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SEL Manufacturing Company Ltd

| Quarterly Financial Results Q3 FY 2025-26

BEARISH SENTIMENT

Report Source

⬤7th Feb 26

Summary : SEL Manufacturing faces severe financial distress, continuous losses, and defaults, raising significant going concern doubts.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Total expenses: Rs. 4,448.92 lakhs (Q3 FY26), Rs. 14,240.27 lakhs (YTD FY26).
  2. Finance Cost: Rs. 1,930.15 lakhs (Q3 FY26), Rs. 5,849.46 lakhs (YTD FY26).
  3. Depreciation and amortisation expense: Rs. 2,143.08 lakhs (Q3 FY26), Rs. 6,710.12 lakhs (YTD FY26).
  4. Net Revenue from operations: Rs. 205.14 lakhs (Q3 FY26), Rs. 1,311.45 lakhs (YTD FY26).
  5. Total income from operations: Rs. 209.49 lakhs (Q3 FY26), Rs. 1,319.13 lakhs (YTD FY26).
  6. Unaudited Financial Results (implies standalone).

Corporate Overview

  1. Shortfall in working capital funds (Rs. 4,000 lakhs).
  2. Continuous losses since resolution plan implementation, cumulative losses of Rs. 76,691 lakhs.
  3. Sub-optimal performance and severe liquidity stress.
  4. Inability to meet financial obligations, including interest and loan servicing.
  5. Defaulted on quarterly installments (Rs. 26,186 lakhs) and interest (Rs. 17,105 lakhs).
  6. Primarily textile manufacturing, currently engaged in job work due to financial constraints.
  7. Factual reporting of severe financial distress and operational challenges.
  8. Textiles (only one reportable segment).
  9. Sub-optimal performance, unable to fully utilize available capacities.
  10. Major plants remained shut down for the quarter under review.

Risk Factors

  1. Inability to meet financial obligations.
  2. Severe liquidity crunch, continuous losses.
  3. Default on debt installments and interest.
  4. Significant doubt on going concern.

Key Drivers

  1. Infusion of interest-free long-term funds.
  2. Increase in operations volume and profits.
  3. Favorable NCLT ruling on moratorium.
  4. Resolution of working capital shortfall.

Auditor’s Report

  1. Qualified Opinion.
  2. Management did not perform impairment testing for Property, Plant & Equipment and Capital Work in Progress as per Ind AS 36.
  3. Material Uncertainty Related to Going Concern due to continuous losses, liquidity stress, and inability to meet financial obligations.

Board Commentary

  1. Board of Directors re-constituted post-CIRP in 2020-21.
  2. Material uncertainty related to going concern.
  3. Inability to meet financial obligations.
  4. Severe liquidity stress and continuous losses.
  5. Underwent Corporate Insolvency Resolution Process (CIRP) in 2020-21.
  6. Filed application with NCLT regarding banks' failure to declassify the company from defaulter lists.
  7. Shareholders passed resolution for initiation of Corporate Insolvency Resolution Process under Section 10 in October 2023.

Corporate Governance

  1. Management's failure to perform impairment testing as per Ind AS 36.
  2. Shareholders passed resolution for Corporate Insolvency Resolution Process.

Management Discussion & Analysis

Future Strategy

  1. Filed application with NCLT for declassification from defaulter lists.
  2. Obtained interim ex parte order from NCLT granting moratorium on payments.
  3. Directed to infuse necessary funds as per approved resolution plan.

Operational Focus Areas

  1. Sustain operations and generate revenue through job work.
  2. Address liquidity crunch and meet financial obligations.

Performance Drivers

  1. Negative: Shortfall in working capital, continuous losses, plant shutdowns, inability to utilize capacity.
  2. Positive: Initiated job work activities to sustain operations and generate revenue.

Risk Control Measures

  1. Application filed with NCLT for declassification from defaulter lists.
  2. NCLT granted interim moratorium on payments to banks.
  3. Seeking infusion of interest-free long-term funds.

Critical Risks

  1. Material uncertainty regarding the company's ability to continue as a going concern.
  2. Inability to meet contractual/financial obligations (repayment of principal and interest).
  3. Failure to arrange funds for normal operations and pending capital projects.
  4. Potential re-initiation of Corporate Insolvency Resolution Process.
SEL Manufacturing Company Ltd (SELMC) Quarterly Report Analysis & Insights | Dhanarthi