Board Approval and Key Decision
The Board of Directors of Gokak Textiles Limited, at its meeting held on August 11, 2026 (commencing at 02:15 PM and concluding at 03:45 PM), approved the permanent closure and subsequent sale/disposal of the company's knitwear unit/factory located at Bagalkot Road, Village Marihal, District Belagavi, Karnataka State. The approval is subject to statutory and regulatory approvals/procedures.
Unit Background and Historical Context
The knitwear unit was established in 1995 on freehold land of 15.65 acres including utilities. It was initially set up to cater exclusively to the export market but later sold portion of production in the local market through third-party outlets and under company's own brand names. In 2015-16, specialized garmenting machines (fabric dyeing, knitting and other miscellaneous machines) were shifted to the Mills Division of the company at Gokak Falls, Karnataka. Only cutting and stitching facility remained operational at the Marihal unit.
Financial Performance Metrics
For FY 2025-2026, the knitwear business/unit generated turnover of ₹422.73 lakhs (9.76% of the company's total revenue from operations). As of March 31, 2026, the unit had a negative net worth of ₹(4,192.55) lakhs, contributing 21.58% to the company's overall negative net worth of ₹(19,423.50) lakhs.
Sale Agreement Details
The company signed an agreement for sale of the land, building and machinery of the knitwear unit with M/s V. G. Parekh & Co., Vijayapura, Karnataka on September 09, 2025, on "as is where is what is" basis. The buyer is engaged in real estate development and leasing in Karnataka and does not belong to the promoter/promoter group/group companies. The transaction is not a related party transaction and is being conducted at arm's length.
Transaction Terms
The agreed consideration for the sale is ₹19.50 crores. The valuation of the plant (land, building and machinery) as of May 15, 2025 was ₹21.49 crores.
Timeline and Delays
The expected date of completion of sale/disposal is October 2026. The transaction has experienced multiple delays from the original completion date of January 2026, with postponements communicated through letters dated January 27, 2026 (postponed by three months) and May 07, 2026 (further postponed by three months) due to process delays.
Reasons for Closure
The closure decision is based on multiple factors including structural cost disadvantages and operational unviability, adverse textile industry conditions, machinery obsolescence and high maintenance costs, industrial relations issues, electricity and water supply issues, and environmental and regulatory restrictions.
Regulatory Compliance Requirements
The closure is subject to obtaining necessary regulatory and statutory approvals, including permission from relevant Labour authorities. The company will comply with the requirements of regulation 37A of the LODR Regulations before selling the unit. The sale is outside any Scheme of Arrangement.
Shareholder Approval Process
The company will seek shareholder approval for the proposal pursuant to Section 180(1)(a) of the Companies Act, 2013 through a Postal Ballot.
Operational Timeline
The date of closure or estimated time of closure is October 2026.