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ICRA Ltd.

BSE: 532835 Sector: Others
NSE: ICRA ISIN Code: INE725G01011
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NSE 13:29 | 30 Oct 2820.00 190.80
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PREVIOUS CLOSE 2634.00
VOLUME 191
52-Week high 3226.95
52-Week low 1968.00
P/E 45.17
Mkt Cap.(Rs cr) 2,712
Buy Price 2776.70
Buy Qty 10.00
Sell Price 2800.00
Sell Qty 1.00
OPEN 2650.00
CLOSE 2634.00
VOLUME 191
52-Week high 3226.95
52-Week low 1968.00
P/E 45.17
Mkt Cap.(Rs cr) 2,712
Buy Price 2776.70
Buy Qty 10.00
Sell Price 2800.00
Sell Qty 1.00

ICRA Ltd. (ICRA) - Auditors Report

Company auditors report

To the Members of ICRA Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of ICRA Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.

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 Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of Matter

We draw attention to Note 29 of the standalone financial statements which describesthat the Company is in the process of addressing certain matters related to credit ratingassigned to one of its customer and its subsidiaries and an anonymous representation. Ouropinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Description of Key Audit Matter

Revenue Recognition How the matter was addressed in our audit
See note 3.2 to the standalone financial statements In this area our audit procedures included:
The revenue relating to rating and grading where customers' acceptance is required is recognized upon issuance of press release or disclosure of unaccepted ratings on the Company's website. For other cases revenue is recognized upon transfer of control of promised services to the customers. There is a risk that revenue for the rating and grading cases is recognized before the transfer of control of the service to customer is completed. • Evaluation of the design and operating effectiveness of internal controls relating to revenue recognition process.
• On selected sample of contracts tested revenue recognition and our procedures included:
- evaluating the identification of performance obligations;
- considering the terms of the contracts to determine the transaction price;
- inspection of the date of transfer of control of service and recording of revenue at an appropriate date;
Further the new revenue standard – Ind AS 115 - testing Company's calculation of fee allocation to rating and surveillance.
"Revenue from contracts with customers" which became applicable from 1 April 2018 establishes a comprehensive framework for recognition of revenue and involves making judgements and estimates which affect the accounting for such cases. • Tested revenue recognition for cut-off transactions on sample basis to assess whether the customer has obtained the control of service and whether the timing of revenue recognition is appropriate.
• Assessment of the adequacy of the Company's disclosures in respect of applicability of new revenue standard – Ind AS 115 "Revenue from contracts with customers".

Other Information

The Company's management and Board of Directors are responsible for the OtherInformation. The other information comprises the information included in the Company'sAnnual Report but does not include the financial statements and our auditors' reportthereon. The Company's Annual Report is expected to be made available to us after the dateof the Auditor's Report. Our opinion on the standalone financial statements does not coverthe other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/ loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) 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 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 as at 31 March 2019 onits financial position in its standalone financial statements – Refer Note 28 to thestandalone financial statements.

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197 (16) which arerequired to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.101248W/ W- 100022
Shashank Agarwal
Place: Gurugram Partner
Date: 9 May 2019 Membership No. 095109

Annexure A of the Independent Auditor's Report to the Members of ICRA Limited on thestandalone financial statements for the year ended 31 March 2019.

We report that:

(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) According to the information and explanations given to us the Company has aregular programme of physical verification of its fixed assets by which fixed assets areverified in a phased manner over a period of two years. Accordingly the Company hascarried out physical verification of its fixed assets at certain locations during the yearended 31 March 2019. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Asinformed to us no material 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) According to the information and explanations given to us the Company is aservice company primarily rendering rating research and other services to corporate andnon-corporate customers. Accordingly it does not hold any inventories. Thus paragraph3(ii) of the Order is not applicable.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies or other parties covered in theregister maintained under Section 189 of the Act. Further there are no firms and limitedliability partnerships covered in the register required under Section 189 of the Act.Accordingly para 3(iii) of the Order is not applicable.

(iv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no loans investments guaranteesand security where provisions of Section 185 and 186 of the Act are required to becomplied with. Accordingly paragraph 3(iv) of the Order is not applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits covered under Section 73 to 76 of the Act.

(vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records by the Company under sub-section (1) ofSection 148 of the Act for any of the activities carried out by 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's StateInsurance Income-tax Goods and Service tax Cess and other material statutory dues asapplicable to it have generally been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us the Company did not have any dues onaccount of Duty of customs and Duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employee's State Insurance Income-tax Goods andService tax Sales tax Value added tax Service tax Cess and other material statutorydues as applicable to it were in arrears as at 31 March 2019 for a period of more thansix months from the date they became payable. Also refer note 28 wherein it is explainedthat on account of the uncertainty with respect to the applicability of the Hon'bleSupreme Court Judgement on the provident fund matter management has not recognized anddeposited any additional provident fund amount with respect to the previous years.

(b) According to the information and explanations given to us the Company did not haveany dues on account of Goods and Service tax Sales tax and Value Added Tax which have notbeen deposited with the appropriate authorities on account of any dispute. Howeveraccording to the information and explanation given to us the following dues of Income-taxand Service tax have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount in (Rupees in lakhs)* Payment under protest in (Rupees in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 19.97 Nil F.Y 2000-01 The Assessing Officer
0.44 Nil F.Y 2002-03
2.00 Nil F.Y 2003-04
181.90 11.00 F.Y 2005-06
53.22 Nil F.Y 2009-10
919.89 Nil F.Y 2016-17
278.62 Nil F.Y 2010-11 Income Tax Appellate Tribunal
462.04 Nil F.Y 2011-12
366.93 Nil F.Y 2013-14
221.56 Nil F.Y 2014-15
417.32 Nil F.Y 2012-13 The Commissioner Income
2360.24 Nil F.Y 2015-16 Tax (Appeals)
41.96 Nil F.Y 2003-04 High Court
Finance Act 1994 Service Tax 1.99 Nil F.Y. 2001-2002 Assistant. Commissioner of Central Excise
11.40 11.40 F.Y 2001-2002 to 2004-2005 The Commissioner (Appeals) of Central Excise
West Bengal Value Added Tax 2003 Value Added Tax 12.80 Nil F.Y 2010-11 Fast Track Revision Authority

*amount as per demand orders including interest and penalty wherever indicated in theorder.

(viii) According to the information and explanations given to us the Company did nothave any outstanding dues to any financial institutions banks government or debentureholders during the year. Accordingly paragraph 3(viii) of the Order is not applicable.

(ix) According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments) and did not have any term loans outstanding during the year. Accordinglyparagraph 3(ix) of the order is not applicable.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the managerial remuneration has been paid/provided by the Company in accordance with provisions of Section 197 read with Schedule Vof the Act.

(xii) According to the information and explanations given to us the Company is not aNidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company all transactions with the related partiesare in compliance with Section 177 and 188 of the Act where applicable and the detailshave been disclosed in the financial statements as required by the applicable accountingstandards. (xiv) According to information and explanations given to us the Company hasnot made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is notapplicable.

(xv) According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xvi) According to information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
ICAI Firm's Registration No.101248W/ W- 100022
Shashank Agarwal
Place: Gurugram Partner
Date: 9 May 2019 Membership No. 095109

Annexure B to the Independent Auditors' report on the standalone financial statementsof ICRA Limited for the period ended 31 March 2019. Report on the internal financialcontrols with reference to the aforesaid standalone financial statements under Clause (i)of Sub-section 3 of Section 143 of the Companies Act 2013 Opinion

We have audited the internal financial controls with reference to financial statementsof ICRA Limited ("the Company") as of 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Emphasis of matter

We draw attention to Note 29 of the standalone financial statements which describesthat the Company is in the process of addressing certain matters related to credit ratingassigned to one of its customer and its subsidiaries and an anonymous representation. Ouropinion is not modified in respect of these matters.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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 safeguarding ofits 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 (hereinafter referred to as"the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls with reference tofinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to financial statements included obtaining an understanding ofsuch internal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the standalone financialstatements whether due 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 controls withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.101248W/ W- 100022
Shashank Agarwal
Place: Gurugram Partner
Date: 9 May 2019 Membership No. 095109

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