MCA to probe Ludhiana's SEL Manufacturing over Rs 4,000-cr loan default

Officials have prepared SEL Manufacturing's assets list that includes a jet and a school

The Ministry of Corporate Affairs (MCA) will probe the Ludhiana-based stressed company SEL Manufacturing for defaulting on bank loans to the tune of over Rs 4,000 crore,  a senior official said.

SEL Manufacturing, with a debt of around Rs 4,275 crore, was the first on the Reserve Bank of India’s (RBI’s) second list of defaulter companies to go into the insolvency and bankruptcy resolution process.  

An initial inquiry into the company by the regional director office, northern region, has already been carried out. “Based on the initial findings, we have recommended an inspection to see if there was any wrongdoing,” the senior official said. SEL Manufacturing did not respond to an email query.

Ministry officials have already prepared a list of the textile manufacturer's various assets, including a private jet parked by it in New Delhi and a school in Bhopal. 

The MCA has spoken to banks regarding the loan default as part of its preliminary inquiry. It will also investigate whether there was any fraud. 

Ram Saran Saluja, chairman of SEL Manufacturing, in the company’s annual report for FY19 had said: “We have been facing difficult operating environment due to liquidity crunch as the credit facilities envisaged and sanctioned under CDR package were not released by the lenders to the company which resulted in sub-optimum utilisation of manufacturing facilities.”

The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) was initiated for the Company after a petition filed by State Bank of India in its capacity as financial creditor in October 2017 was admitted by the National Company Law Tribunal, Chandigarh Bench (NCLT).

The process, after being kept in abeyance following a June 22, 2018, order of the High Court of Punjab & Haryana, has recently restarted.

Interim Resolution Professional Navneet Kumar Gupta had taken control of the company on September 6, according to people in the know.

SEL Manufacturing is engaged in the production of knitted garments, terry towels, fabric and various kind of yarns and has production facilities at multiple locations in India.

The company registered a loss of Rs 236 crore for FY19.

According to its annual report, the company followed “an aggressive growth path and had considerably grown its balance sheet, including debt.” It said the industry situation and company-specific issues, such as growing debt, delayed realisation of debtors, working capital shortfall, delay in project completion, and cash flow mismatch, adversely affected the liquidity position of the company.