

There is no change in the capital structure of the company during the accountingperiod.

HUMAN RESOURCES

‘Human Resources’ are recognized as a key pillar of any successfulorganization and so is for ICSA (INDIA) LIMITED. The company puts constant efforts inrecruiting and training the employees and ensures to bring out the best of them. Thecompany adopts a HR policy and ensures that all the employees are aware of personnelpolicies. The needs of the employees are addressed with high importance and efforts aremade to provide a highly challenging and healthy environment. Besides all these thecompany places high emphasis on professional etiquette required of every employee.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

ICSA (INDIA) LIMITED has an adequate system of internal control to ensure that theresources of the Company are used efficiently and effectively all assets are safeguardedand protected against loss from unauthorized use or disposition and the transactions areauthorized recorded and reported correctly financial and other data are reliable forpreparing financial information and other data and for maintaining accountability ofassets. The internal control is supplemented by extensive programmer of internal auditsreview by management documented policies guidelines and procedures.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behavior actual orsuspected fraud or violation of the Company’s Code of Conduct or ethics policy. ThePolicy provides for adequate safeguards against victimization of employees who avail ofthe mechanism and also provides for direct access to the Chairman of the Audit Committee.It is affirmed that no personnel of the Company has been denied access to the AuditCommittee.

RELATED PARTY TRANSACTIONS:

The company has not entered any related party transactions referred to in Section188(1) of the Companies Act2013.

PERFORMANCE EVALUATION

Pursuant to the provisions of Section 134 (3) (p) 149(8) and Schedule IV of theCompanies Act 2013 annual Performance Evaluation of the Directors as well as of theAudit Committee Nomination and Remuneration has been carried out.

The Performance Evaluation of the Independent Directors was carried out by the entireBoard and the Performance Evaluation of the Chairman and Non-Independent Directors wascarried out by the Independent Directors.

The manner in which the evaluation has been carried out has been explained in CorporateGovernance Report.

NOMINATION AND REMUNERATION POLICY

The Company has adopted the Nomination and Remuneration Policy for the Directors KeyManagerial Personnel and other employees pursuant to the provisions of the Act and Clause49 of the Listing Agreement.

The Nomination and Remuneration Committee has considered the following factors whileformulating the Policy:

(i) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;

(ii) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

(iii) Remuneration to Directors Key Managerial Personnel and Senior Managementinvolves a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the Company and its goals.

It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company. Details of theRemuneration Policy are given in the Corporate Governance Report.

BOARD AND COMMITTEE MEETINGS

A calendar of Board and Committee Meetings to be held during the year was circulated inadvance to the Directors. Six Board Meetings were convened and held during the year.

The Board has re-constituted all the Committee on 12th February 2016 with anIndependent Directors namely Mr. SARVESWAR REDDY MANDRA Mr. TELUKUTLA SRINIVASA RAO andMrs. LALITHA GUDIMETLA as Non-independent director. There have not been any instancesduring the year when recommendations of the Audit Committee were not accepted by theBoard.

The Board has again re-constituted all the Committee on 13th August 2016 with anIndependent Directors namely Mr. SARVESWAR REDDY MANDRA Mr. TELUKUTLA SRINIVASA RAO andMr. G. BALA REDDY as Executive Director. There have not been any instances during the yearwhen recommendations of the Audit Committee were not accepted by the Board.

Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Act and the SEBI (LODR) Regulation 2015.

FCCBs

Out of USD 46 million FCCBs issued by the Company USD 25 million FCCBs were convertedinto equity upon exercise of conversion rights by bond holders in the earlier years and anamount of USD 21 million FCCBs were outstanding and due for redemption as at the previousaccounting year. The trustee for FCCB holders has filed suit u/s. 433 & u/s. 434 ofthe Companies Act 1956 for winding up of the company which has been disposed of incompany favour.

SUBSIDIARY

The Company has floated a new India based subsidiary during the year 2011-12 namedICSA Infra Limited. Since it is into inception stage there was no transaction in thecompany during the accounting period.

However during the year ICSA INFRA Limited has filed the form FAST TRACK EXIT (FTE)MODE on 08.08.2016.

FIXED DEPOSITS

Your Company has not accepted any deposits falling within the meaning of Sec.76 of theCompanies Act 2013 any other provision read with the Companies (Acceptance of Deposits)Rules during the financial year under review.

INSURANCE

The Company’s properties and assets are adequately insured wherever required.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(5) of the Companies Act 2013 your Directorsto the best of their knowledge and ability confirm as under:

a) In the preparation of the annual accounts for the year ended 31st March 2016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;

c) The Directors have 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) The annual accounts have been prepared on a going concern basis;

e) The Company had laid down Internal Financial Controls to be followed by the Companyand that such Internal Financial Controls are adequate and were operating effectively: and

f) The have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s C.V. Reddy K & Associates Practicing Company Secretaries to undertakethe secretarial audit of the company. The Secretarial Audit Report is annexed herewith as‘Annexure I’.

The Secretarial Audit Report for the financial year ended 31st March 2016 do notcontain any qualification reservation adverse remark or disclaimer.

STATUTORY AUDITORS

M/s. Rambabu & CO. Chartered Accountants Hyderabad as Statutory Auditors of theCompany retires at the ensuing annual general meeting.

The appointment of M/s. Rambabu & Co Chartered Accountants Hyderabad IndependentAuditors of the Company retiring at the forthcoming Annual General Meeting and are beingratified as they were appointed for a period of five years in the 20th AGM held on 22 Dec2014. In accordance with the Companies Act 2013 it is proposed to appoint them for aperiod of three consecutive years of the first term of five consecutive years subject tothe ratification of shareholders at every Annual General Meeting and M/s. Rambabu &Co Chartered Accountants Hyderabad have confirmed that the appointment if made wouldbe within the prescribed limits under Section 141 of the Companies Act 2013.

The Board recommends their re-appointment.

RESPONSE TO AUDITORS OBSERVATIONS AND EMPHASIS OF MATTERS

With reference to the observations made by the Statutory Auditors in the Audit Reportthe management response there to as follows:-

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. 13294.17 lakhs(Cumulative) The loss of the company is understated to an extent of Rs.13294.17 lakhs andthe liability of the company is understated to that extent.

Management Response:

The company has been declared sick u/s.3(o) of SICA as per the order pronounced by theHon’ble BIFR on 12.02.2014. But later the banks have issued notice under SARFAESI Act2002 against which Hon’ble BIFR has stayed the actions of banks.

The company also has given revised DRS proposal to the banks which has not been takenup by the banks. Since all the bank accounts have become NPAs and the matter is pendingwith Hon’ble BIFR the interest is not provided.

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

Management Response:

The company has been declared sick u/s.3(o) of SICA as per the order pronounced by theHon’ble BIFR on 12.02.2014. But later the banks have issued notice under SARFAESI Act2002 against which Hon’ble BIFR has stayed the actions of banks.

The company also has given revised DRS proposal to the banks which has not been takenup by the banks. Since all the bank accounts have become NPAs and the matter is pendingwith Hon’ble BIFR the interest is not provided.

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

Management Response:

The company has been declared sick u/s.3(o) of SICA as per the order pronounced by theHon’ble BIFR on 12.02.2014.

Since company become Sick and the matter is pending with Hon’ble BIFR theinterest is not provided.

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.

Management Response:

The company has been declared sick u/s. 3(o) of SICA as per the order pronounced by theHon’ble

BIFR on 12.02.2014. But later the banks have issued the notice under SARFAESI Act 2002against which Hon’ble BIFR has stayed the actions of banks.

The company also has given revised DRS proposal to the banks which has not been takenup by the banks. Since all the bank accounts have become NPAs and the matter is pendingwith Hon’ble BIFR the interest is not provided

With reference to the emphasis of matters by the Statutory Auditors in the AuditReport the management response there to as follows:-

i) Note no. 12 in respect of Long term loans and advances Rs.7831 lakhs. Loans andAdvances are subject to confirmation and reconciliation.

Management Response:

Since sufficient staff not available with company obtaining of the statements from theconcerned parties and the reconciliation of the same has not been done during the year.

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.

Management Response:

Due to insufficient staff in the company the physical verification of the inventorieshas not been done during the year.

iii) Note no. 15 in respect of trade receivables Rs.15164.38 lakhs (net of provision).Receivables are subject to confirmation and reconciliation.

Management Response:

Company has been discussing with the customers for the statement of accounts forreconciliation. Due to cancellation of the projects the customers are not willing toconfirm the balances as the dues from them are subject to adjustment towards the cost& risk of the project.

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 Company’s ability to infuse funds to meet itsdebt and resuming normal operations.

Management Response:

The matters with the customers for cancelled projects and projects under progress onthe receivables are under progress as the performance period of the projects is notcompleted. Company‘s management is discussing with the prospective investors forfunds to resolve the debts. After resolution of the debt with banks from the funds to beinfused by the prospective investors the business of the company will improve. Hencefinancial statements have been prepared on going concern basis.

REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR)

The Board of Directors at their meeting held on 29th August 2013 approved to make areference to the Hon’ble Board for Industrial and Financial Construction (BIFR)u/s.15 Sick Industrial Companies (Special Provisions) Act 1985. The information wasalready placed in the 20th Annual General Meeting held on 22nd December 2014. Company hasmade a reference to the Hon’ble BIFR on 10th September 2013 and reference has beenregistered on 15th October 2013 as case no.70/2013. The company was declared sick u/s.3(o)of SICA as per the order pronounced by the Hon’ble BIFR on 12.02.2014. As per thedirections of the Hon’ble BIFR the company has submitted the Draft RehabilitationPackage (DRS) to the State Bank of India the Operating Agency (OA) and other banks on25.03.2014.

Meanwhile the banks have issued SARFAESI notice on 16.10.2014 the Hon’ble BIFRhas given stay against the SARFAESI on 27.11.2014 Company has submitted the DRS to thebanks as per the direction of the Hon’ble BIFR and the banks has appointed the TEVconsultants for study & submit the report and the company has provided the data to theTEV consultants in the year 2015.

Last minutes of meeting of Hon’ble BIFR available in the site of the Hon’bleBIFR is for the meeting held on 01.09.2015.

At the end of August 2016 there were no hearing fixed by the Hon’ble BIFR on thematters pertain to ICSA (India) Limited.

EMPLOYEES

During the year under review none of the employees were in receipt of remuneration inexcess of the limits prescribed under the Section 197 (12) of the Companies Act 2013 andany other applicable provisions of the ACT read with rule 5(1)the Companies (Appointmentand Remuneration of Managerial personal) Rules 2013 as amended.

LISTING OF SECURITIES

The Company’s equity shares are listed with the Bombay Stock Exchange Ltd. and theNational Stock Exchange.

The annual listing fee for the years 2016-17 have been paid to these exchanges.

CORPORATE GOVERNANCE AND SHAREHOLDERS’ INFORMATION

Your Company has been practicing the principles of good Corporate Governance over theyears and it is a continuous and on-going process. A detailed Report on CorporateGovernance is given as Annexure 'A' to this Report. Certificate from Practicing CompanySecretary confirming the compliance with conditions of Corporate Governance as stipulatedunder clause 49 of the Listing Agreement is attached to this report.

MANAGEMENT DISCUSSION & ANALYSIS:

Pursuant to the provisions of Clause 49 of the Listing Agreement with the stockexchange a report on Management Discussion & Analysis is attached to this report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN-EXCHANGE EARNINGS AND OUTGO

Information as required to be furnished under the provisions of the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules 1988 are ashereunder:

CONSERVATION OF ENERGY

Energy conservation measures taken up:

ICSA (INDIA) LIMITED uses electrical energy for its equipment such as air-conditionerscomputer terminals lighting and utilities at work places. As an on-going process wecontinue to undertake the following measures to conserve energy- Incorporating newtechnologies in the airconditioning system of the upcoming facilities to optimize powerconsumption

- Identifying and replacing low-efficient machinery (AC) in a phased manner

- Identifying and replacing outdated and low-efficient UPS systems in a phased manner

The Company also has in place the internal control procedures by which the cost of theelectricity will be identified with the project and thereby there will be an incentivefor the concerned department to consume optimum power.

Additional investment and proposals for reduction of consumption of energy: Nil.

Total energy consumption requirement: Not applicable as the Company is not engaged inany of the specified industries specified in Schedule 1 to the Companies (Disclosures ofParticulars in the Report of the Board of Directors) Rules 1988.

RESEARCH AND DEVELOPMENT

The Company is committed to continue its efforts in Research and Development. OurResearch and Development activities will help us gear up for future opportunities. Weinvest and encourage continuous innovation.

TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION

Efforts made in technology absorption :

Enclosed - Form ‘B’

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure - II".

DECLARATIOHN FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The company has received declaration from Mr. Sarveswar Reddy Mandra and Mr. Telukutla.Srinivasa Rao Independent Director of the Company to the effect that they are meeting thecriteria of independence as provided in Sub-section (6) of Section 149 of the CompaniesAct 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015- Annexure-III

SEXUAL HARASSMENT

During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules there under.

ACKNOWLEDGEMENTS

Your Directors are thankful to all investors customers vendors banks and serviceproviders as well as regulatory and government authorities and other business constituentsfor their assistance co-operation understanding support and encouragement. YourDirectors also sincerely appreciate the high degree of professionalism commitment anddedication displayed by the employees at all level in the initiatives of the Company.

By the order of the Board of Directors
for ICSA (INDIA) LIMITED
Sd/-
Place: Hyderabad G. BALA REDDY
Date: 13.08.2016 Chairman-cum-Managing Director

Annexure to Directors’ Report

FORM B’

(See rule 2)

Form for disclosure of particulars with respect to absorption Research and Development(R & D)

1. Specific areas in which R & D has been carried out by the Company:

Embedded solutions and software for Energy Sector

2. Benefits derived as a result of the above R & D:

We believe that our R & D activities will help us gear up for future opportunitiesand enable us to provide state-of- the-art power automation solutions.

3. Future plans of action:

The Company will continue R & D in the embedded solutions.

4. Expenditure on R & D NIL
a) Capital NIL
b) Recurring NIL
c) Total NIL
d) Total R & D expenditure as a percentage of total turnover NIL

Technology absorption adaptation and innovation

1. Efforts in brief made towards technology absorption : adaptation and innovation

2. Benefits derived as a result of the above efforts:

Benefits like product development product improvement cost reduction among others.

3. In case of imported technology (imported during last five years reckoned from thebeginning of the financial year) following information:

a) Technology imported : NIL
b) Year of import : NOT APPLICABLE
c) If not fully absorbed areas where this did not take place reasons therefore the same and future plan of action : NOT APPLICABLE

4. Foreign exchange earnings and outgo :

1) Activities relating to exports initiatives taken to increase exports developments of new export markets for products and services and export plans The power sector has been receiving special attention from the private and government sectors world over. Every country has been realising the need to improve the status of the grids bring in efficiency in Transmission and Distribution and manage demand and supply equation effectively. It is also acknowledged that adopting technology is the only way to achieve these objectives.
Countries in which stakes are significant for the government are seeing reform initiatives either through funding programs or privatization to fast-track development and countries with private sector stakes are seeing technology deployments for efficiency building. Developed countries like the US and the UK are funding or incentivising utilities and co-operatives to deploy smart-grid technologies throughout the grid. While the developed world is a few years’ advanced in initiating development the Asian region is still lagging behind in these initiatives. Having said that the Asian countries have also realised the need to make the grids smarter since the structure of power sector and the environment in which they operate are similar viz. power losses by theft inefficient commercial processes (metering billing and collection) power deficit and resultant poor customer service.
The Company’s efforts in the last year have shown that the southeast Asian region is a good target market which includes Indonesia Malaysia Thailand and Vietnam since the distribution inefficiencies are much similar to those in India. These countries are also experiencing either privatizations or government interference to better handle power distribution. Power theft and poor customer service are considered as important factors by utilities for considering technology deployment. Several multi-lateral organisations like ADB World Bank and IMF are funding projects taken up by the utilities that have energy-efficiency objective. The Company has also studied the type of the solutions that are required in these countries and it is understood that automation technologies that have the capabilities of integrating into smart grid power theft technologies grid management technologies are mostly preferred.
Having understood the landscape from a distance the Company is now working towards approaching and explaining our capabilities to deploy through proper business development network to feel the pulse on the ground and the minds of the stakeholders in the utilities. Shortly the Company plans to establish partner network to understand immediate and longterm opportunities.
All the efforts the Company is making are in line to develop the market for a profitable long-term benefit.

2) Total foreign exchange used and earned :

a. Foreign exchange earnings : NIL
b. Foreign exchange outgo : NIL