We have audited the accompanying standalone financial statements of Gokak Textiles Limited (“the Company”) which comprise
the standalone balance sheet as at March 31, 2025, the standalone statement of profit and loss (including other comprehensive
income), the standalone statement of changes in equity and the standalone statement of cash flows for the year ended on
that date, and notes to the standalone financial statements, including a summary of significant accounting policies and other
explanatory information (hereinafter referred to as “the standalone financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial
statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and
fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian
Accounting Standards) Rules, 2015 (“Ind AS”), as amended and other accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 2025, the loss (including other comprehensive income), changes in equity and its
cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of standalone financial statements in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for
the Audit of the Standalone Financial Statements' section of our report. We are independent of the Company in accordance with
the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the independence requirements
that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial
statements.
Material Uncertainty Related to Going Concern
We draw attention to Note 48 of the standalone financial statements, which indicates that the Company has incurred a net loss
for the year ended March 31, 2025 and that its current liabilities exceeded its current assets as at that date. The Company has
accumulated significant losses and its net worth has been fully eroded. These conditions, along with reduced operations and
increased financial stress, indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability
to continue as a going concern. However, the standalone financial statements have been prepared on a going concern basis of
accounting based on the reasons stated in the said Note. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of most significance in our audit of the standalone
financial statements of the current period. Those matters were addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition
to the matter described in the Material Uncertainty Related to Going Concern section above, we have determined the matters
described below to be the key audit matters to be communicated in our report.
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1. Impairment testing of investment in equity shares of subsidiary
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(Refer Note 6A of the standalone financial statements)
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Description of Key Audit Matter:
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How the matter was addressed in our audit:
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The Company has investment of Rs. 2,499.00 lakhs in the
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We analysed the methods and assumptions applied by
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equity shares of Gokak Power & Energy Limited ('GPEL')
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management to carry out the impairment test though following
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which represents 51% of its equity capital. GPEL is engaged in
the business of generation and distribution of hydro power and
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procedures:
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significant portion of power generated by GPEL is used by the
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• Identification and understanding of the significant controls
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Company for its textile factory.
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implemented by the Company over the impairment testing
process;
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Investments in subsidiaries are valued at cost adjusted for
impairment losses, if any. In line with “Ind AS 36 Impairment
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• Analysis of the reasonableness of the principal
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of assets”, in the presence of an impairment indicator, the
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assumptions made to estimate their cash flows by
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Company carries out an impairment test by comparing the
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obtaining information from management that we deemed
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recoverable amount of the investments, determined according
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to be significant;
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to the value in use method and their carrying amount.
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• We also examined the adequacy of the information
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GPEL has accumulated losses of ' 3,274.33 lakhs as on March
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provided by the Company about the impairment test and
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31,2025 which indicates that the investment in GPEL could be
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its consistency with the requirements of Ind AS 36;
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impaired and requires impairment testing.
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• Analysis of actual data of the year and previous years
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The valuation process adopted by management is complex
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in comparison with the original plan, in order to assess
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and is based on a series of assumptions, such as the forecast
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the nature of variances and the reliability of the planning
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cash flows, the appropriate discounting rate (WACC) and the
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process;
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long-term growth rate. These assumptions are, by nature,
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• Assessment of the reasonableness of the discount rate
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influenced by future expectations regarding the evolution of
external market conditions.
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(WACC) and the long-term growth rate;
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We focused on this area due to the significance of management
judgements adopted in assessing the recoverable amount with
regard to the impairment assessment.
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• Verification that the carrying amount of the investment
was determined properly and comparison with the value
in use resulting from the impairment test.
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2. Going Concern Assessment
(Refer Note 48 of the standalone financial statements)
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Description of Key Audit Matter:
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How the matter was addressed in our audit:
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The Company has incurred a net loss (including other
comprehensive income) of Rs. 4,524.53 lakhs for the year ended
March 31, 2025 and its current liabilities exceeded its current
assets by Rs. 3,897.19 lakhs as at that date. The Company has
significant accumulated losses of Rs. 22,870.02 lakhs, and its
net worth has been fully eroded. These conditions, along with
reduced operations and increased financial stress, indicate the
existence of a material uncertainty that may cast significant
doubt on the Company's ability to continue as a going concern.
We focused on this area due to the significance of
management judgements adopted in assessment of the going
concern assumption for the preparation of standalone financial
statement and related material uncertainties.
Refer above paragraph on “Material Uncertainty Related to
Going Concern”
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We performed the following principal audit procedures in
relation to management's assessment of going concern:
• Evaluated the appropriateness of management's use
of going concern basis of accounting in the preparation
of standalone financial statements in accordance with
Standard on Auditing issued by ICAI in this regard.
• Evaluated the management's plans for future actions
in relation to its going concern assessment, to assess
whether the outcome of those plans is likely to improve the
situation and whether management's plans are feasible in
the circumstances.
• Evaluated the appropriateness of identification of material
uncertainties.
• Assessed the possible mitigating actions identified by
management in the event that actual cash flows are below
forecast.
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• Discussed with management and assessed, the possible
effect of liquidity stress in textile segment and its possible
effect on the solar segment
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• Discussed and obtained a written letter from the holding
company indicating its intention and ability to support the
Company's financial and operating requirements through
infusion or arrangement of additional capital / funds as
and when necessary.
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• Evaluated disclosures in the financial statements for
the Material Uncertainty Related to Going Concern
and the related compliance with the requirements of
the Standards on Auditing and the applicable financial
reporting standards.
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3. Impairment testing of Property, Plant and Equipment
(Refer Note 3, Note 30(iii) and Note 53 of the standalone financial statements)
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Description of Key Audit Matter:
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How the matter was addressed in our audit:
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As at March 31, 2025, the carrying amounts of Property
Plant and Equipment (“PPE”) amounted to Rs. 21,793.70
lakhs, significant part which comprise of Rs. 18,022.95 lakhs
pertaining to solar power plant (“Solar Plant”) and balance
pertains to the textile division of the Company.
Certain PPE had impairment indicators on account of reduced
turnover and financial condition of the Company. Also refer
above paragraph on “Material Uncertainty Related to Going
Concern”.
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We performed the following principal audit procedures in
relation to management's testing of impairment of PPE:
• Identification and understanding of the significant controls
implemented by the Company over the impairment testing
process;
• Understanding the restoration plans for certain assets
along with physical verification of the PPE location and
evaluation of the current status of the assets.
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Further, during the last quarter of the financial year ended
March 31, 2025, the Company's Solar Plant experienced five
fire incidents, on January 16, February 3, February 15, March
4, and March 6, 2025 which impacted upto 20MW capacity of
the Plant which was later restored upto 35MW as at March
31, 2025 and the balance capacity was under restoration.
Subsequent to the financial year end, the Solar Plant again
suffered failure in one of the transformers impacting 15MW as
at May 13, 2025.
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• Analysis of the reasonableness of the principal
assumptions made to estimate the recoverable amounts
by obtaining information from management that we
deemed to be significant;
• Analysis of actual data of the year and previous years
in comparison with the original plan, in order to assess
the nature of variances and the reliability of the planning
process;
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The Company carries out impairment testing, based on
indicators of impairment. For cash generation units (“CGU”)
to which these PPE belong and contain, the determination
of recoverable amount, being the higher of fair value less
costs to sell and value in use requires judgment on the part of
management in both identifying and then valuing the relevant
CGUs. Recoverable amounts are based on various variables
which requires significant management judgement and
estimation.
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• We also examined the adequacy of the information
provided by the Company about the impairment test and
its consistency with the requirements of Ind AS 36.
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We focused on this area due to the significance of management
judgements adopted in assessing the recoverable amount with
regard to the impairment assessment.
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Information other than the standalone financial statements and auditor's report thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the
information included in the Management Discussion and Analysis and Board's Report including Annexures to Board's Report, but
does not include the financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge
obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation
of these standalone financial statements that give a true and fair view of the financial position, financial performance, total
comprehensive income/loss, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting
principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable
and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively
for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout
the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal controls.
• Obtain an understanding of internal financial controls relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such
controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the standalone 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's
report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 (“the Order”), issued by the Central Government of India
in terms of sub-section (11) of section 143 of the Act, we give in the 'Annexure A’ a statement on the matters specified in
paragraphs 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 best of 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 the Company so far as it appears from our
examination of those books except for the matters stated in the paragraph '2.(j)vi.' below on reporting under Rule 11(g)
of the Companies (Audit and Auditors) Rules, 2014.
c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the
standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in
agreement with the books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards prescribed
under Section 133 of the Act.
e) The matter described in the 'Material Uncertainty Related to Going Concern' section above, in our opinion, may have an
adverse effect on the functioning of the Company.
f) On the basis of the written representations received from the directors of the Company as on March 31,2025 and taken
on record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 from being appointed as
a director in terms of Section 164 (2) of the Act.
g) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the
paragraph '2.(b)' above on reporting under Section 143(3)(b) of the Act and paragraph '2.(j)vi.' below on reporting under
Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating
effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses an unmodified opinion
on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
i) With respect to the other matters to be included in the auditor's report in accordance with the requirements of section
197(16), as amended, in our opinion and to the best of our knowledge and according to the explanations given to us,
the remuneration paid/provided by the Company to its directors during the year is in accordance with the provisions of
section 197 of the Act.
j) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014, as amended, in our opinion and 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 financial position in its standalone financial
statements. (Refer Note 44 of the standalone financial statements)
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material
foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the
Company.
iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced
or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds)
by the Company to or in any other persons or entities, including foreign entities (“Intermediaries”), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or
indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries;
(b) The management has represented, that, to the best of its knowledge and belief, other than those disclosed
in the standalone financial statements, no funds have been received by the Company from any persons or
entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or
otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities
identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on audit procedures performed, nothing has come to our attention that causes us to believe that the
representations under sub-clause (i) and (ii) of Rule 11(e), as provided in (a) and (b) above, contain any
material misstatement.
v. The Company has not declared or paid any dividend during the year.
vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining
its books of account for the financial year ended March 31, 2025 which has a feature of recording audit trail (edit
log) facility and the same has operated throughout the year for all relevant transactions recorded in the software
except in case of one software used for maintaining closing stock quantities of inventory and one software used
for maintaining payroll records did not have audit trail feature throughout the year. Further, in respect software, for
which audit trail existed, during the course of our audit we did not come across any instance of the audit trail feature
being tampered with. Additionally, the audit trail pertaining to the software for which it existed, has been preserved
by the Company as per the statutory requirements for record retention.
For BATLIBOI & PUROHIT
Chartered Accountants
ICAI Firm Reg. No.101048W
N. S. Gaur
Partner
Membership No. 137138
ICAI UDIN: 25137138BMGGHQ9757
Place : Mumbai
Date : May 23, 2025
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