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SEL Manufacturing Company Ltd.

BSE: 532886 Sector: Industrials
NSE: SELMC ISIN Code: INE105I01020
BSE 00:00 | 19 Aug 752.60 35.80
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NSE 00:00 | 19 Aug 788.10 37.50
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OPEN 752.60
PREVIOUS CLOSE 716.80
VOLUME 41
52-Week high 1237.85
52-Week low 4.78
P/E
Mkt Cap.(Rs cr) 2,493
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 752.60
CLOSE 716.80
VOLUME 41
52-Week high 1237.85
52-Week low 4.78
P/E
Mkt Cap.(Rs cr) 2,493
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SEL Manufacturing Company Ltd. (SELMC) - Auditors Report

Company auditors report

To

The Members of SEL Manufacturing Company Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of SEL ManufacturingCompany Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accountingpolicies-and other explanatory information (hereinafter referred as "the StandaloneFinancial Statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ('Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards ('Ind AS') specified under section 133 of the Act of the state ofaffairs (financial position) of the Company as at 31st March 2021 and itsProfit (financial performance including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further ' described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with ethical requirementsthat are relevant to our audit of the Standalone financial statements under the provisionsof the Companies Act 2013 and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the year ended 31stMarch 2021. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matters Auditor's Response
(i) Accounting treatment for the effects of the Resolution Plan
Refer Note No. 37 to the Standalone Financial Statements for the details regarding the resolution plan implemented in the Company pursuant to a corporate insolvency resolution process concluded during the year ended 31st March 2021 under Insolvency and Bankruptcy Code 2016. Owing to the size of the over-due credit facilities due to financial creditors and large number of operational creditors determination of the carrying amount of related liabilities at the date of approval of Resolution Plan was a complex exercise. In respect of de-recognition of operational and financial creditors (Including Corporate Guarantee) difference between the carrying amount of financial liabilities extinguished and consideration paid is recognized in statement of profit and loss account in accordance with "Ind AS-109" "Financial Instruments" prescribed under section 133 of the Companies Act 2013 and accounting policies consistently followed by the Company and disclosed as an "Exceptional items". Accounting for the effects of the resolution plan is considered by us to be a matter of most significance due to its importance to intended users understanding of the Financial Statements as a whole and materiality thereof. We have performed the following procedures to determine whether the effect of Resolution Plan has been appropriately recognized in the standalone Financial Statements:
• Reviewed the provisions of the Resolution Plan to understand the requirements of the said Plan and evaluated the possible impact of the same on the financial statements.
• Verified the balances of liabilities as on the date of approval of Resolution Plan from supporting documents and computations on a test check basis.
• Verified by the payment of funds on test check basis as per the Resolution Plan.
• Tested the implementation of provisions of the Resolution Plan in computation of balances of liabilities owed to financial and operational creditors.
• Evaluated whether the accounting principles applied by the management fairly present the effects of the Resolution Plan in. financial statements in accordance with the principles of Ind AS.
• Tested the related disclosures made in notes to the standalone financial statements in respect of the implementation of the resolution plan.
(ii) Contingent liabilities
Refer Note No. 40(a) to the standalone financial statements; Prior to the approval of the Resolution Plan there were certain litigations against the company. We have reviewed the provisions of the Resolution Plan to understand the requirements of the said Plan and evaluated the possible impact.
Pursuant to the approval of the Resolution Plan it was determined that no amounts are payable in respect of those litigations as they stand extinguished except as mentioned in Note 40(a)(ii). * Evaluated whether the accounting principles applied by the management fairly present the amounts in financial statements in accordance with the principles of Ind AS.
• Discussion with the management on the development in litigations during the year ended 31st March 2021.
• Obtaining representation letter from the management on the assessment of those matters.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors (read with Note No. 56 of the standalone financialstatements) is responsible for the preparation and presentation of its report herein aftercalled the Management Discussion and Analysis Board's Report including Annexure toBoard's Report Business Responsibility Report Corporate Governance and

Shareholder's Information but does not include the Standalone Financial Statements andour Auditor's Report thereon. The Management Discussion and Analysis Board's Reportincluding Annexure to Board's Report Business Responsibility Report Corporate Governanceand Shareholder's Information is expected to be made available to us after the date ofthis auditor's report.

Our opinion on the standalone financial statements does not cover the ManagementDiscussion and Analysis Board's Report including Annexure to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information and we do notexpress any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the Management Discussion and Analysis Board's Report including Annexureto Board's Report Business Responsibility Report Corporate Governance and Shareholder'sInformation if we conclude that there is a material misstatement therein we are requiredto communicate the matter to those charged with governance and describe actions applicablein the applicable laws and regulations.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors (read with Note No. 56 of the standalone financialstatements) is responsible for the matters stated in Section 134(5) of the Companies Act2013 ('the Act') with respect to the preparation of these financial statements that give atrue and fair view of the-financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards ('Ind AS') prescribed under Section 133 of the Act read with relevant rulesissued there under. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively ensuring the accuracy and completenessof the accounting records relevant to the preparation and presentation of the financialstatements that give a true and . fair view and are free from material misstatementwhether due to fraud or error.

In preparing the standalone financial statements the management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

That Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: '

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current Year and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe 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 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the order.

2. As required by Section 143 (3) of the Act based on our audit we report that:

a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome). Statement of Changes in Equity and the statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Companies Act 2013 read with relevant rules issuedthere under.

e. On the basis of the written representations received from the directors as on 31stMarch 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"

g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note no. 40(a) to the standalonefinancial statements;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

FOR MANIK MALHOTRA & ASSOCIATES
CHARTERED ACCOUNTANTS.
FRN:015S48N
PUCE: LUDHIANA (CA MANIK MALHOTRA)
DATED: 29.06.2021 PARTNER
M.No:094604

Annexure - A to the Independent Auditors' Report

The Annexure-A referred to the Independent Auditors' Report to the members of thecompany on the Standalone financial statements for the year ended on 31stMarch2021. We report that:

(i)(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipments.

(b) The Company has a regular programme of physical verification of its property plant& equipments by which property plant & equipments are verified in a phased mannerover a period of three years.

As explained to us in accordance with this programme certain property plant &equipments were verified during the year and no material discrepancies were noticed onsuch verification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) In our opinion and according to the information and explanation given to us thephysical verification of inventories has been conducted at reasonable interval by themanagement and no material discrepancy was noticed on physical verification of inventoriescarried out by the management as compared to the book records.

(iii) In our opinion and according to the information and explanation given to us theCompany has not granted any loans secured or unsecured to Companies Firms and otherparties covered in the register maintained section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and security.

(v) The Company has not accepted deposits from the public within the meaning ofprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under. No order under the aforesaid sections has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any court or any other Tribunal.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of Cost records undersection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of such records with a view to determine whether they are accurateor complete.

(vii) (a) According to the information and explanations given to us and the books andrecords examined by us we state that the company is regular in depositing undisputedstatutory dues including income tax provident fund employees state insurance customduty Goods & services tax. The Punjab State Development Tax cess and other statutorydues to the appropriate authorities though there has been a slight delay in cases ofincome tax provident fund and employee state insurance. According to the information andexplanations given to us there were no undisputed amounts payable in respect of incometax provident fund employees state insurance custom duty Goods & services tax ThePunjab State Development Tax cess and other material statutory dues as at 31stMarch 2021 for a period of more than six months from the date they became payable.

(b) As mentioned in note 40(a) to the standalone financial statements as per approvedresolution plan which interalia resulted in extinguishment of all contingent liabilities(except income tax) pertaining to the period on or before the effective date. There are nodues of income tax provident fund employees state insurance custom duty Goods &services tax The Punjab development tax and other statutory dues which have not beendeposited on account of any dispute.

(viii) The National Company Law Tribunal ('NCLT') has approved the terms .of theResolution Plan submitted by Resolution Applicant pursuant to which loans or borrowingsowed by the Company as at that date have been settled and balance amount has beenextinguished. Accordingly the Company has not defaulted in repayment of loans /borrowings to any financial institution/Bank.

(ix) in our opinion and according to the information and explanations given to us nomoney was raised by way of initial public offer or further public offer (including debtinstruments) and term loans during the year. All allotment of shares/Non convertibledebenture to the Financial Creditors and Resolution Applicant during the year were as perthe NCLT order dated 10.02.2021 under section 31 of the IBC Code 2016

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(xi) According to the information and explanations given to us and the audit proceduresconducted by us managerial remuneration paid or provided was in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theCompanies Act 2013.

(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the company all transactions with the related parties arein compliance with Section 177 and 188 of Companies Act 2013 where applicable and thedetails of the transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year .All allotment of shares/Non convertible debentureduring the year were as per the NCLT order dated 10.02.2021 under section 31 of the IBCCode 2016.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has not entered into any non-cashtransactions with directors or persons connected with the directors and therefore theprovisions of clause 3 (xv) of the. Companies (Auditor's Report) Order 2016 are notapplicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

FOR MANIK MALHOTRA & ASSOCIATES
CHARTERED ACCOUNTANTS
FRN:01S848N
PLACE: LUDHIANA (CA MANIK MALHOTR)
DATED: 29.06.2021 PARTNER
M.No:094604

Annexure - B to the Independent Auditors' Report

(Referred to In Paragraph (f) under the "Report on other legal and regulatoryrequirements" section of our report to the members of SEL Manufacturing CompanyLimited of even date)

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the Internal Financial Control over financial reporting of SELManufacturing Company Limited ("the Company") as of 31stMarch 2021in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company (read with Note No! 56 of the standalonefinancial statements) is responsible for establishing and maintaining internal financialcontrols based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India. These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial controls over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's Internal financial controls over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement directors and RP of the company; and(3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the Standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of Internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

FOR MANIK MALHOTRA & ASSOCIATES
CHARTERED ACCOUNTANTS
FRN:01584SN
PLACE: LUDHIANA (CA MANIK MALHOTRA)
DATED: 29.06.2021 PARTNER
M.No: 094604

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