B - X X ' 2 8 1 5 , G U R D EN

VAGAR'
DASS KHANNA & CO. LUDHIANA- 141 OO1
Tele.No.0161-2402492
ACCOUNTANTS
CHARTERED E Mail :dasskhannaco@Yahoocon
PAN: MBFD 5151 G

AUDITOR'S
INDEPENDENT REPORT
REVIEW

To
TheBoardof Directors,
SELManufacturingCo.Ltd,

lntroduction
the accompanylng sratement of unaudited financialresultsof sEL
standalone
We havereviewed
for the quarterandninemonthsnded December 31'
N4anufacturing Company Limited(thecompany)
bythe company pursuant of-Rgulation
to ihe requirements 33 of the
2016("theSt;ement")prepared
Requiremenlcl RegLlations ?015readwith SFBICircular no'
SLBI{lisr'1sObrieatior dnd Dis(losure
dareds lJlv 70.16lhis sratemenr of the conpanv's
i' the responlibility
iti)rro,ftirildoli
bythe Boardof Directors Our is
responsibilityto issuea repofton
Ivlanagement andhasbeenapproved
tnesestanddlone result!baseoor oJr rFview
financidl

Scopeof Review
Standard on ReviewEngagements (SRE)2410"'Review of
We conducted our reviewin accordance
Performedby the Independent Auditorof the issued
Entity"' by the
lnterimFinancialInformation
of chartered
Institute Accountants thatwe planandperformthe review
requires
of India.Thisstandard
arefreeof material
statements misstatement'
io oia"intoO"r"," u.trfanceasto whetherthefinancial to
of company personneland procedures
analytical applied
A reviewls limitedprimarily
to inquiries
thanan audit We havenot performed 3n auditand
financialdataandthus providelessassurance
aacoroinSlV. dnaLdilop;nior'
we do note/pres5

Basisof QualifiedConclusion
We repott hot:
95 Crorespertoiningto ntne
1. Thecompany has not providedt'ot interestomountingto Rs200
quarter ended31't Decembel
monthsendedon 31"' December2a16(Rs89 98 crcresfot the -
2016)on NPA clossiJied bdnk boffawings on occrual bosis os required.under lnd As 1
September2076 quorters
Prcsentdtionof findncidl stdtements Fufther intetest Jor lune/
is revercedin Decembet2016
omountingRs 7lo gi dateson NPAclassifiedbdnk borrcwings
rtemsf refer note no 5 of the interimt'inanciqlrcsults)'
quafterand adiusledinexceptronat

2. Duringthercportingperiod,thereis rcductionin prcvisian Jor diminutianin the valueof investments

in oni ol itssubsidiorynametysELTextiles Limiteddue to nonprovisional intercstomountingta Rs
b nine monthsendedon 31't December 2076 ( Rs 3181 croresfor the
iz..sz iron, pertdin;ng
bankbo(awingson dccruol.basis os required
i"tir, zt' o"i"nbet 2016)on NPA ctossified
"na"i
underndnsl.Presentotianoffinonciolstotements.Furthe|intercstt'o|June/september2016
Rs 5077 crcreson NPAclassifiedbonkborrowinqs i.nDecenber2076
is reversed
quortersomounting
in December 2076
;uarter resultingreductian for diminutionin the volueof investments
in provisian
quartet.( refernoteno5 ofthe interimfinancialresults)'

thot intheopinionoJthemondgement despitetub

3. NoteNo.2af the interin financiolresultsdescribes
lossesduringthe quortetond nine months ended
iptiru, ,ipority utitiz;tion,incurringsubstantial
37", 2A76andsubstontiol in networthas ot December
reduction 37't' 2076'the unaudited
December
goingconcern bosis in view ol nattets Jully
standdlone finoncialresultshavebeenprcporedon d
 f

exp!ojnedinthesaidnote'However,thesesjtuationsgiverisetomoterioluncertojntyinrespectof
conpony'sabilityto continueos goingconcernwhichis paft dependent outcomeafthe
on successJul
with the CDRlendersand campany's
discussions obilityta generote Jundsto supportits
sufficient
dndJulfillrepdymentabligotions
operations

4. Thecampanyhosrecognized deJeffedtax ossetamountingto Rs 16607 crorcsond MAf Credit

EntitlementoJ Rs.55.34croresupto 31st Decenber,2016 consideng probobilitythot sufficient
toxobleincomewi|]beovoilobteduingspecifiedperjodogojnstwhichsuchdeferredtclxasset/MA
credit Entitlementcon be adjusted.Howevetno canclusive documents/evidences ore providedto
suo^orttheir cloim, The componyahility to continue os gaing concernis dependent on Jactors
in pora (3)above ln cosethe goingconcern
discussed statusof the compony is defeffed
suspect' tdx
oste'/MAlCreditLmitlementrccagni/edtill dotewitlrequircto be teversed

in poto (3) above,hod the

, iJ ony,ol the notters speciJied
Wefuftherrcportthat exceptfor theeJt'ect
imD;octof our obseNotianmodein porcgroph(1), (2)& (4)obavebeenconsidered, theprofit/ ( loss)Jol
thequorterendedon 31't Decembet,2076andninemonthsendedon 31't DecenbeL2076wouldhove
been Rs.484.70crares ond Rs.gg8.12 croresrcspectively (osagainstthe rcpartedJigureaf Rs20 18
crares/(Rs493.24)respectively).

fot thequoftetending 31'tDecembet2076ond ninenonths ending31't

Theeornings/(loss)per shore
December os againstreportedeqrntngs
2076 would havebeen(Rs14 53) and (Rs3012)respectively
(lass)pershoreRs0.67ond (Rs14.89)respectively.

qualifiedconclusion
Basedon our reviewconductedas above,nothingexceptthe oboveobservotians has cometo our
attention usto believe
thatcauses thatthe accompanyingstatement of unauditedstandalonefinancial
resultsreadwithnotesthereon, prepared with
in accordance IndianAccounting Standardsasspecified
undersection 133ofthe Companies Act,2013readwith Companies (Accounts) 2014andother
Rules,
recognized accountingpractices acceptedin India,has
and policiesgenerally not disclosedthe
information in termsof Regulation
requiredto be disclosed 33 of the SEBI(Listlng
ObliSationsand
Disclosure Regulations,2Ol5read
Requirements) no
withSEBlCircular ClR/CFD/FAC/62/2016dated 5lh
luly, 2016includingthe mannerin whichit is to be disclosed,or that it containsany materlal
misstatement.

of Matter
Emphasis
to thefollowing
Wedrawattention matters:

as on December
hasbeenmadefor TradeReceivables
1. No provision to Rs
315t,2016amounting
446.29 for morethan180daysfromthe due date
{orcs outstanding Howeverthe management
c|aimsihaithesaidreceivab|esarerecoverab|eandnoprovisionisrequiredtobemadeth

2. Theievelof inventories bythe cornpany

maintained is highThismayinclude slow/non
unidentified
andobsolete
rnoving lyingwiththe company
itemsof Inventories for whichno provision
hasbeen
made.FurtherduringtheninemonthsendedonDecember3lst,2016therehasbeenreduct
of someof the finishedgoodsfrorn the fair marketvalueestimatedby the
ihe realization
management dueto obsolescence,

3. NoteNo.6 of the interimfinancial regarding

results revision in
installed
in usefullifeof machinery
andone of its subsidiary namelySEL Textiles
Limited
/Terrytowelunitsofthe company
Spinning
basedon technicalreportseffectivefrom April2016
1.!
a/
rJ
i
TaxAct)1961wascarriedon the ComFany' its
I o.
- search& Seizure actionu/s 132(1)of the Income
year2013-14Assessments
duringthelinancial have
I pr"t**. ."J ."t" *her companies/entities
Year2oo8-09, 2oo9-10'2or2'73 and on
2oL4-75 March 2016
31st'
I ;""" .omoleted for Assessmeni
;;;,i"t"'*"t no additional tax on
liability the assessmentfor the saidYearsForthe remaining
I demands Rs-283.43croreshave
agglegatinE.to
assessment yearsi.e. 2o\o'17,2017.72&2013.14,
haveissueda showcause
beenraisedby incometax department.FurtherIncomeTax authorities
i"i '.rl"C p*alty proceedingsu/s 274 readwith section271of the IncomeTaxAd' 1951
""a'i"i".
iurther,the Compinyis in process offilingappealsagainstthese demandsandno provisionhasbeen
madeinthlsregard
of
(4) of Emphasis
is not mod!fiedin respectof the mattersreportedin para (1) to
Our conclusion
mafters.

ForDASSKHANNA&CO.
Accountants
Chartered

(cA.Rakes
Place:Ludhiana
Partner
Datet !4.O2'2OL7
M.No. : 083142
 NAGAR,
B-XX-2815,GURDEV
DASS KHANNA& CO. LUDHIANA 141 OO1
ACCOUNTANT5
CHARTERED r e l e . N o . 0 1 6 12 4 0 2 4 9 2
E M a i lr d a s s k h a n n a c o o y a h o o . c o r
P A N: A A B F D 5 1 5 1 G

To
TheBoardof Directors,
SELManufact!ringCo.Ltd.,

lntrocluction

Wehavereviewedtheaccompanyingstatementofconso|idatedunauditedfinancia|resu|ts
companyLimiled(hereinafter
N4anufacturing referredto as"the Holding company") anditssubsidiaries
(theHolding
Company anditssubsidiaries togetherreferred to as"theGroup")for the ninemonthsand
ouarterndedDecember 31, 2016 ("the Statement") preparedby the companypursuantto the
of Regulation
requirement 33 of the sEBl(Listing
obligation andDisciosure Requirements)Regulations,
2015readwith sEBlcircularno. clR/cFD/FAc/62/2016 dated5tbJuly,2016 Thisstatementis the
of the Company's
responsibility Management and has been approved by the Boardof Directorsour
isto issuea reporton theseconsolidated
responsibility financial basedon our review-
results

TheStatement the financial

includes entities:
of following
results
l. SELManufacturing Co ttd (doldingCorrpanYl
2. SELTextilesLimited(Subsidiarv
Company)
3. 5ELAviationPrivateLimited(Subsidiary
Company)
4. SEExports(SubsidiarYFirm)
5. SELTextileCorporation(subsidiary
Company)

scoDeof Review

We conducted qur reviewin accordance Standard on ReviewEngagements (sRE)2410,"Reviewof

tnterimFinancial InformationPerformedby the lndependent Auditorof the Entity",issuedby the
Accountants
nstituteof chartered of India.Thisslandard that we planandperformthe review
requires
to obtainmoderate assuranceasto whetherthefinancial arefreeof material
statements misstatement.
A reviewis limitedprimarilyto inquiriesof company personneland procedures
analytical appliedto
financialdataand thus providelessassurance than an audit We have not performed an auditand
according|y,wedonotexpressanauditopinion.WedidnotreviewthefinanciaIresu|tsofove
anditsfoursubsidiaries.
branchofthe holdingcompany

Basisof qualifiedConclusion

Wereportthot:
pravidedfor
1. The haldingcomponyond ane of its subsidiorynamely sELTextilesLimitedho.venot
interestamountingto Rs 283.49Crarespertainingto ninemonthsendedon 31't December 2A16(Rs
721.79Crcresfot the qudtter ended 315tDecember2016) on NPAclossiJied bonk borrawingson
af finonciolstotements.Further interestfol
occruolbasisas requiredundertnd As 1 -Presentotion
June/ September 2076 quafters omounting Rs 16167 crores on NPA cldssified bonk
(/eternote
borrowingsis revercedin December2076 qudrter ond adiusledin exceptionalitems
no 4 of the interin finonciolresults)

thot in the opinionof the manogementol despite

2. NoteNo.2 of theinteim t'inonciolrcsultsdescribes
sub ootimumcopocitvutilizdtion,incurringsubstontiollossesduring the quartet and nine months
,- 7
rcduction in net t"torthos ot Decemb.er37st'2016of the
endedDecembet37st,2076ond substuntiol
conpinv nomely SELTexlllesLinited' the unoudited
holding os wetl as one of its suosiaioi
prelared on o goingconcernbosisin vi.ewof mottersfully
consolidoted finonciol resuttsnoveoeei
,"ii uo'*u, 'n"'[ 'iiootions siv; ise to matetiotuncettqintv in rcspectof the
:rp;;;;;; ;;;;t';'; outconeof
,:on''nu"o' guiniionii'n;hkh is partdep'endent-on
soidcompany'sobilityto ,successful
. the discussions with thecDR tenderson; respective companies abilityto generctesuflicientfunds to
obligations
suopott their operationsondf ulfilI repayment
credit
omountingto Rs 274 Oo croresond MAT
3. fhe Group hosrccognizeddefetredtox osset
20i6 consideringwoba-bilitvthat sullicient
EntittementoJ Rs.64.sscrorcsupto il.rt'o"r"^a"r, 'o' ou"'/'o'
which
au'ins-'i"'iid puiodogoinst
willbe ouottook
tdxobleincome ,:l'!..!:!::'"0
creditEntit|ementconbeodjusted'Howevernoconclusivedocuments/evidencesarcprovidedto
going concernof holdingond one of its subsidiary
suppotttheir cloim.The obitityto .;o*i'u" *
in po* (2).?-b.1'jln casetne gotng
on fdctorsos discussed
sEL TextilesLimitedis depenoent
nomely
suspect,deferred tax osset/MAT credjt Entitlement
concern stotusoJ the respectivecomp,onie,is
till dotewill requie to be rcvcrsed
recognized
(2) obove'hodthe
oJ the mottersstotedin.poroqtoph
we fufther rcportthotexceptfot the effect'tf ony' the,eafiings/(loss) of
impactof aur observation^oo" ,.n,oronioii di d p) otou" 0"", ,onsidered
o' ili'i"""tier' 2076 dnd nine months ended on 37't
the qtoupfor the quorter
'iirlirizi, (as
",ro"o
aeen (ss.szz.aecrores) ond(Rs.g98.04 crorcs)respectivelv
*r, woutd hove
and(Rs37600)respectivelv)'
ri" *i",r"a tUureof (Rs5 64 crores)
"i"i,ii ond nine months
quorter ending 37st.Decem-ber
The eanings/ (toss)per shore for the
'"|)1"n '2076
qnd (Rs.30.12)rcspectivelvas osdinst
woutd hdve been(Rs 18.94)
(Rs 11'36) respectivety'
lton) per share (Rs0 17)and
,"f,ori"a";;i";"r;;,2076
"ornirgt
Qualifiedconclusion
exceptthe oboveobseNotionshas come to our
Basedon our review conductedas above,nothing financial
.t"t"r"nt of unaudited-consolidated
attentionthat causesusto believethat th;:ciorfu"nying standards as specified
w;th tndianlccounting
resultsreadwith notes*,"'"on, p'"pu'"i in'l-tcJJancJ
u n d e r s e c t i o n 1 3 3 o f t h e c o m p a n l e s A c l , 2 o l 3 r e a d W i t h c oinm India'
p a n i ehas
s { Anot
c c odisclosed
t ] n t s ) R uthe
les,2014a
practi;es and iolitl"' g"nur.utlyaccepted
i"*"iJ"r.."r"it"t and
if Regulation33 of the-SEBI(ListingObligations
informationrequiredto be disclosed'" t"trnt dated5ih
Disclosufe Requirementsl negutations, zoiireui titt' iret cittutu' no clR/CFD/FAC/62/2016
or that it contains any mat'rial
t is to be disclosed'
Julv,2016 includingthe mannerin wnrch
misstatement.

of Matter
Emphasis

We drawattentionto the followingmatters:

ason 31'tDecember to Rs62545
2016amounting
hasbeenmadeforTradeReceivables
1. No provision claimsthat
Howeverthe management
for mo'" tf'tn fso au-ytfi;rn the due date
croresoutstanding
thesaidreceivablesarerecoverao'"andnop,ovisionisrequiredtobemadetherefore.
and-::."1-j:^:lljY]"],]l
bvtheHoldins.companv
maintained
2. rhelevelof inventories iili;1ll
mayil:ffi:,';:::"ffi ;i;;no;;;;;""i;
Includeunroerrrrrrcu
"i"", :- ":; :o::':1".1:T:.:l,l::"1':::'.H?'il1'J"i:;
l""n ,nuo" ruftherduringthe ninemonths
provlslr r't]ut
ended
companies
respective for which
:TB::'ffr'""I?ffii?'ffi;;;:;;;;',il"r'u't""n *o"ll*ll-':,"::l':l'."1":::::
rionof someoi

il"?;::*'r';#i;;;;;;'i,i;.;'i";"'timated bvthemanasel9n-t 9uetoobsorescence

 -f
I
h 3 . NoteNo.7 of the interimfinancialresultsregard;ng
revisionin usefullife of mach:nery
basedon
technicalreportseffectivefrom Aoril2015.

4 . Search
& Seizure
actionu/s 132(1)of the Income
TaxAct,1961wascarriedon the holding
company,
its promotersand some other relatedcompanies/entities duringthe financialyear 2013-14.
Assessments of subsidiaries
havebeencompleted for the completeblockperiodwhereas in caseof
holdingcompany assessmentshavebeencompleted for AssessmentYear200809,2009-10, 2012-13
and2014-15 on March31st,2016andtherewasno additional taxliabilitvon the assessmentfo. the
saidyears.Forthe remainingassessment yearsi.e. 2010-11,2071-72& 2Of3-L4,assessments have
beencompleted by the IncomeTaxAuthoritieson 30thJanuary,2017, anddemands aggregating to
Rs.283.43 croreshavebeenraisedby incometax department. FurtherIncomeTaxauthorities have
issueda show causenoticefor initiatingpenaltyproceedings u/s 274 rcad with section271 of the
IncomeTaxAct, 1961.Further,the holdingcompanyis in process of filingappealsagainstthese
demands, no provisionhasbeenmadein this regard.

Ourconclusion
is not modifiedin respect
of the mattersreportedin para(1)to (4) of Emphasis
of
mafters.

OtherMatters

Wedrawattention
to thefollowing
matter

1. We did not reviewthe interimfinancialresultsof four subsidiaries

includedin the consolidated
financialresultswhose interimfinancialresultsfor the nine monthsand quarterended31st
December, 2016reflecttotal revenues
of Rs.300.11 croresand Rs.83.01croresresoectivelv.
The
consolidatedfinancial
resultsalsoincludefor the ninemonthsand quarterended31stDecember,
2016.Thegroup'sshareof net{loss)/profitof (Rs.116.46crores)
andRs.56.39croresrespectively.

Ourconclusionis not modjfiedin respectofthe mattersreportedin OtherMatters.

FoTDASSKHANNA& CO,
ChartefedAccountants
{FirmReE.No.000402N}

PlacerLudhiana
Dalet 14.O2.2OL7
M.No.:083142