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Ircon International Ltd.

BSE: 541956 Sector: Infrastructure
NSE: IRCON ISIN Code: INE962Y01013
BSE 00:00 | 18 Feb 367.90 -9.70
(-2.57%)
OPEN

380.00

HIGH

380.00

LOW

364.00

NSE 00:00 | 18 Feb 367.45 -12.70
(-3.34%)
OPEN

380.00

HIGH

380.00

LOW

362.00

OPEN 380.00
PREVIOUS CLOSE 377.60
VOLUME 3378
52-Week high 470.00
52-Week low 338.00
P/E 6.09
Mkt Cap.(Rs cr) 3,460
Buy Price 364.00
Buy Qty 5.00
Sell Price 367.90
Sell Qty 167.00
OPEN 380.00
CLOSE 377.60
VOLUME 3378
52-Week high 470.00
52-Week low 338.00
P/E 6.09
Mkt Cap.(Rs cr) 3,460
Buy Price 364.00
Buy Qty 5.00
Sell Price 367.90
Sell Qty 167.00

Ircon International Ltd. (IRCON) - Auditors Report

Company auditors report

TO THE MEMBERS OF IRCON INTERNATIONAL LIMITED

1. Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of IRCONINTERNATIONAL LIMITED ("the Company") which comprise the Balance Sheet as at 31March 2018 the Statement of Profit & Loss (including Other Comprehensive Income)the Cash Flow statement & the statement of changes in equity for the year then endedand a summary of significant accounting policies and other explanatory information inwhich are incorporated the Returns for the year ended on that date audited by branchauditors of the company's branches at Northern Region J&K region Eastern RegionPatna Region Mumbai Region South Africa Algeria Bangladesh Sri-Lanka & MalaysiaRegion.

2. Management's Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the Stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based 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 of thestandalone Ind AS financial statements in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence obtained by us & other auditors in terms oftheir reports referred to in others matter paragraph below is sufficient and appropriateto provide a basis for our audit opinion on the standalone Ind AS financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at March 31 2018 and its Profit(financial performance including other comprehensive income) its Cash Flow and thechanges in equity for the year ended on that date.

5. Emphasis of Matters

i) We draw attention to Note No. 33 to the standalone Ind AS financial statements a.The Company has made provision for tax without considering the deduction under Section80-IA of Income Tax Act 1961. However the ITAT has disposed pending appeal for FY2000-01 allowing deduction u/s 80IA and subsequently CIT(A) has allowed deduction for AY2004-05 2005-06 2007-08 2012-13 2013-14 and 2014-15. The matters for other assessmentyears are contested by the company with the concerned authorities. b. The company isoffering global income for tax in India after excluding the income earned by its permanentestablishments in foreign countries having Double Taxation Avoidance Agreements (DTAA)with India. CIT (A) denied the treatment of excluding such foreign income. Accordinglythe company has subsequently paid taxes however the matter is contested by the companywith the concerned authorities. ii) We draw attention to Note No. 48 to the standalone IndAS financial statements regarding non-provision of Rs. 4.96 crores towards foreign agencycommission/ consultancy charges in respect of projects in three foreign countries pendingassessment of the performance.

Our report is not qualified in respect of the above matters.

6. Other Matters

i) We did not audit the financial statements/information of Ten branches included inthe standalone Ind AS financial statement of the company whose financialstatements/financial information reflect Total Assets of Rs. 6302.80 Crores as at 31March 2018 Total Revenues of Rs. 3793.35 Crores for the year ended on that date asconsidered in the standalone Ind AS financial statements. The financial statements/information of these branches have been audited by the branch auditors whose reports havebeen furnished to us and our opinion in so far as it relates to the amounts anddisclosure included in respect of these branches is based solely on the reports of suchbranch auditors. ii) The financial statements include the company's share in Profit/Lossof unincorporated Joint Venture (JVs) accounts out of which four JVs accounts have beencertified by other firms of Chartered Accountants and one JV (IRCON-SPSCPL) has beencertified by the management.

Our opinion is not modified in respect of these matters.

7. Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of section 143(11) of theAct we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order. (2) As required by Section 143(3) of the Act we reportthat: a) We have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purpose of our audit. b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books and proper returns adequate for thepurpose of our Audit has been received from branches not visited by us.

c) The reports on the accounts of branch offices of the Company audited under section143(8) of the Act by branch auditors have been sent to us and have been properly dealtwith by us in preparing this report.

d) The Balance Sheet the Statement of Profit & Loss including Other ComprehensiveIncome the statement of cash flows and Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account.

e) In our opinion the aforesaid Standalone Ind AS financial Statements comply with theIndian Accounting Standard (Ind AS) specified under section 133 of the Act read withrelevant rules issued thereunder.

f) Being a government company provision of section 164(2) of the Act are notapplicable pursuant to the notification No. G.S.R.463(E) dated 5 June 2015 issued by theCentral Government of India.

g) 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". h) With respect to the other matters tobe included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanation given to us: i. The Company has disclosed the impact of pendinglitigations on its financial position in its standalone Ind AS financial statements-ReferNote No.29 of the standalone Ind AS financial statements. ii. The Company has madeprovision as required under the applicable law or accounting standards for materialforeseeable losses if any on long-term contracts -Refer Note No.16.3 to the standaloneInd AS financial statements. The Company did not have any derivative contracts for whichthere were any material foreseeable losses. iii. There were no amounts which were requiredto be transferred to the Investor Education and Protection Fund by the Company.

(3) As required by Section 143(5) of the Act and as per directions issued bycomptroller and Auditor General of India

we report that:

Sl. No. Directions Auditor's Replies
(i) Whether the company has clear title/ lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available. Yes the Company has clear title/ lease deed for freehold and leasehold land respectively except as reported in Mumbai region i.e. one lease hold building on railway land for 30 years in Pali hill Mumbai for which agreement is yet to be finalized.
(ii) Whether there are any cases of waiver/write off of debts/loans/interest etc. if yes the reasons thereof and the amount involved. The Company has written-off bad assets of Rs. 0.29 Crores during the Financial Year 2017-18. (Refer Note: 22 of Financial Statement).
(iii) Whether proper records are maintained for inventories lying with third parties & assets received as gift/ grants(s) from Govt. or other authorities. Yes proper records are being maintained for the
inventories lying with third parties. No assets have been received as gift /grants(s) from Govt. or other authorities during the Financial Year 2017-18.

 

For K.G SOMANI & CO.
Chartered Accountants
FRN 006591N
(Ashish Kumar Batta)
Place of Signature: New Delhi Partner
Date: 03 August 2018 Membership No.095597

"Annexure A" to the Independent Auditors' Report of even date on theStandalone

Ind AS Financial Statements of Company for the year ended 31 March 2018 i. a) TheCompany has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets. In Mumbai Region Tagging/ Numbering to be done oncertain assets and assets with third parties needs to be confirmed from third party.

b) The fixed assets were physically verified by the management during the year. Thereis a regular program of verification which in our opinion is reasonable having regard tothe size of the Company and nature of its business. No material discrepancies were noticedon such verifications.

c) The title deeds of immovable properties are held in the name of the Company exceptone lease hold building at Pall Hill documents for the same are yet to be executed inMumbai Region.

ii. The inventory has been physically verified by the management at reasonableintervals during the year. In our opinion the frequency of verification is reasonable.The discrepancies noticed on comparison of physical verification with book records werenot material and have been properly dealt with in the books of account.

iii. According to the information and explanation given to us by the management andrecords produced the Company has not granted any loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Therefore paragraph 3(iii) ofthe Order is not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and security; the provisions of section 185 and186 of the Companies Act 2013 have been complied with.

v. According to the information and explanations given to us and as per ourexamination of records the Company has not accepted any deposits from public andtherefore the directives issued by the Reserve Bank of India and the provisions ofSection 73 to 76 or any other relevant provision of the Companies Act 2013 and rulesframed there under are not applicable.

vi. The Company has maintained cost records as required under section 148(1) of theCompanies Act 2013. However we are neither required to carry out nor have carried Outany detailed examination of such accounts and records.

vii. a. The Company is generally regular in depositing undisputed statutory duesincluding provident fund income tax goods and service tax sales tax service-tax dutyof customs duty of excise value added tax cess and any other statutory dues applicablewith the appropriate authorities. Employees' State Insurance is not applicable to theCompany. According to the information and explanation given to us there are no undisputedstatutory dues which were outstanding as on 31.03.2018 for a period of more than sixmonths from the date the same become payable.

b. According to information and explanation given to us and as per our examination ofrecords of the Company following are the particulars of dues on account of sales taxservice tax entry tax trade tax income tax duty of customs royalty provident fundduty of excise and cess matters that have not been deposited on account of dispute as on31.3.2018.

Name of the statute Nature of disputed Dues Amount outstanding Period to which the amount relates Forum where dispute is pending
(in Rs. Crores)
Customs Act 1962 Customs Duty levied on machinery import from Algeria/Iraq 5.81 1989-90 Dy Commissioner
(Custom) Mumbai
Central Excise Act 1944 Levy of Excise Duty on Bracket/Cantilever Assemblies 0.66 1998-99 CESTAT (Dept. Appeal)
West Bengal State Sales Tax Act Sales Tax 0.26 1998-99 Sr. Jt. Comm. (Appeals)
Sales Tax West Bengal
Income Tax Act 1961 Disallowance of deduction u/s 80-IA taxing of foreign income & provision for maintenance etc. 13.52 2015-16 Commissioner of Income Tax (Appeals) New Delhi
West Bengal VAT Act 2003 VAT 0.71 2004-05 Asst. Comm. of Sales Tax College St Charge Kolkata
Odisha Vat Act 2004 VAT 1.09 2002-03 Comm. of Sales Tax Odisha
Bihar Sales Tax Act-1981 Sales Tax 1.75 1987-88 and 1994-95 Bihar Sales Tax Tribunal Khalgoan
West Bengal VAT Act 2003 VAT 0.54 2006-07 Joint Commissioner Commercial Taxes Dharamtala Circle
West Bengal VAT Act 2003 VAT 0.28 2005-06 WB Commercial Taxes Appellate & Revisional Board
Service Tax Service Tax on agency Fees 12.91 2010-11 to 2014-15 CESTAT
Service Tax Service Tax on agency Fees 5.6 2009-10 to 2013-14 CESTAT
VAT VAT TDS 5.98 2005-06 & 2006-07 Bihar VAT Department West Circle Patna
VAT VAT 0.07 2010-11 Bihar VAT Department West Circle Patna
VAT VAT 29.2 2012-13 Bihar VAT Department West Circle Patna
Jammu and Kashmir GST Act 1962 Sales Tax 19.33 1999-00 to 2005-06 J&K High Court Jammu and Deputy Comm. Sales Tax (Appeals) Srinagar
Sales Tax Sales Tax-AGRP 2.28 2007-08 to 2012-13 The Additional Commissioner Commercial Taxes Ghaziabad

 

Sales Tax Entry Tax-AGRP 0.027 2009-10 to 2012-13 The Additional Commissioner Commercial Taxes Ghaziabad
Sales Tax Entry Tax-AGRP 0.015 2013-14 The Additional Commissioner Commercial Taxes Ghaziabad
Sales Tax UP TRADE TAX UP 01 0.15 2004-05 (Entry Tax) The Assessing Authority
Sales Tax UP TRADE TAX UP 01 3.74 2004-05 to 2007-08 The Assessing Authority
Sales Tax UPTT-UP-01( Entry Tax) 0.16 2007-08 The Assessing Authority
Sales Tax UPVAT ACT-UP-01 1.36 2007 08 (1.01.2008 The Assessing Authority
31-03-2008)
Sales Tax UPVAT ACT-UP-01 (Entry Tax) 0.15 2008 09 The Appellate Authority
Sales Tax UPVAT ACT-UP-01 (Entry Tax) 0.005 2009 10 The Appellate Authority
Sales Tax UPVAT ACT-UP-01 0.011 2010 11 The Deputy Commissioner
Sales Tax Sales Tax-BE-08 1.17 2008-09 to 2009-10 The Additional Commissioner
Appeal Noida
Sales Tax Sales Tax-BE-08 Entry Tax 0.004 2008 - 09 The Additional Commissioner
Appeal Noida
Sales Tax UPTT-UP-05 0.01 2005-06 High Court Allahabad
Sales Tax UPTT-UP-05 1.31 2006-07 to 2007-08 Tribunal Jhansi Bench
(9 months)
Sales Tax UPVAT-UP-05 3.26 2007-08 to 2009-10 Tribunal Jhansi Bench
Sales Tax UPVAT-UP-05 1.55 2013-14 Dy. Commissioner Sales
Tax authority Orai
Sales Tax UPVAT-UP-05 0.76 2014-15 Dy. Commissioner Sales
Tax authority Orai
Sales Tax Sales Tax 2005-06-Godhra 5.47 2003-04 to 2005-06 Dy. Commissioner Sales
Tax authority Vadodara
Sales Tax Sales Tax 2010-11-GED 0.05 2010-11 Asst Commercial Tax Officer Margo
Uttar Pradesh Demand Raised for Sales Tax 0.08 1982-83 & 1989-90 Appellate Authority Jhansi
VAT Act 2008
Rewari - Works contract Tax 1.84 2006-07 to 2010 - 11 High Court Rajasthan
Ajmer Project
Sales Tax Sales Tax 1996-97 MRO 3.51 1995-96 to 1996-97 Bombay High Court

 

Karnataka Vat Difference in rate of tax and levy of Interest thereon 0.5 2009-10 Deputy Commissioner
(Appeals ) Trivndrum
Sales Tax Sales tax 2010-11 MRO 0.29 2010-11 Sales Tax Office Mumbai
Sales Tax Sales tax 2011-12 MRO 3.68 2011-12 Sales Tax Office Mumbai
Kerala VAT Kerala VAT 0.33 2013-14 Asst. Commissioner Commercial Tax
Sales Tax UP- VAT 0.62 2010-11 Addl. Comm./ Sales Tax/Lucknow

viii. The Company has not defaulted in the repayment of loans or borrowings to anyfinancial institution banks Government during the year. The company did not issue anydebenture during the year. ix. The Company has not made any public offer (including debtsinstruments) during the year. The term loan taken during the year was applied for thepurpose for which it was taken. x. According to the information and explanations given tous no fraud by the Company or any fraud on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.

xi. In view of the Government Notification No. GSR 463

(E) dated 5 June 2015 government companies are exempt from the applicability ofsection 197 of the Companies Act2013. Accordingly clause 3(xi) of the order is notapplicable to the Company. xii. The Company is not a Nidhi Company as specified in theNidhi Rules 2014. Thus the requirements under para 3(xii) of the Companies (Auditor'sReport) Order 2016 are not applicable to the Company. xiii. According to the informationand explanations given to us all transactions with related parties are in compliance withsection 177 and 188 of the Companies Act 2013 where applicable and the details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards. xiv. According to the 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 under review. xv. According to the information andexplanations given to us the Company has not entered into non-cash transactions with thedirectors or persons connected with him within the provisions of section 192 of theCompanies Act 2013. xvi. The Company is not a Non-banking finance company henceregistration under section 45-IA of the Reserve Bank of India Act 1934 does not arise.

For K.G SOMANI & CO.
Chartered Accountants
FRN 006591N
(Ashish Kumar Batta)
Partner
Membership No.095597
Place of Signature: New Delhi
Date: 03 August 2018

"Annexure B" to the Independent Auditors' Report of even date on theStandalone Ind AS

Financial Statements of Ircon International Limited for the year ended 31 March 2018

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 IrconInternational Limited "the Company" as of March 31 2018 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 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.

Auditor's 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 prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Company's internal financial controls system 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit andbranch auditor's audit report the following material weaknesses have been identified asat March 31 2018.

(a) The Company has an integrated ERP system which was not used at its full potential.In the foreign projects the company has not used ERP system for the preparation offinancial accounts instead software "Tally" was used for the same. In the Mumbairegion the branch auditor has reported that integrated ERP system is not used to itsfullest potential and in one project software tally was used for preparation of FinancialStatement. The ERP system should have been used at its full potential to have moreeffective financial control.

(b) The Inventory records at some units is maintained manually and the inventory manualin SAP is under consideration. Further continuous identification system ofsurplus/obsolete/broken assets and material/stores is inadequate and needs to bestrengthened. A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion except for the effects/ possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2018 "based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia".

Emphasis of Matter

Few cases of reduction of bills by the client and accepted by the project withoutnoting therein full reasons/ justifications have been observed for which follow up withclient needs to be improved.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to a branches/Region is based on the corresponding report of other auditors.

For K.G SOMANI & CO.
Chartered Accountants
FRN 006591N
(Ashish Kumar Batta)
Partner
Membership No.095597
Place of Signature: New Delhi
Date: 03 August 2018