1. We have audited the attached balance sheet of SEL Manufacturing
Company Limited for the year endedas at 31st March, 2012, the profit
and loss statement and the Cash Flow Statement for the year ended on
that date, annexed thereto, in which are incorporated the returns from
the company''s overseas branch at Sharjah, United Arab Emirates audited
by other auditors''. These financial statements are the responsibility
of the company''s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3. As required by the Companies (Auditor''s Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
order on the basis of information & explanations received by us and
report received by the company from the auditors of the company''s
overseas branch at United Arab Emirates on which we have relied.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
(ii) In our opinion, proper books of account as required by law have
been kept by the company, so far as it appears from our examination of
those books and proper returns adequate for the purpose of our audit
have been received from the company''s overseas branch at United Arab
Emirates audited by other auditors;
(iii) The reports on the accounts of the company''s overseas branch at
United Arab Emirates audited by other auditors have been forwarded to
us and have been dealt with by us in preparing this report.
(iv) The balance sheet, profit and loss statement and cash flow
statement dealt with by this report are in agreement with the books of
account and audited branch returns.
(v) In our opinion, the balance sheet, profit and loss statement and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
(vi) On the basis of written representations received from the
directors, as on 31st March, 2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vii) In our opinion and to the best of our information and according
to the explanations given to us, the said accounts, subject to Non
confirmation of debit/credit balances as stated in note no. 31 of the
Balance Sheet and read together with other notes thereon, give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
a) In the case of the balance sheet, of the state of affairs of the
company as at 31st March 2012,
b) In the case of the profit and loss statement, of the profit for the
year ended on that date, and
c) In the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
(REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE TO THE MEMBERS
OF SEL MANUFACTURING COMPANY LIMITED AS AT AND FOR THE YEAR ENDED 31ST
i) (a) The Company has maintained proper records
showing full particulars including quantitative details and situation
of fixed assets except for certain items of fixed assets, the
quantitative details of which, we are informed, are in the process of
(b) All the fixed assets have not been physically verified by the
management during the year but there is a regular program of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. According to the
information and explanations given to us, no material discrepancies
were noticed on such verification.
(c) In our opinion and according to information and explanations given
to us, the company has not made any substantial disposal of fixed
assets during the year and the going concern status of the Company is
ii) (a) As explained to us, the inventory has been
physically verified during the year by the management. In our opinion,
the frequency of verification is reasonable.
(b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of opinion that the company is maintaining proper records of inventory.
The discrepancies noticed on verification between the physical stocks
and the book records were not material.
iii) (a) The company has not granted secured or
unsecured loans to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
the provisions of paragraph 4(iii) (a) to (iii) (d) of the above said
order are not applicable to the company.
(b) The company has not taken any loans secured or unsecured from
companies, firms or other parties covered in register maintained under
section 301 of Companies Act, 1956. Hence, the clauses (iii)-(e) to
(iii)-(g) are not applicable.
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business with regard to purchases of inventory, fixed assets and for
sale of goods
& services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls.
v) (a) Based on the audit procedures applied by us and
according to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 have
been entered in the register required to be maintained under that
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lakh in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
vi) The Company has not accepted deposits from the public within the
meaning of Section 58A, Section 58AA or any other relevant provisions
of the Companies Act, 1956 and the Companies (Acceptance of Deposit)
rules, 1975. No order has been passed by the Company Law Board or
National Company Law Tribunal or Reserve Bank of India or any court or
any other Tribunal.
vii) In our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
viii) We have broadly reviewed the books of accounts maintained by the
Company pursuant to the Rules made
by the Central Government for the maintenance of Cost records under
section 209-(1) (d) of the Companies Act, 1956 and we are of opinion
that prima facie, the prescribed accounts and records have been made
ix) (a) According to the records of the company, the
company is regular in depositing undisputed statutory dues including
income tax, wealth, tax, provident fund, employees state insurance,
custom duty, sales tax, excise duty, service tax, cess and other
material statutory dues applicable to it though there has been slight
delays in few cases of income tax deducted at source, employee state
insurance and provident fund which are not material.
(b) According to the information and explanations given to us, there
were no undisputed amounts payable in respect of Income Tax, Wealth
Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
in arrears, as at 31st March, 2012 for a period of more than six months
from the date they became payable.
x) The company has no accumulated losses as at the end of the financial
year. The company has not incurred cash losses during the financial
year covered by our audit and in the immediately preceding financial
xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to
banks or financial institutions.
xii) The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) In our opinion, the company is not a chit fund or a nidhi mutual
benefit fund/ society. Therefore, the provisions of clause (xiii) of
paragraph 4 of the order are not applicable.
xiv) In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investment. The investments
made in equity shares is held in its own name except six shares of a
100% owned subsidiary company SEL Textiles Ltd. held in the name of
other persons in which company is beneficial holder.
xv) In our opinion, the terms and conditions on which the Company has
given guarantee for loans taken by its 100% owned subsidiary from banks
are not prejudicial to the interest of the company.
xvi) In our opinion and according to the information and explanations
given to us, the term loans raised during the year were applied prima
facie for the purpose for which the loans were obtained.
xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the company, we report
that funds raised on short term basis have prima facie not been used
for long term investments.
xviii)According to the information and explanations given to us, the
company has made preferential allotment of equity warrants to parties
covered in the register maintained under section 301 of the Act. In our
opinion, the price at which equity warrants have been issued is not
prejudicial to the interest of the company.
xix) According to the information and explanations given to us, during
the period covered by our audit report, the company has not issued
xx) The company has not raised money by public issues during the year.
However during the year, the funds (lying unutilized out of Global
Depository Receipts raised in 2009-10 and 2010-11) have been utilized
for the respective purposes for which they were raised as referred to
note-40 of the balance sheet.
xxi) Based on the audit procedures performed and the information and
explanations given by the management to us, no fraud on or by the
company has been noticed or reported during the course of our audit.
FOR DASS KHANNA & CO.
Registration No. 000402N
PLACE: LUDHIANA (RAKESH SONI)
DATED: 29.05.2012 PARTNER