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K G Denim Ltd.

BSE: 500239 Sector: Industrials
NSE: KGDENIM ISIN Code: INE104A01012
BSE 00:00 | 17 Sep 42.70 -0.55
(-1.27%)
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NSE 05:30 | 01 Jan K G Denim Ltd
OPEN 43.00
PREVIOUS CLOSE 43.25
VOLUME 1732
52-Week high 59.65
52-Week low 17.40
P/E
Mkt Cap.(Rs cr) 109
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 43.00
CLOSE 43.25
VOLUME 1732
52-Week high 59.65
52-Week low 17.40
P/E
Mkt Cap.(Rs cr) 109
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

K G Denim Ltd. (KGDENIM) - Auditors Report

Company auditors report

TO THE MEMBERS OF K G DENIM LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

Opinion

1. We have audited the accompanying standalone financial statements of KG Denim Limited('the Company') which comprise the Balance sheet as at 31 March 2020 the statement ofprofit and loss (including Other Comprehensive Income) the Cash Flow statement and thestatement of changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ('the Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards ('Ind AS') specified under Section 133 of the Act of thestate of affairs of the Company as at 31 March 2020 and its loss (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the "Auditor's Responsibilities for the Audit of the FinancialStatements" section of our report. We are independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India ('ICAI')together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

Emphasis of Matter

4. We draw attention to note 40 to the accompanying standalone financial statementswhich describes the effects of uncertainties relating to

Covid-19 pandemic outbreak on the company's operations and management's evaluation ofits impact on the accompanying standalone financial statements as at 31st March 2020 theimpact of which is dependent on future developments. Our opinion is not modified inrespect of this matter.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgement were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr.No Key Audit Matter Auditor's Response
1. Litigations - Contingencies Principal Audit Procedures
The Company has ongoing litigations with various authorities and third parties which could have a significant impact on the results if the potential exposures were to materialise. Our audit approach was a combination of test of internal controls and substantive procedures including:
The amounts involved are significant and the application of accounting standards to determine the amount if any to be provided as a liability or disclosed as a contingent liability is inherently subjective. Assessing the appropriateness of the design and implementation of the Company's controls over the assessment of litigations and completeness of disclosures. Supporting documentation are tested for the positions taken by the management meetings are conducted with in-house legal counsel and/or legal team and minutes of Board to confirm the operating effectiveness of these controls.
Claims against the Company not acknowledged as debts are disclosed in the Financial Statements by the Company after a careful evaluation of the facts and legal aspects of the matters involved. The outcome of such litigation is uncertain and the position taken by management involves significant judgement and estimation to determine the likelihood and/or timing of cash outflows and the interpretation of preliminary and pending court rulings. Involving our direct and indirect tax specialists to assess relevant historical and recent judgements passed by the appropriate authorities in order to challenge the basis used for the accounting treatment and resulting disclosures.
Refer Note 44 to the Financial Statements

Information other than the Financial Statements and Auditor's Report thereon

6. The Company's Board of Directors is responsible for the other information. The otherinformation obtained at the date of this auditor's report is information included in theAnnual Report but does not include the standalone financial statements and our auditor'sreport thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed on the other information obtained prior to the date of thisauditor's report we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of

Directors is responsible for the matters stated in section 134(5) of the Act withrespect to the preparation of these standalone financial statements that give a true andfair view of the state of affairs (financial position) profit or loss (financialperformance including other comprehensive income) changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Ind AS specified under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements 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.

8. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

9. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

10.Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

11.As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

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

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

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

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

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

Report on Other Legal and Regulatory Requirements

15. As required by Section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under Section 197 read with Schedule V to the Act.

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

17. As required by Section 143 (3) of the Act based on our audit 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 of theaccompanying standalone financial statements.

(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 the statement of profit and loss (including other comprehensiveincome) the cash flow statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;

(d) in our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with relevantrules issued thereunder;

(e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164 (2) of the Act;

(f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31st March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport as per "Annexure B"; expressed an unmodified opinion; 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 (as amended) inour opinion and to the best of our knowledge and belief and according to the informationand explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financialposition as at 31st March 2020 in the standalone financial statements;

ii. the Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses;

iii. Amount of Rs. 859424 was transferred in delay of one day to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2020.

iv. the disclosure requirements regarding specified bank notes held and transactedduring the period from 8th November 2016 to 30 December 2016 has not been made since therequirement does not pertain to the year ended 31st March 2020.

For MOHAN & VENKATARAMAN
Chartered Accountants
Firm Regn. No.007321S
V KARTHIKEYAN
COIMBATORE Partner
29th July 2020 Membership No.208828
UDIN : 20208828AAAAAT2873

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 16 of the Independent Auditors' Report of even date to themembers of K G Denim Limited on

the standalone financial statements for the year ended March 31 2020.

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The property plant and equipment are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the property plant andequipment has been physically verified by the Management during the year and no materialdiscrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. The physical verification of inventory excluding stocks with third parties havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material and have been appropriately dealt with in the books of accounts.

iii. The Company has not granted unsecured loans to companies firms LLPs or otherparties covered in the register maintained under Section

189 of the Act.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of loans investments made and the guarantees provided by it.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. The company has maintained the cost records prescribed by the Central Governmentunder Section 148 (1) of the Act however we have not made detailed examination of suchrecords.

vii.(a) According to the information and explanations given to us and the records ofthe company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues in respect of sales tax goods and services tax VATprovident fund employees' state insurance income tax service tax duty of customs dutyof excise cess and other material statutory dues as applicable with the appropriateauthorities. Further no undisputed amounts payable in respect thereof were outstanding atthe year-end for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of sales tax service tax and VAT which havenot been deposited on account of any dispute. The particulars of dues of Income tax dutyof customs and duty of excise as at March 31 2020 which have not been deposited onaccount of a dispute are as follows:

Name of Statute Nature of Dues Amount (Rs. Lakhs) Period to which the amount relates Forum where the dispute is pending
Customs Act Custom Duty 7.49 FY 2006-07 Customs Excise and Service Tax Appellate Tribunal Chennai.
0.33 FY 2008-09 Out of this demand of
s 112.61 FY 2013-14 Rs.112.61 lakhs was stayed by CESTAT Chennai.
Income Tax Act Income Tax 20.15 FY 2014-15 CIT Appeals

viii. According to the information and explanation given to us we are of the opinionthat the Company has not defaulted in repayment of loans

or borrowings to any financial institution or bank or Government or dues to debentureholders during the year.

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). According to the information and explanationgiven to us we are of the opinion that the term loans have been applied for the purposesfor which they were obtained.

x. According to the information and explanation given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

xi. The Company has paid / provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of

Section 197 read with Schedule V to the Act.

xii. As the Company is not a Nidhi Company and therefore Clause 3(xii) of the Order isnot applicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the 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 theapplicable accounting standards.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the

year under review. Accordingly Clause 3(xiv) of the Order is not applicable to theCompany.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him Accordingly Clause 3(xv) of

the Order is not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 Accordingly Clause 3(xvi) of the

Order is not applicable to the Company.

For MOHAN & VENKATARAMAN
Chartered Accountants
Firm Regn. No.007321S
V KARTHIKEYAN
COIMBATORE Partner
29th July 2020 Membership No.208828
UDIN : 20208828AAAAAT2873

ANNEXURE - B TO THE AUDITORS' REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the

Act")

1. We have audited the internal financial controls with reference to financialstatements of KG Denim Limited ("the Company") as of 31 March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Responsibility of Management and Those charged with Governance for Internal FinancialControls

2. The Company's Board of Directors are responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India ('ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditors' Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the ICAI prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls with reference to financial statements and the Guidance Note issued bythe ICAI. Those standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. A Company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

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

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2020 based on the internal financial controls with referenceto financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the ICAI.

For MOHAN & VENKATARAMAN
Chartered Accountants
Firm Regn. No.007321S
V KARTHIKEYAN
COIMBATORE Partner
29th July 2020 Membership No.208828
UDIN : 20208828AAAAAT2873

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