SEL Manufacturing Company Ltd

To

The Members

SEL Manufacturing Company Limited

The Directors hereby present the 24th Annual Report on the affairs of the company together with Audited Financial Statements for the financial year ended 31st March, 2024.

(Rs in Lakhs)

2. BUSINESS:

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.

3. STATE OF COMPANY'S AFFAIRS:

During the year under review, your company has achieved Revenue from Operations of Rs. 37,427.31 lacs as compared to Rs. 55,436.76 lacs in the previous year. After deducting Expenses there was a loss of Rs. 20,441.56 lacs as compared to loss of Rs. 19,612.62 lacs during the previous year. After adjusting Exceptional Items there was Loss of Rs. 19,295.33 lacs as compared to loss of Rs. 18,591.15 lacs during the previous year. After providing for other adjustments/comprehensive income, the current year Loss stood at Rs. 20,480.84 lacs as compared to the Loss of Rs. 1,1523.13 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 Hon'ble 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 Hon'ble 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.

4. SUBSIDIARY COMPANY/FIRM(S):

The Company had one Subsidiary Company viz. SEL Aviation Private Limited in the previous year, however application for the Striking off M/s SEL Aviation Private Limited (subsidiary of the company) has been filed before the Registrar of the Companies, further the Jurisdictional Registrar of Companies has issued Notice of Striking off and Dissolution under sub section (5) of Section 248 of the Companies Act, 2013 and rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 in Form No. STK- 7 vide Notice No. STK-7/000149/2023 dated 25/11/2023 in which they have informed that the name of SEL Aviation Private Limited have been struck off on 25/11/2023 from the Register of the Companies and the said Company is dissolved.

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 in prescribed Form AOC-1 as Annexure A to this report.

5. CONSOLIDATED FINANCIAL STATEMENTS:

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.

6. CORPORATE GOVERNANCE:

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 2023-24 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.

7. DIVIDEND:

The directors have not recommended any dividend for the financial year 2023-24.

8. SHARE CAPITAL:

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.

9. FIXED DEPOSITS:

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:-

1. Mr. Dinesh Kumar Mehtani (DIN: 08909769), Director of the Company, retires by rotation at this Annual General Meeting and being eligible offers himself for re-appointment. Details of appointment and terms are given in detail in the Notice/Annexure to Notice for the ensuing Annual General Meeting. The Board recommended his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

2. Mr. Sushil Kumar (DIN: 00126157), Independent Director of the company, resigned from the directorship of the company and accordingly he ceased to hold the office of director of the company with effect from 17 th April, 2023.

3. Mr. Anukool Bhatnagar (DIN: 09800892) was appointed as Nominee Director of the Company w.e.f 28th April, 2023.

4. Mr. Ashwani Kumar Khanna (DIN: 01680456) was appointed as Additional Director (Independent Director) of the company w.e.f 23rd May, 2023.

5. Ms. Aarti Sharma (ACS 68577) an associate member of the Institute of Company Secretaries of India was appointed as Company Secretary of the company w.e.f 01st June, 2023.

6. Mr. Ashwani Kumar Khanna (DIN: 01680456) was appointed as Director (Independent Director) of the company for a period of 5 years w.e.f 23rd May, 2023.

7. Mr. Rajeev Bhalla (DIN: 00551773) was reappointed as the Managing Director of the company for a period of 3 years w.e.f 08th April, 2024 in the Annual General Meeting of the company held on 22nd August, 2023.

8. Mr. Naveen Arora (DIN: 09114375) was reappointed as the Whole-time Director of the company for a period of 3 years w.e.f 08th April, 2024 in the Annual General Meeting of the company held on 22nd August, 2023.

9. Mr. Vinod Kumar Goyal (DIN: 02751391) Chief Executive Officer (CEO) of the company, resigned from the post of Chief Executive Officer (CEO) and KMP of the Company w.e.f 20th October, 2023.

10. Mr. Ashwani Kumar Khanna (DIN: 01680456) Independent Director of the company, resigned from the directorship of the company and accordingly he ceased to hold the office of director of the company w.e.f 07th November, 2023.

11. Ms. Meghna Mahendra Savla (DIN: 09152133) was appointed as Additional Director (Independent Director) of the company w.e.f 08th November, 2023.

12. Ms. Aarti Sharma (ACS 68577) Company Secretary-cum-Compliance Officer of the Company, resigned from the post of Company Secretary-cum-Compliance Officer of the Company w.e.f 30th November, 2023.

13. Mr. Rajeev Bhalla (DIN: 00551773) Managing Director of the company was appointed as Chief executive officer (CEO) of the company w.e.f 09th November, 2023.

14. Mr. Anukool Bhatnagar (DIN: 09800892) Nominee Director of the Company, resigned from the directorship of the company and accordingly he ceased to hold the office of director of the company w.e.f 15th January, 2024.

15. Mr. Rajiv Kumar Maheshwary (DIN: 07342702) Independent Director & Chairperson of the company, resigned from the directorship of the company and accordingly he ceased to hold the office of director of the company w.e.f 07th February, 2024.

16. Ms. Meghna Mahendra Savla (DIN: 09152133) Additional Director (Independent Director) of the company was designated as Chairperson of the company w.e.f 07th February, 2024.

The following changes occurred in the directorship of the company after the closure of financial year ending on 31st March, 2024 but before signing of this report

1. Ms. Nidhi Aggarwal (DIN: 09149030) Independent Director of the company, resigned from the directorship of the company and accordingly she ceased to hold the office of director of the company w.e.f 14th May, 2024.

2. Ms. Meghna Mahendra Savla (DIN: 09152133) Independent Director & Chairperson of the company, resigned from the directorship of the company and accordingly she ceased to hold the office of director of the company w.e.f 14th May, 2024.

3. Mrs. Seema Singh (DIN: 10042852) was appointed as Additional Director (Independent Director) of the company w.e.f 22nd May, 2024.

4. Mr. Manjit Singh Kochar (DIN: 08298764) was appointed as Additional Director (Independent Director) of the company w.e.f 22nd May, 2024.

5. Mr. Manjit Singh Kochar (DIN: 08298764) was designated as chairperson of the company w.e.f 22nd May 2024.

Further, the Board of Directors have recommended -

1. Appointment of Mrs. Seema Singh (DIN: 10042852) as a Director (Independent Director) of the Company to hold office for a term upto five consecutive years commencing from 22nd May, 2024."

2. Appointment of Mr. Manjit Singh Kochar (DIN: 08298764) as a Director (Independent Director) of the Company to hold office for a term upto five consecutive years commencing from 22nd May, 2024."

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 2024-25.

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 22nd 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, 2024. 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 2024-25 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, 2024 would be filed with the Central Government.

16. BOARD MEETINGS:

During the year under review, the Board met Five (5) 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 2023-24 was held on 27th July, 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 NonIndependent 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 Director's 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 E 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 Company's 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 Hon'ble 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 Hon'ble 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 2023-24 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, 2024, 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-retum.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 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, 2024. This Report is self-explanatory and requires no comments. The Report forms part of this report as Annexure F.

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 Company's 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 Company's website viz. www.selindia.in/policy.html. Details of transactions are also given in Annexure B 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 Company's 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 Company's 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:

1) Mr. Manjit Singh Kochar

2) Mr. Dinesh Kumar Mehtani

3) Mrs. Seema Singh

Mr. Manjit Singh Kochar 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 C 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- D 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, 2024 and of the profit/loss of the Company for the year ended on 31st March, 2024;

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 Company's 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.