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Gokak Textiles Ltd.

BSE: 532957 Sector: Industrials
NSE: N.A. ISIN Code: INE642I01014
BSE LIVE 15:40 | 18 Aug 41.60 4.25
(11.38%)
OPEN

41.00

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41.95

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41.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 41.00
PREVIOUS CLOSE 37.35
VOLUME 8
52-Week high 60.00
52-Week low 32.25
P/E
Mkt Cap.(Rs cr) 27
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 41.00
CLOSE 37.35
VOLUME 8
52-Week high 60.00
52-Week low 32.25
P/E
Mkt Cap.(Rs cr) 27
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gokak Textiles Ltd. (GOKAKTEXTILES) - Auditors Report

Company auditors report

TO THE MEMBERS OF GOKAK TEXTILES LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of GOKAK TEXTILESLIMITED ("the Company") which comprises the Balance Sheet as at March 31 2016the Statement of Profit and Loss the Cash Flow Statement for the six months then endedand a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the 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 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 provision of the Act for safeguarding the assets of the Company and for preventing anddetecting 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.

Auditor's Responsibility

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 thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2016 and its losses and its cash flows for the six months ended on that date.

Emphasis of Matters

In forming our opinion on the financial statements in view of the accumulated lossesand the labour related problems we have considered and relied on the parent company'scommitment to and the active involvement in the Company and based on the above thefinancial statements have been prepared on the Going Concern basis.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the "Annexure A" considering the comments in the BranchAuditor's Report a statement on the matters specified in the paragraph 3 and 4 of theOrder.

As required by Section 143 (3) of the Act we report that:

We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit.

In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books and proper returns adequatefor the purposes of our audit have been received from the branches not visited by us. TheBranch Auditor's report has been forwarded to us and has been appropriately dealt with.

The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account and with the auditedreturns received from the branches.

In our opinion the aforesaid financial statements comply with the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

On the basis of the written representations received from the directors as on March 312016 and taken on record by the Board of Directors we report that none of the directorsis disqualified as on March 31 2016 from being appointed as a director in terms ofsection 164 (2) of the Act.

With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and

With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:

The Company has disclosed the impact of pending litigations on its financial positionin its financial statements - refer note 29 to the financial statements.

The Company does not have any material foreseeable losses on long term contractsincluding derivative contracts requiring provision under the applicable law or accountingstandards.

There are no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company.

For KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
(Firm Registration No. 104607W)
Anil A. Kulkarni
Partner
Place: Mumbai Membership No. 47576
Date: July 8 2016

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

As referred to in Paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our Independent Auditor's Report of even date on thestandalone financial statements of Gokak Textiles Limited for the six months ended March31 2016.

Statement on Matters specified in paragraphs 3 and 4 of the Companies (Auditor'sReport) Order 2016:

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As informed to us the Company has a program for physical verification of fixedassets at periodic intervals. As informed to us the fixed assets have been verified bythe Company as per the program and we were informed that no material discrepancies werenoticed.

(c) Based on the information and explanations given to us and on the basis ofexamination of the records of the Company the details of title deeds of immovableproperties are as under:

Nature of asset No. of Cases Whether Leasehold / Freehold Gross Block as on March 31 2016 Rupees Net Block as on March 31 2016 Rupees Remarks
Land 1 Freehold 1135177 1135177 The title deeds of the property are in the name of erstwhile entities (Mills Division). As per the government records some portion of the land is neither in the name of the Company nor in the name of erstwhile entities.
Land 1 Freehold 1110273 1110273 The title deeds of the properties are in the name of erstwhile entity (Knitwear Division).
Land 1 Leasehold 150000 150000 The lease deed of the land is in the name of erstwhile entity (Mills Division).
Building 2 Freehold 777500 380335 The title deeds of all the properties are in the name of erstwhile entity (Mills Division).
Building Refer note below Refer note below 2102355 1527062 The title deeds were not made available for verification. Consequently we are not able to comment.

Note : Information not available

ii. In our opinion and according to the information and explanations given to usphysical verification of inventory has been conducted at reasonable intervals by themanagement. As informed to us the discrepancies noticed on verification between physicalinventories and book records were not material in relation to the operations of theCompany and the same have been properly dealt with in the books of account.

iii. The Company has not granted any loans secured or unsecured to companies firmsand limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Act. Therefore the provisions of sub-clause (a) (b) and (c) ofparagraph 3(iii) of the Order are not applicable.

iv. In our opinion and according to the information and explanations given to us andthe records examined by us the Company has complied with the provision of section 185 and186 of the Act with respect to investments made and securities provided.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public and hence the directives issued bythe Reserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Act and the Rules framed thereunder are not applicable.

vi. In our opinion and according to the information and explanations given to us themaintenance of cost records has been specified by the

Central Government under sub-section (1) of section 148 of the Act. We have broadlyreviewed the books of account maintained by the Company pursuant to the Rules made by theCentral Government for the maintenance of cost records under section 148 of the Act andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained.

vii. (a) According to the information and explanations given to us by the Company andthe Branch Auditors and the records examined by us the Company is generally regular indepositing undisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Sales Tax Service Tax Duty of Customs Duty of Excise Value Added Tax Cessand other material statutory dues to the appropriate authorities. According to theinformation and explanations given to us by the Company and the Branch Auditors there areno arrears of outstanding statutory dues in respect of above as on the last day of thefinancial year for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us by the Company and theBranch Auditors and on the basis of our examination of the books of account and therecords there are no dues of Income Tax Sales Tax Service Tax Duty of Customs Duty ofExcise and Value added tax outstanding on account of any dispute other than thefollowing:

Name of Stature Amount(Rs) Period to while the amount relates Forum where dispute is pending
The Karnataka Special Tax on Entry of Certain Goods Act 2004 11458194 October-2004 to March-2007 High Court of Karnataka
Bangalore
The Excise Duty Act 1944 3262241 2004-2005 and 2005-2006 The Central Excise and Service
Tax Appellate Tribunal Mangalore
The Employees Provident Fund and Miscellaneous Provision Act 1952 4014265 January -1990 The Employees Provident Fund
December - 2001 Appellate Tribunal
The Excise Duty Act 1994 11037577 December 2004 to May-2005 The Supreme Court of India

The Company has deposited Rs.12 04583 and Rs.8 15561 under protest towardsprovident fund and excise duty respectively.

viii. According to the records of the Company examined by us and the information andexplanations given to us by the Company and the

Branch Auditors the Company has not defaulted in repayment of dues to financialinstitutions banks and government. There are no dues to debenture holders.

ix. The Company has not raised money through initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us and based on the documents and records examined by us on anoverall basis the term loans obtained by the Company were applied for the purpose forwhich the loans were obtained.

x. During the course of our examination of the books of account and records of theCompany and according to the information and explanation given to us by the Company andthe Branch Auditors and representations made by the Management no material fraud by or onthe Company by its officers or employees has been noticed or reported during thefinancial year.

xi. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with requisite approvals mandated by the provisions of section197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company. Accordingly

provisions of paragraph 3(xii) of the Order are not applicable.

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

xiv. According to the information and explanation given to us and based on ourexamination of the records of the Company the allotment of

7% Non-cumulative non-convertible Redeemable Preference Shares made by the Companythrough private placement basis is in compliance with the requirements of section 42 ofthe Companies Act 2013. According to the information and explanation given to us andbased on our examination of the records of the Company the amount raised through privateplacement has been used for the purpose for which the funds were raised.

xv. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with the directors or persons connected with them. Hence the provisions ofsection 192 of the Act are not applicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 hence the provisions of paragraph 3 (xvi) of the Order are notapplicable.

For KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
(Firm Registration No. 104607W)
Anil A. Kulkarni
Place: Mumbai Partner
Date: July 8 2016 Membership No. 47576

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

As referred to in Paragraph 2 (f) under the heading "Report on Other Legal andRegulatory Requirements" of our Independent Auditor's Report of even date on thestandalone financial statements of Gokak Textiles Limited for the six months ended March31 2016.

Report on the Internal Financial Controls under Clause

(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of GOKAKTEXTILES LIMITED ("the Company") as of March 31

2016 in conjunction with our audit of the financial statements of the Company for thesix months ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements 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 systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our knowledge and information and based on theexplanations information and records given to us the Company has in all materialrespects maintained adequate internal financial controls systems over financial reportingand such internal financial controls over financial reporting were operating effectivelyas at March 31 2016 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.

For KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
(Firm Registration No. 104607W)
Anil A. Kulkarni
Place: Mumbai Partner
Date: July 8 2016 Membership No. 47576