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Globe Textiles (India) Ltd.

BSE: 538431 Sector: Industrials
NSE: GLOBE ISIN Code: INE581X01013
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Globe Textiles (India) Ltd. (GLOBE) - Auditors Report

Company auditors report

To the Members of Globe Textiles (India) Ltd. (Formerly Globe Textiles (India) PrivateLtd.)

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Globe Textiles(India) Private Ltd. ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss and Cash Flow Statement for the year thenended and 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased 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 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements read with Emphasis of Matterparagraph below give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2017 and itsfinancial performance and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inthe paragraph 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act wereport 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 Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) on the basis of the written representations received from the directors as on 31stMarch2017 taken on record by the Board of Directors none of the directors is disqualified ason 31stMarch 2017 from being appointed as a director in terms of Section 164(2) of the Act;

f) 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

g) with respect to the other matters to be included in the Auditor's 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 on its financialposition in its financial statements - Refer Note 29(d) to the financial statements;

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

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company

iv. The company has provided requisite disclosures in its financial statements (videNote no. 32 to the Financial Statements) as to holdings as well as dealings in SpecifiedBank Notes during the period from 8th November 2016 to 30th December 2016 and these arein accordance with the books of accounts maintained by the company. We have relied on themanagement representation for disclosure of denomination wise details

For DHARMESH PARIKH & CO.
Chartered Accountants
Firm RegNo: 112054W
Place: Ahmedabad Anuj Jain
Date : 22/05/2017 Partner
Membership No. 119140

Annexure - A to the Independent Auditor's Report Re: Globe Textiles (India) Ltd.(Formerly Globe Textiles (India) Private Ltd.)

(Referred to in Paragraph 1 of our Report of even date)

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2017 we reportthat

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

(b) According to the information and explanations given to us the Company has aprogram of physically verifying its fixed assets in a phased manner designed to cover allassets which in our opinion is reasonable having regard to the size of the company andthe nature of its business.

(c) The title deeds of immovable properties as disclosed in Note 12 on fixed assets tothe financial statements are held in the name of the company except for leasehold landand immovable assets constructed on the same having a carrying value of Rs. 98352283 asat 31stMarch 2017.

(ii) The inventory other than stocks lying with third parties has been physicallyverified by the management during the year. In our opinion the frequency of verificationis reasonable. The discrepancies noticed on verification between the physical stocks andthe book records were not material and have been properly dealt with in the books ofaccount.

(iii) According to the information and explanations given to us and representationsmade by the Management 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 (‘the Act'). Accordingly theprovisions of clause 3 (iii) (a) to (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us and representations madeby the Management the Company has not done any transactions covered under section 185 and186 in respect of loans investments guarantees and security. Accordingly the provisionsof paragraph 3 (iv) of the Order are not applicable.

(v) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.

(vi) According to the information and explanation given to us the maintenance of costrecords under section 148(1) of the Act as prescribed by the Central Government iscurrently not applicable to 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 employees' stateinsurance income tax sales tax wealth tax service tax duty of customs value addedtax cess and other material statutory dues have been regularly deposited during the yearby the Company with the appropriate authorities generally. As explained to us the Companydid not have any dues on account of duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of above referred statutory dues were in arrears as at 31 March 2017for a period of more than six months from the date they became payable.

(b) According to the records of the Company and representations made by the Managementthe following dues of income tax have not been deposited by the Company on account ofdisputes:

Name of Statute Nature of the dues Forum where dispute is pending Amount (*) (In Rs.) Amount paid under protest (In Rs.) Period to which the amount relates
Income Tax Act 1961 Income Tax Appellate Authority upto Commissioner's Level 45807240 AY 2012-13 2013-14& 201415
Income Tax Act 1961 TDS Assessing Officer 160290 Mutliple years

(viii) Based on our audit procedures and on the information and explanations given bythe management we are of the opinion that the Company has not defaulted in repayment ofdues to any bank or financial institution during the year. The company has not borrowedfunds from any debenture holders.

(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments. The company has utilized the amountraised by way of term Loans during the year for the purpose for which it was raised.

(x) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practice in India andaccording to the information and explanation given to us we have neither come across anyinstance of material fraud by the company or on the company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company though managerial remuneration has been paid/provided the Company being a private limited companyupto 22nd March 2017 provisions ofSection 197 read with Schedule V of the Companies Act 2013 is not applicable to theCompany for the year.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly the provisions ofparagraph 3 (xii) of the Order are not applicable.

(xiii) As per information and explanation given to us and on the basis of ourexamination of the records of the Company all the transaction with related parties are incompliance with section 177 and 188 of Companies Act 2013 and all the details have beendisclosed in financial statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanations given to us and on the basis of ourexamination of the records the Company has not made any preferential allotment or privateplacement or not issued any debenture during the year under review. Accordingly theprovisions of paragraph 3(xiv) of the Order are not applicable.

(xv) According to the information and explanations given to us and on the basis of ourexamination of the records Company has not entered into any non-cash transactions withany director or any person connected with him. Accordingly the provisions of Clauses 3(xv)of the Order are not applicable to the Company.

(xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi) ofthe Order are not applicable.

For DHARMESH PARIKH & CO.
Chartered Accountants
Firm RegNo: 112054W
Place: Ahmedabad Anuj Jain
Date : 22/05/2017 Partner
Membership No. 119140

Annexure-B to the Independent Auditor's Report

Re: Globe Textiles (India) Ltd. (Formerly Globe Textiles (India) Private Ltd.)

(Referred to in paragraph 2 (f) of our Report of even date)

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 the Companyas of 31st March 2017 in conjunction with our audit of the standalonefinancial statements of the company for the period ended on that date.

Management's Responsibilities 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. Thes e responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

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 on Audit of Internal Financial Controls Over Financial Reporting(the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and 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 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 includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 the company is not having any defined SOP to manage its operations.Accordingly there are some limitations in the control aspects of financial reporting. Inour opinion except for the possible effects of the this material weakness the companyhas maintained in all material respects an adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of 31stMarch 2017 based on the internal financialcontrols over financial reporting criteria established by the company considering theessential components of internal financial controls stated in the Guidance Note on auditof internal financial controls over financial reporting issued by the Institute ofChartered Accountants of India.

For DHARMESH PARIKH & CO.
Chartered Accountants
Firm RegNo: 112054W
Place: Ahmedabad Anuj Jain
Date : 22/05/2017 Partner
Membership No. 119140