sel manufacturing company ltd Directors report

The Company is vertically integrated multi-product textile company, manufacturing various kinds of Knitted Garments, Terry Towels, Knitted & Processed Fabric and various kinds of Yarn with production facilities located at different parts of India.

During the year under review, your company has achieved Revenue from Operations of Rs.55,436.76 lacs as compared to Rs. 42,013.19 lacs in the previous year. After deducting Expenses there was a loss of Rs. 19,612.62 lacs as compared to loss of Rs. 13,454.28 lacs during the previous year. After adjusting Exceptional Items there was Loss of Rs. 18,591.15 lacs as compared to loss of Rs.13,130.54 lacs during the previous year. After providing for other adjustments/comprehensive income, the current year Loss stood at Rs. 1,1523.13 lacs as compared to the Loss of Rs. 15,251.16 lacs during the previous year.

Earlier, the Company went through Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy code (IBC), 2016, pursuant to an application filed before the Honble National Company Law Tribunal, Chandigarh Bench (“NCLT”) by State Bank of India against SEL Manufacturing Company

Limited (“Corporate Debtor”), under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder, as amended from time to time (“Code”), The Honble National Company Law Tribunal, Chandigarh Bench on February 10, 2021 had approved the Resolution plan submitted by Consortium of Arr Ess Industries Private Limited and Leading Edge Commercial FZE (“Consortium” or “Resolution Applicant”) in respect of SEL Manufacturing Company Limited (“Company”). Pursuant to the Corporate Insolvency Resolution Process, the Company has been taken over by new management.

The Company has been regularly paying interest and instalments as per terms of resolution plan and there has never been a delay of even a single day in any of the months. Despite the foregoing compliance by the Company, the Company has received a notices from certain banks declaring the name of the Company as wilful defaulter. Post implementation of the resolution plan, certain actions were required to be taken sequentially by the resolution applicant, company and the lenders. First of all, joint documents were required to be executed and the same was done. Post that the resolution applicant was required to bring in Rs.50.00 crores. The same were brought in by the resolution applicant and it was used for making payments to financial creditors & operational creditors. Thereafter, a security trustee was appointed. After that equity shares & debentures were allotted to the lenders and the equity shares allotted to the resolution applicant were pledged with the lenders. As per terms of resolution plan, term loan-II of Rs.50.00 crores was required to be repaid and the same was duly done.

During the intervening period of one year, the lenders were required to take steps for removal of Company name from the CIBIL and fraud list and issue a satisfaction letter for removal of redundant charges of about Rs.12000 crores from MCA records. However, despite repeated reminders and requests from the Company nothing in this regard has been done by the banks. In fact, two of the bankers have included the name of the new directors in the CIBIL list even though the interest and instalments are being served on time. Due to this, the Company has not been able to obtain external rating.

The Company is finding it very difficult to raise finances from the market as the name of the Company and the new directors still appears in the CIBIL list and fraud list. Not only this, the Company is also not able to get business from international and domestic buyers as most of these buyers ask for credit rating before placing the orders. However, as the name of Company appears in CIBIL and fraud list and also because of redundant charges of Rs.12000 crores standing in the name of the Company, the Company is unable to get credit rating and consequently unable to generate orders from international buyers. All this is severely hampering the business of the Company.

The resolution applicant had estimated certain financial projections relating to sales and profitability while submitting the resolution plan with committee of creditors. Based on these financial projections, the repayment of loans and payment of interest was scheduled. However, due to reasons mentioned above, the Company is finding it very difficult to achieve the estimated sales and the company continues to incur losses. Due to continuation of situation, servicing of financial obligations is becoming difficult.

As at 31.03.2023, the Company has one Subsidiary Company viz. SEL Aviation Private Limited. The Annual Accounts of the Subsidiary company and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. Further, the Annual Accounts of the subsidiary company are kept for inspection by any shareholders in the head office i.e. the Registered Office of the holding company and of the subsidiary company concerned.

SEL Aviation Private Limited, subsidiary of the company is in the business of Aviation services. The contribution of Subsidiaries in the overall performance is as given in Consolidated Financial Statements. Further the Report on financial position of subsidiaries and other details thereto during the year has been duly provided as an Attachment in prescribed Form AOC-1.

The Consolidated Financial Statements of the Company and its subsidiaries, prepared and presented in accordance with Accounting Standard, are attached to and form part of the Annual Report.

Your Company is committed to adhere to the best Practices of governance. In your Company, prime importance is given to reliable financial information, integrity, transparency, fairness, empowerment & compliances. Detailed compliances with the provisions of the SEBI (LODR) Regulations, 2015 and Companies Act, 2013 for the year 2022-23 are given in Corporate Governance Report, which is attached and forms part of this report. The certificate of Chartered Accountant in Practice on compliance with corporate governance norms is also attached thereto.

The directors have not recommended any dividend for the financial year 2022-23.

There was no change in the Capital structure of the Company during the year. Further, the company has not issued any Equity Shares with Differential Rights, Employee Stock Options and/or Sweat Equity Shares.

During the year, your Company has not accepted any fixed deposits under the provisions of the Companies Act, 2013 and the Rules made there under.

10. SECRETARIAL STANDARDS:

The Company has complied with applicable secretarial Standards.

11. DIRECTORS AND KMP:

The following changes occurred in the directorship of the company during the period under review :-

The following changes occurred in the directorship of the company after the closure of financial year ending on 31^st March, 2023 but before signing of this report :-

4. Ms. Aarti Sharma was appointed as Company Secretary of the company w.e.f 01st June, 2023. Further, the Board of Directors have recommended

- re-appointment of Mr Rajeev Bhalla (DIN: 0551773) as Managing Director of the Company for a period of 3 years w.e.f. 8^th April, 2024 at a consolidated remuneration of Rs 10,00,000/- (Rupees ten lakh) per month.

- re-appointment of Mr Naveen Arora (DIN: 09114375) as Whole-time Director of the Company for a period of 3 years w.e.f. 8^th April, 2024 at a consolidated remuneration of upto Rs 1,72,000/- (Rupees one lakh seventy two thousand) per month.

12. LISTING WITH EXCHANGES AND LISTING FEES:

The Equity Shares of the Company are presently listed with Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Ltd. (NSE). Further, the Company has paid listing fees to both the exchanges (i.e. BSE and NSE) up to financial year 2023-24.

13. AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the company at its Annual General Meeting held on 22^nd September, 2022, had appointed M/s Kamboj Malhotra & Associates, (Formerly Known as M/s Malhotra Manik & Associates), Chartered Accountants, Ludhiana, (Firm Registration No. 015848), as statutory auditors of the Company. The present term of M/s Kamboj Malhotra & Associates, as Statutory Auditors would expire till the conclusion of the Annual General Meeting of the Company to be held in the year 2027.

14. AUDITORS REPORT:

M/s Kamboj Malhotra & Associates, (Formerly Known as M/s Malhotra Manik & Associates), Chartered Accountants, Ludhiana, (Firm Registration No. 015848), have audited the financial statements of the Company for the financial year ended March 31, 2023. The report of Auditors and notes on accounts are self explanatory and do not call for any further comments as there are no adverse remarks/qualified opinion by the Auditors.

15. COST AUDITORS:

In terms of the Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and get them audited every year and accordingly such accounts and records are made and maintained. The Board appointed M/s. Jatin Sharma & Co., Cost Accountants, as cost auditors of the Company for the financial year 2023-24 at a fee of INR 77,000 plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the shareholders at the ensuing annual general meeting. The cost audit report for the financial year ended March 31, 2023 would be filed with the Central Government.

16. BOARD MEETINGS:

During the year under review, the Board met Four (4) times and the intervening gap between any two meetings was within the period prescribed under Companies Act, 2013. The details of Board Meeting are set out in Corporate Governance Report which forms part of this Annual Report.

17. ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND

OF INDIVIDUAL DIRECTORS:

The meeting of Independent Directors of the Company for the financial year 2022-23 was held on 11^th February, 2023, to evaluate the performance of Non-Independent Directors, Chairperson of the Company and the Board as a whole. The evaluation was done by way of discussions on the performance of the Non- Independent Directors, Chairperson and Board as a whole. A policy on the performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of non-executive directors and executive directors has been formulated by the Company.

The Board of Directors has evaluated the performance of the Board, its Committees and the Individual Directors as per the Nomination and Remuneration Policy.

18. POLICY ON DIRECTORS APPOINTMENT & REMUNERATION:

The Nomination & Remuneration Committee of the Company has formulated the ‘Nomination & Remuneration Policy on Directors appointment and remuneration which includes the criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013. The Nomination & Remuneration Policy is annexed hereto and forms part of this Report as Annexure VI and is also available on the website of the Company at http://www.selindia.in/uploads/Policies-and-Codes/8-Remuneration-Policy.pdf

19. DECLARATION BY INDEPENDENT DIRECTORS:

All the Independent directors of the company have given their statement of declaration under Section 149(7) of the Companies Act, 2013 (“the Act”) that they meet the criteria of independence as provided in Section 149(6) of the Act, and their Declarations have been taken on record.

20. RISK MANAGEMENT:

The Risk Management Policy required to be formulated under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has been duly formulated and approved by the Board of Directors of the Company. The aim of Risk Management Policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying types of risks and its assessment, risk handling, monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company.

The Risk Management policy may be accessed on the Companys website at http://www.selindia.in/uploads/Policies-and-Codes/17-Risk-Management-Policy.pdf.

21. LOANS, GUARANTEES & INVESTMENTS BY THE COMPANY:

Details of loans, guarantees and investments by the Company to other body corporates or persons are given in Financial Statements/Notes to the financial statements.

22. MATERIAL AND SIGNIFICANT ORDERS PASSED BY REGULATORS & COURTS:

The Company went through Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy code (IBC), 2016, pursuant to an application filed before the Honble National Company Law Tribunal, Chandigarh Bench (“NCLT”) by State Bank of India against SEL Manufacturing Company Limited (“Corporate Debtor”), under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder, as amended from time to time (“Code”), The Honble National Company Law Tribunal, Chandigarh Bench on February 10, 2021 had approved the Resolution plan submitted by Consortium of Arr Ess Industries Private Limited and Leading Edge Commercial FZE (“Consortium” or “Resolution Applicant”) in respect of SEL Manufacturing Company Limited (“Company”).

23. MATERIAL CHANGES & COMMITMENTS:

No material changes and commitments, affecting the financial position of the Company have occurred after the end of the financial year 2022-23 and till the date of this report.

24. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

Your Company has always believed in providing a safe and harassment free workplace for every individual working in SEL through various interventions and practices. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company believes in prevention of harassment of employees as well as contractors. During the year ended 31 March, 2023, no complaints pertaining to sexual harassment were received.

25. RELEVANT EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9, as required under the provisions of the Companies Act, 2013, forms an integral part of Board Report. Form MGT-9 is available on the website of the Company and can be accessed at http://www.selindia.in/annual-return.html.

26. SECRETARIAL AUDIT:

M/s Harshit Arora & Associates, Ludhiana (CP No. 14807), were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in its meeting held on July 27, 2023 for the financial year 2022-23 & 2023-24. The Secretarial Auditors of the Company have submitted their Report in Form No. MR-3 as required under Section 204 of the Companies Act, 2013 for the financial year ended 31st March, 2023. This Report is self-explanatory. The Company underwent the NCLT Resolution process and was maintaining the SDD Record in physical form. However, as on date, requisite software has been purchased by the Company and relevant record is duly maintained. Pursuant to the implementation of the NCLT Resolution process, the Company has also updated its website.

Further, pursuant to the implementation of the Resolution Plan in terms of the Order dated February 10, 2021 passed by the Honble National Company Law Tribunal, Chandigarh Bench, the Company had applied to the stock exchanges where the shares of the Company are listed for reclassification of erstwhile promoters of the Company as Public shareholders. The Company has received approval from BSE Limited and National Stock Exchange of India Limited vide their letters dated 13th March, 2023. After the aforesaid reclassification, the Minimum Public Shareholding is maintained at 25%.

Further, The Report forms part of this report as Annexure V.

27. RELATED PARTY TRANSACTION:

The Company has a policy to regulate the transactions of the Company with its related parties. As per policy, all related party transactions require approval as per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The said policy is available on Companys website at weblink http://www.selindia.in/uploads/Policies-and-Codes/9-Policy-on-Related-Party-Transactions.pdf. Further, the Company has also formulated a policy for determining ‘material subsidiaries. The said policy is available on the Companys website viz. www.selindia.in/policy.html. Details of transactions are also given in Annexure IV to this report in form AOC 2.

28. VIGIL MECHANISM:

The Company has in place a whistleblower policy, to support the Code of Business Ethics. This policy documents the Companys commitment to maintain an open work environment in which employees, consultants and contractors are able to report instances of unethical or undesirable conduct, actual or suspected fraud or any violation of Companys Code of Business Ethics at a significantly senior level without fear of intimidation or retaliation.

Individuals can also raise their concerns directly to the chairman of the Audit Committee of the Company. Any allegations that fall within the scope of the concerns identified are investigated and dealt with appropriately. Further, during the year, no individual was denied access to the Audit Committee for reporting concerns, if any. The details of establishment of vigil mechanism for Directors & employees to report genuine concerns are available at the website of the Company viz. www.selindia.in/policy.html.

29. INTERNAL FINANCIAL CONTROLS & ITS ADEQUACY:

SEL continuously invests in strengthening its internal control processes. The Company has put in place an adequate system of internal financial control commensurate with its size and nature of business which helps in ensuring the orderly and efficient conduct of its business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention & detection of frauds, accuracy & completeness of accounting records and ensuring compliance with corporate policies.

30. FAMILIARISATION PROGRAM FOR DIRECTORS:

The Company provides an orientation and business overview to all its new Directors and Independent directors and provides materials and briefing sessions periodically which assists them in discharging their duties and responsibilities.

The Directors of the Company are also informed of the important developments in the Company and Industry. Directors are fully briefed on all business related matters, and initiatives proposed by the Company and updated on changes and developments in the domestic & global corporate and industry scenario. The details of the familiarization program for Directors is available on the website of the Company viz. http://www.selindia.in/uploads/Policies-and-Codes/11-Familization-Programme-Policy.pdf

31. AUDIT COMMITTEE:

The Board has constituted its Audit Committee pursuant to the provisions of Section 177 of the Companies Act, 2013 and provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Audit Committee of the Company presently comprises of the following members namely:

Mr. Rajiv Kumar Maheshwary is the Chairman of the said committee.

32. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE

EARNINGS & OUTGO:

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo is given in Annexure I to this report.

33. PARTICULARS OF EMPLOYEES:

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the Annexure-II to this report and forms part of this report.

34. BUSINESS RESPONSIBILITY REPORT:

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandate the inclusion of the Business Responsibility & Sustainability Report as part of the Annual Report for top 1000 listed entities based on market capitalization, However, this year the company does not fall under the top 1000 listed entities based on market capitalization, hence there is no requirement to prepare such report.

35. DIRECTORS RESPONSIBILITY STATEMENT:

The Directors would like to assure the Members that the financial statements for the year under review conform in their entirety to the requirements of the Companies Act, 2013. The Directors confirm that:

a) In the preparation of the annual accounts/financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2023 and of the profit/loss of the Company for the year ended on 31st March, 2023;

c) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts/financial statements have been prepared on a going concern basis.

e) That Internal financial controls were laid down to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) Proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

36. CORPORATE SOCIAL RESPONSIBILITY:

The provisions relating to Corporate Social Responsibility are not applicable to the Company based on Annual Financial Statements. Accordingly, the Corporate Social Responsibility Committee was dissolved during the year. The same will be reconstituted as and when the same becomes applicable to the Company.

37. ACKNOWLEDGEMENT:

Your Directors express their gratitude to the Companys vendors, customers, Banks, Financial Institutions, Shareholders & society at large for their understanding and support. Finally, your Directors acknowledge the dedicated services rendered by all employees of the company.