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Kitex Garments Ltd.

BSE: 521248 Sector: Industrials
NSE: KITEX ISIN Code: INE602G01020
BSE 00:00 | 21 May 107.75 -6.60
(-5.77%)
OPEN

114.35

HIGH

114.95

LOW

105.05

NSE 00:00 | 21 May 107.70 -6.80
(-5.94%)
OPEN

114.00

HIGH

114.90

LOW

107.10

OPEN 114.35
PREVIOUS CLOSE 114.35
VOLUME 17419
52-Week high 200.05
52-Week low 88.00
P/E 8.80
Mkt Cap.(Rs cr) 717
Buy Price 106.15
Buy Qty 14.00
Sell Price 107.75
Sell Qty 9.00
OPEN 114.35
CLOSE 114.35
VOLUME 17419
52-Week high 200.05
52-Week low 88.00
P/E 8.80
Mkt Cap.(Rs cr) 717
Buy Price 106.15
Buy Qty 14.00
Sell Price 107.75
Sell Qty 9.00

Kitex Garments Ltd. (KITEX) - Auditors Report

Company auditors report

To

The Members of

Kitex Garments Limited

Kizhakkambalam

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of KitexGarments Limited (hereinafter referred to as "the Company") comprising theBalance Sheet as at 31st March 2018 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Cash Flows and the Statement of Changes in Equityfor the year then ended and a summary of the significant accounting policies and otherexplanatory 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 (hereinafter referred to as "the Act") withrespect to the preparation of these standalone Ind AS financial statements that give atrue and fair view of the financial position 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

While conducting the audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit of the standalone Ind AS financial statements in accordance with the Standardson Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the standalone Ind AS financial statements are free from materialmisstatement.

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 of the Company as at 31st March 2018 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Other Matters

The comparative financial information of the Company for the transition date openingbalance sheet as at 1st April 2016 included in these standalone Ind AS financialstatements are based on the previously issued statutory financial statements prepared inaccordance with the Companies (Accounting Standards) Rules 2006 audited by thepredecessor auditor whose report for the year ended 31st March 2016 dated 4th April 2016expressed an unmodified opinion on those standalone financial statements as adjusted forthe differences in the accounting principles adopted by the Company on transition to theInd AS which have been audited by us.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 (hereinafter referred toas "the Order") issued by the Central Government of India in terms ofsub-section (11) of section 143 of the Companies Act 2013 we give in the "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.

2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. (c) The Balance Sheet the Statement of Profit and Lossincluding Other Comprehensive Income the Statement of Cash Flows and the Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account.

(d) InouropiniontheaforesaidstandaloneIndASfinancial statements comply with the IndianAccounting Standards specified under Section 133 of the Act. (e) On the basis of thewritten representations received from the directors as on 31st March 2018 taken on recordby the Board of Directors none of the directors is disqualified as on 31st March 2018from 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 system withreference to financial statements reporting of the Company and the operating effectivenessof such controls refer to our separate Report in "Annexure B".

(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. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone Ind AS financial statements – Refer Note No 2.37.1.1 to the standalone IndAS financial statements.

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

Place: Kizhakkambalam Date: 18.05.2018

"ANNEXURE A"

REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS" OF OUR INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE INDAS FINANCIAL STATEMENTS OF KITEX GARMENTS LIMITED FOR THE YEAR ENDED 31st MARCH 2018

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

(b) We are informed that fixed assets have been physically verified by the managementat reasonable intervals and that no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us the records of theCompany examined by us and the confirmation from financial lender in respect of titledeeds deposited with them and based on the details of immovable properties furnished to usby the Company the title deeds of the immovable properties are held in the name of theCompany.

2. We are informed that the physical verification of inventory has been conducted atreasonable intervals by the management and that no material discrepancies were noticed onsuch verification.

3. According to the information and explanations given to us and the records of thecompany examined by us 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 Act. Accordingly the reporting requirements underclauses (iii) (a) to (c) of paragraph 3 of the Order are not applicable.

4. According to the information and explanations given to us and the records of thecompany examined by us the company has not granted any loans or given any guarantee orsecurity for which the provisions of sections 185 and 186 of the Act are applicable andthe company has complied with the provisions of section 186 of the Act in respect ofinvestments made by it.

5. The Company has not accepted any deposits from the public during the year and hencethe directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76or any other relevant provisions of the Act and the rules framed thereunder are notapplicable.

6. To the best of our knowledge and according to the information and explanations givento us the Central Government has not prescribed the maintenance of cost records underSection 148 (1) of the Act for the company at this stage.

7. (a) As per the information and explanations given to us and according to ourexamination of the records of the Company the Company has been generally regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax Goods and Service Tax duty of customs duty ofexcise value added tax cess and other statutory dues as applicable to the Company to theappropriate authorities during the year.

There are no arrears of undisputed statutory dues outstanding as on the last day of thefinancial year for a period of more than six months from the date on which they becamepayable.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no disputed amounts due to be deposited under Sales TaxService Tax Duty of Excise and Value Added Tax and the following disputed demands ofIncome Tax and Duty of Customs have not been deposited with the authorities as at 31stMarch 2018:

Name of the statute Nature of the dues Amount (in Rs. Lakhs) Period to which the amount relates (Financial year) Forum where the dispute is pending
The Customs Act 1962 (Net of Rs. 99.31 Lakhs paid under protest) Customs duty and interest 1996-97 to 1997-98 220.26 Honourable Supreme Court of India
The Customs Act 1962 Customs duty and interest 2558.19 2010-11 to 2017-18 Honourable High Court of Kerala
Income Tax Act 1961 Penalty 33.91 2010-11 Commissioner of In- come Tax (Appeals)

8. In our opinion and according to the information and explanations given to us and therecords of the Company examined by us the Company has not defaulted in repayment of loansand borrowings to the banks. The company has not taken any loans or borrowing fromFinancial Institutions and Government or raised any money by way of issue of debentures.

9. According to the information and explanations given to us and the records of theCompany examined by us no money has been raised by way of initial public offer or furtherpublic offer (including debt instruments) and the term loan availed by the Company havebeen applied for the purpose for which the loan was obtained.

10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations 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 been informed of any such case by theManagement.

11. According to the information and explanations given to us and the records of theCompany examined by us managerial remuneration has been paid or provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

12. The Company is not a Nidhi company. Accordingly the reporting requirements underclause (xii) of paragraph 3 of the Order are not applicable.

13. According to the information and explanations given to us and the records of theCompany examined by us all transactions with the related parties are in compliance withSections 177 and 188 of the Act where applicable and the details of such transactions havebeen disclosed in Note No 2.35 to the standalone Ind AS financial statements as requiredby the applicable accounting standards.

14. According to the information and explanations given to us and based on theexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

15. According to the information and explanations given to us and the records of theCompany examined by us the Company has not entered into any non-cash transactions withdirectors or persons connected with the directors. Accordingly the reporting requirementunder clause (xv) of paragraph 3 of the Order is not applicable.

16. According to the information and explanations given to us and the records of theCompany examined by us the Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly the reporting requirement underclause (xvi) of paragraph 3 of the Order is not applicable.

Place: Kizhakkambalam Date: 18.05.2018

ANNEXURE B

REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDIT REPORT OF EVEN DATE ON THESTANDALONE IND AS FINANCIAL STATEMENTS OF KITEX GARMENTS LIMITED FOR THE YEAR ENDED 31STMARCH 2018 Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls system with reference to financialstatements reporting of Kitex Garments Limited (hereinafter referred to as "theCompany") as of March 31 2018 in conjunction with our audit of the standalone Ind ASfinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the company is responsible for establishing and maintaininginternal financial controls based on the internal controls with reference to financialstatements 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 ("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 tocompany'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 Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols system with reference to financial statements reporting based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls system withreference to financial statements 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 with reference to financial statements reportingand their operating effectiveness. Our audit of internal financial controls system withreference to financial statements reporting included obtaining an understanding ofinternal financial controls system with reference to financial statements 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 judgement 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 systemwith reference to financial statements reporting.

Meaning of Internal Financial Controls with reference to Financial Statements reporting

A company's internal financial controls system with reference to financial statementsreporting is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls system with reference to financial statements reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements reporting

Because of the inherent limitations of internal financial controls system withreference to financial statements reporting including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols system with reference to financial statements reporting to future periods aresubject to the risk that the internal financial controls system with reference tofinancial statements reporting may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements reporting and suchinternal financial controls system with reference to financial statements reporting wereoperating effectively as at March 31 2018 based on the internal control with referenceto financial statements reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

Other Matters

As stated in Note No 2.38 to the standalone Ind AS Financial Statements Software underdevelopment disclosed under ‘Intangible assets under development' representsexpenditure on implementation of an integrated ERP System covering all functional areas/transactions including inventories which is in progress; and pending implementation ofthe same the company has alternate internal controls over financial reporting in place.Our opinion is not modified in respect of this matter.

For VARMA & VARMA

(FRN: 004532S)

Sd/-

V. Sathyanarayanan

Partner

CHARTERED ACCOUNTANTS

Membership No. 21941

Place: Kizhakkambalam

Date: 18.05.2018