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Gokak Textiles Ltd.

BSE: 532957 Sector: Industrials
NSE: N.A. ISIN Code: INE642I01014
BSE 00:00 | 19 Jun 38.00 -0.50
(-1.30%)
OPEN

38.55

HIGH

38.55

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38.00

NSE 05:30 | 01 Jan Gokak Textiles Ltd
OPEN 38.55
PREVIOUS CLOSE 38.50
VOLUME 2491
52-Week high 66.75
52-Week low 32.25
P/E
Mkt Cap.(Rs cr) 25
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 38.55
CLOSE 38.50
VOLUME 2491
52-Week high 66.75
52-Week low 32.25
P/E
Mkt Cap.(Rs cr) 25
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 Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of GOKAKTEXTILES LIMITED ("the Company") which comprise the Balance Sheet as at March312017 and the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information.

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 also includes maintenance of adequate accounting records inaccordance with the provision of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; makingjudgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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 the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom 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 we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

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 2017 and its loss(financialperformance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Emphasis of Matters

In forming our opinion on the standalone Ind AS financial statements in view of theaccumulated losses and reduction in operations we have considered and relied on theparent company's commitment to and the active involvement in the Company and based onabove the standalone Ind AS financial statements have been prepared on the Going Concernbasis.

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

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 subsection (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.

2. 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 appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2017 and taken on record by the Board of Directors we report that none of thedirectors is disqualified as on March 312017 from being appointed as a director in termsof 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 standalone Ind AS financial statements - refernote 36 to the standaloneInd AS financial statements.

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

iii. Based on the information given to us there has been delay of four days intransferring the amount of Rupees 0.34 Lakh required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the standalone Ind AS financialstatements as regards its holdings as well as dealings in Specified Bank Notes during theperiod from November 8 2016 to December 30 2016. Based on the representations providedto us by the management we report that the disclosures are in accordance with the booksof account maintained by the Company-referNote 45 to the standalone Ind AS financialstatements.

For KALYANIWALLA & MISTRY LLP
CHARTERED ACCOUNTANTS
(Firm Registration No. 104607W/W100166)
Anil A. Kulkarni
Place: Mumbai Partner
Date: May 26 2017 Membership No. 47576

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 Ind AS financial statements of Gokak Textiles Limited for the year ended March312017.

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 the discrepancies noticed on suchverification have been properly dealt with in the books of account.

(c) Based on the information and explanations given to us and on the basis ofexamination of the records of the Company the title deeds of immovable properties are heldin the name of the Company except:

Sr. No. Nature of Asset No. of Cases Whether Leasehold/Freehold Gross Block as on March 31 2017 Rupees in Lakh Net Block as on March 31 2017 Rupees in Lakh Remarks
1. Land 1 Freehold 11.35 ll.35 • 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.
2. Land 1 Freehold 11.10 11.10 The title deeds of the properties are in the name of erstwhile entity (Knitwear Division).
3. Land 1 Leasehold 1.50 The lease deed of the land is in the name of erstwhile entity (Mills Division).
4. Building 2 Freehold 7.78 3.69 The title deeds of all the properties are in the name of erstwhile entity (Mills Division).

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 broadly reviewed the books of account maintained bythe Company pursuant to the Rules made by the Central Government for the maintenance ofcost records under section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained.

vii. (a) According to the information and explanations given to us by the Company andthe records examined by us the Company is generally regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax SalesTax Service Tax Duty of Customs Duty of Excise Value Added Tax Cess and othermaterial statutory dues to the appropriate authorities. According to the information andexplanations given to us by the Company there are no arrears of outstanding statutorydues in respect of above as on the last day of the financial year for aperiod of more thansix months from the date they became payable.

(b) According to the information and explanation given to us by the Company and on thebasis of our examination of the books of account and the records there are no dues ofIncome Tax Sales Tax Service Tax Duty of Customs Duty of Excise and Value added taxoutstanding on account of any dispute other than the following:

Name of Statute Amount (Rupees in Lakh) Period to which the amount relates Forum where dispute is pending
The Karnataka Special Tax on Entry of Certain Goods Act 2004 114.58 October-2004 to March-2007 High Court of Karnataka Bangalore
The Excise Duty Act 1944 32.62 2004-2005 and 2005-2006 The Central Excise and Service Tax Appellate Tribunal Mangalore
The Employees Provident Fund and Miscellaneous Provision Act 1952 40.14 January-1990 to December-2001 The Employees Provident Fund Appelate Tribunal
The Excise Duty Act 1944 110.38 December 2004 to May 2005 The Supreme Court of India

The Company has deposited Rupees 12.05 Lakh and Rupees 8.16 Lakh 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 the Company has not defaulted in repayment of dues to financialinstitutions banks and government except for a few delays ranging between 1 to 36 daysaggregating to Rupees 460.22 Lakh in payment of installments of term loans taken frombanks during the first quarter of the year. 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 ofour examination of the books of account and records of theCompany and according to the information and explanation given to us by the Company andrepresentations made by the Management no material fraud by or on the Company by itsofficers or employees has been noticed or reported during the financial 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 Orderare 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 standalone IndAS financial statements as requiredby the applicable Indian Accounting Standards.

xiv. According to the information and explanation given to us and based on ourexamination of the records of the Company the allotment of 11% Non-cumulativeNon-convertible Redeemable Preference Shares made by the Company through privateplacement basis is in compliance with the requirements of section 42 of the Companies Act2013. According to the information and explanation given to us and based on ourexamination of the records of the Company the amount raised through private placement hasbeen 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 LLP
CHARTERED ACCOUNTANTS
(Firm Registration No. 104607W/W100166)
Anil A. Kulkarni
Partner
Membership No. 47576
Date: May 26 2017
Place: Mumbai.

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 Ind AS financial statements of Gokak Textiles Limited for the year ended March312017.

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 GOKAKTEXTILES LIMITED ("the Company") as of March 31 2017 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 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 financial reporting to future periods aresubject to the risk that the internal financial control over financial reporting maybecome inadequate because of changes in conditions or that the degree of compliance withthe 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 2017 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 LLP
CHARTERED ACCOUNTANTS
(Firm RegistrationNo. 104607W/W100166 )
Anil A. Kulkarni
Partner
Membership No. 47576
Date: May 262017
Place: Mumbai.