Gravity (India) Limited Addresses Auditor Qualifications in Quarterly Results

Gravity (India) Limited has recently responded to six auditor qualifications in its Limited Review Report for the quarter ended September 30. The company's management has provided explanations and outlined corrective measures for various financial reporting and compliance issues raised by the auditors.

Key Auditor Qualifications and Management Responses

Auditor Qualification	Management Response
Unverified income of Rs. 2,036.40 Lakhs	Confirmation letters sent to parties; delayed responses received after the Limited Review Report
Non-compliance with Ind AS 19 for gratuity obligations	Gratuity liability accounted based on annual premium paid; to be accounted annually based on management estimate
Non-recognition of right-of-use assets and lease liabilities (Ind AS 116)	Implementation of Ind AS 116 to be done in financial statements
Non-deposit of TDS amounts	Delay due to unavoidable circumstances and staff shortage; to be deposited shortly with interest
Misalignment of business activities with company's object clause	Process of amending the Memorandum of Association (MOA) underway
Non-amendment of MOA for current business activities	Form MGT-14 filed online with MCA; awaiting approval

Management's Commitment to Compliance

The company has stated that it has initiated necessary steps to address these non-compliances and expects to complete the compliance processes in due course. Management emphasized that:

Appropriate accounting treatments have been applied in the books of account.
All necessary disclosures have been made in the financial statements.
The company remains committed to maintaining compliance with statutory requirements.
Transparent financial reporting is a priority for the management.

Implications for Investors

These auditor qualifications and management responses highlight several areas of concern in Gravity (India) Limited's financial reporting and compliance practices. Investors should consider the following:

The unverified income of Rs. 2,036.40 Lakhs raises questions about the company's revenue recognition practices and the reliability of its financial statements.
Non-compliance with accounting standards for gratuity and lease obligations may result in misstated financial positions and performance metrics.
Delayed TDS deposits could lead to penalties and interest charges, potentially impacting the company's cash flow.
The misalignment between business activities and the company's object clause may pose legal and regulatory risks.

Investors are advised to closely monitor the company's progress in addressing these issues and implementing the promised corrective measures. The management's ability to resolve these compliance concerns promptly will be crucial in maintaining investor confidence and ensuring accurate financial reporting in the future.

As the company works towards regularizing its non-compliances, stakeholders should remain vigilant and look for updates on the implementation of corrective actions in subsequent financial reports and company announcements.

Gravity (India) Limited , a company listed on the Bombay Stock Exchange, has announced several significant decisions following its board meeting held on September 4, 2025. The company has approved the sale of a key property, scheduled its Annual General Meeting (AGM), and proposed changes to its business focus.

Property Sale Approval

The board has approved the sale of the company's property comprising land and factory building located at Survey No.10/1, Village Khutali, Khanvel, Dudhani Road, Silvassa, Union Territory of Dadra & Nagar Haveli. This decision is subject to shareholder approval at the upcoming AGM.

38th Annual General Meeting

Gravity has scheduled its 38th Annual General Meeting for September 30, 2025. The meeting will be conducted via video conference, in line with ongoing corporate governance practices.

Key Appointments and Regularizations

The board has made several important decisions regarding company leadership:

Appointment of CA Kamlesh Dave, DDM & Associates as statutory auditor for five years (2025-26 to 2029-30)
Regularization of appointments for four directors, including:
- Manoj Kanhiyalal Ramavat as Managing Director
- Ambika Jindal as Non-Executive Independent Director
- Tushar Rai Sharma as Non-Executive Non-Independent Director
- Komal Hardikkumar Patel as Independent Director

Business Expansion Plans

In a significant move, the company is seeking to expand its business activities. The board has approved changes to the company's object clause in its Memorandum of Association, subject to shareholder approval. The proposed changes include:

Entering the IT services and software development sector
Expanding into electronic devices trading
Providing support and consulting services in IT-enabled fields

This marks a potential shift from the company's traditional focus on fabrics and garments.

Other Key Decisions

Approval of related party transactions and material related party transactions, subject to shareholder approval
Re-appointment of Mr. Varun Rasiklal Thakkar, who retires by rotation

Financial Implications

While specific financial details were not provided, these decisions, particularly the property sale and business expansion plans, are likely to have significant implications for the company's future financial position and strategic direction.

The 38th AGM, scheduled for September 30, 2025, will be a crucial event where shareholders will vote on these important matters. Investors and stakeholders will be keenly watching the outcomes of this meeting, as it could mark a new chapter in Gravity's business journey.

Shareholders and potential investors are advised to closely monitor further announcements from the company regarding these developments.