sterling wilson renewable energy ltd share price Directors report


Dear Members,

Your Directors are pleased to present the 5th Annual Report along with the Audited Financial Statements of Sterling and Wilson Renewable Energy Limited (formerly known as Sterling and Wilson Solar Limited) ("the Company") for the Financial Year ended March 31, 2022.

Financial Performance

The key highlights of the financial performance of the Company for the Financial Year ended March 31, 2022 along with comparison with the previous Financial Year ended March 31, 2021 are provided below:

(Rs in Crore)

Particulars Consolidated Standalone
FY 2021-22 FY 2020-21 FY 2021-22 FY 2020-21
Revenue from Operations 5,198.94 5,080.80 3,459.58 3,176.17
EBITDA (859.35) (362.37) (194.17) (189.60)
Less:
Depreciation 14.67 16.51 7.90 8.20
Finance Cost 76.71 93.09 75.34 67.59
Add:
Interest Income 40.57 131.93 71.99 122.72
(Loss)/ Profit before tax (910.16) (340.04) (205.42) (142.67)
Provision for tax (including deferred tax) 5.60 (50.00) (37.90) (31.23)
Loss/ Profit after tax (915.76) (290.04) (167.52) (111.44)

On a consolidated basis, the revenue from operations for the Financial Year 2021-22, stood at Rs 5,198.94 Crore as compared to Rs 5,080.80 Crore in the Financial Year 2020-21. The consolidated loss after tax amounted to Rs (915.76) Crore in the Financial Year 2021-22 as against a loss of Rs (290.04) Crore in the Financial Year 2020-21.

On a standalone basis, the revenue from operations for the Financial Year 2021-22, stood at Rs 3,459.58 Crore as compared to Rs 3,176.17 Crore in the Financial Year 2020-21. The standalone loss after tax amounted to Rs (167.52) Crore as against a loss of Rs (111.44) Crore in the Financial Year 2020-21.

Revenue from operations increased to Rs 5,198.9 Crore in the Financial Year 2021-22 from Rs 5,080.80 Crore in the Financial Year 2020-21.

Adjusted gross margins (adjusted for MTM impact) stood at (9.7%) in the Financial Year 2021-22 as compared to 1.2% in the Financial Year 2020-21. Gross margins for the Financial Year 2021-22 continue to remain impacted significantly primarily on account of increase in modules prices, liquidated damages and increase in overhead and subcontracting costs due to extension in project timelines because of Covid-19 and module delivery delays.

The O&M business revenue decreased by 11.6% to Rs 222.9 Crore in the Financial Year 2021-22 from Rs 252.10 Crore in the Financial Year 2020-21.

Other Income stood at Rs 35 Crore in the Financial Year 2021-22 as compared to Rs 27 Crore in the Financial Year 2020-21.

Business Overview

The Company is a global pure-play, end-to-end solar engineering, procurement, and construction ("EPC") solutions provider. The Company provides EPC services primarily for utility-scale solar power projects with a focus on project design and engineering and manages all aspects of project execution from conceptualizing to commissioning. The Company also provides operations and maintenance ("O&M") services, including for projects constructed by third parties.

The Companys operations are supported by a competent and sizable design and engineering team which is responsible for designing solutions that it believes are innovative and cost effective, with an aim to increase the performance ratio of solar power projects. The Company believes that its design and engineering solutions, coupled with robust quality compliance checks on PV modules helps it in achieving more than the contractually agreed performance ratio for the solar power projects it constructs.

The Company uses its subsidiaries and branch offices globally for its operations. The Company leverages these offices to strategically tap solar opportunities in markets in which it does not have a permanent presence. The Company strategically focuses on markets that have conducive solar power policies and high solar resources and invests in geographies having long term solar opportunities. The Company also adopts a disciplined expansion strategy that it customizes for each market with a view to enhancing its bidding abilities in these geographies.

Material events during the year under review

Pursuant to the Share Subscription Agreement ("SSA") entered into between the Company, Shapoorji Pallonji and Company Private Limited ("SPCPL"), Mr. Khurshed Daruvala and Reliance New Energy Limited (formerly known as Reliance New Energy Solar Limited) ("RNEL"), the Board at its meeting held on October 10, 2021, approved the issuance of 2,93,33,333 (Two Crore Ninety Three Lakhs Thirty Three Thousand Three Hundred and Thirty Three only) Equity Shares of face value of Rs 1/- each at a price of Rs 375/- per equity share aggregating to Rs 1,099,99,99,875/- (Rupees One Thousand Ninety Nine Crore Ninety Nine Lakhs Ninety Nine Thousand Eight Hundred and Seventy Five only) on a preferential basis to RNEL, a wholly-owned subsidiary of Reliance Industries Limited ("Preferential Issue").

The Shareholders approved the Preferential Issue at its Extraordinary General Meeting held on November 02, 2021. Further, the Board at its meeting held on December 30, 2021 approved the allotment of 2,93,33,333 Equity Shares to RNEL on preferential basis.

Further, RNEL has become one of the Promoters of the Company post the above said preferential allotment.

Pursuant to the Share Purchase Agreement ("SPA") entered into between SPCPL, Mr. Khurshed Daruvala and RNEL, SPCPL sold 1,84,00,000 Equity Shares of the Company ("Tranche I Sale Shares") to RNEL on January 06, 2022. Further, SPCPL and Mr. Khurshed Daruvala have sold 1,53,80,904 and 42,86,846 Equity Shares ("Remaining Sale Shares") respectively to RNEL on February 09, 2022.

Also, pursuant to the open offer made by RNEL along with its PACs, 84,76,251 Equity Shares (4.47% of total paid-up equity share capital) were tendered by the public shareholders of the Company and accepted by RNEL.

Together with the Preferential Issue of 2,93,33,333 Equity Shares by the Company to RNEL on December 30, 2021, the sale of Tranche 1 Sale Shares and Remaining Sale Shares and the Equity Shares acquired by RNEL from the public shareholders in the open offer, RNEL holds 7,58,77,334 Equity Shares representing 40.00% of the total share capital of the Company as on March 31, 2022.

Share Capital

Consequent to the Preferential Issue to RNEL, during the year under review, the issued, subscribed and paid-up equity share capital of the Company has increased from Rs 16,03,60,000 to Rs 18,96,93,333.

The issued, subscribed and paid-up equity share capital of the Company as at March 31, 2022 stood at Rs 18,96,93,333 comprising of 18,96,93,333 Equity Shares of Rs 1/- each fully paid.

Transfer to Reserves

No amount has been transferred to general reserves for the Financial Year ended March 31, 2022.

Dividend

During the year under review, the Board has not recommended dividend on the equity shares of the Company.

In terms of the provisions of Regulation 43A of the Securities and Exchange Board of India ("SEBI") (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations), the Company has formulated a Dividend Distributio n Po licy. The Policy is enclo sed as Annexure A, and is also available on the Companys website and can be accessed at https://www.sterlingandwilsonre.com/pdf/reg/ dividend-distribution-policy.pdf

Subsidiaries

During the year under review, Sterling and Wilson International Solar FZCO ("SWFZCO"), a wholly owned subsidiary of the Company increased its shareholding in Sterling and Wilson Middle East Solar Energy L.L.C ("SWME Solar") from 147 fully paid equity shares of AED 1,000 representing 49% of the total share capital to 300 fully paid-up equity shares of AED 1,000 representing 100% of total share capital of SWME Solar. Consequent to the same, SWME Solar is now a wholly owned subsidiary of SWFZCO.

Further, 10 (Ten) subsidiaries have been incorporated by Sterling and Wilson Solar Spain, S.L. namely, Esterlina Solar - Proyecto Uno, S.L., Esterlina Solar - Proyecto Dos, S.L., Esterlina Solar - Proyecto Tres, S.L., Esterlina Solar - Proyecto Cuatro, S.L., Esterlina Solar - Proyecto Cinco, S.L., Esterlina Solar - Proyecto Seis, S.L., Esterlina Solar - Proyecto Siete, S.L., Esterlina Solar - Proyecto Ocho, S.L., Esterlina Solar - Proyecto Nueve, S.L. and Esterlina Solar - Proyecto Diez, S.L. However, no capital has been infused in these companies as on March 31, 2022.

The Company has 24 (Twenty Four] subsidiaries as on March 31, 2022 comprising of 5 (Five) direct subsidiaries and 19 (Nineteen) step down subsidiaries. The Company also has share in a partnership firm in India.

In accordance with the SEBI Listing Regulations, the Company has formulated a policy for determining its material subsidiaries. The said Policy is available on the Companys website and can be accessed at https://www.sterlingandwilsonre.com/pdf/reg/ policy-on-material-subsidiaries.pdf

Performance Highlights

The Audit Committee/ Board reviews the Financial Statements, significant transactions and investments of all the subsidiary companies. The minutes of the subsidiary companies are also placed before the Board at its meetings.

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 ("the Act") read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of Financial Statements of the Companys subsidiaries in Form AOC-1 is attached to the Financial Statements of the Company.

The said Form also highlights the financial performance of each of the subsidiaries of the Company included in the Consolidated Financial Statements pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.

Further, pursuant to the provisions of Section 136 of the Act, the Standalone and Consolidated Financial Statements of the Company along with relevant documents and separate audited Financial Statements in respect of subsidiaries, are available on the website of the Company at https://www.sterlingandwilsonre. com/investo r-relations/financials

Consolidated Financial Statements

In accordance with the provisions of Section 129(3) of the Act and Regulation 34 of the SEBI Listing Regulations, the Audited Consolidated Financial Statements of the Company forms part of this Annual Report. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards prescribed under Section 133 of the Act.

Deposits

The Company has not accepted any deposits within the meaning of Section 2(31) and Section 73 of the Act and the Rules framed thereunder. As on March 31, 2022, there were no deposits lying unpaid or unclaimed.

Particulars of Loans, Guarantees, Investments & Securities

Pursuant to section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, disclosures relating to loans, advances and investments as on March 31, 2022 are given in the Notes to the Standalone Financial Statements.

Directors & Key Managerial Personnel Directors

Your Companys Board consists of global leaders and visionaries who provide strategic direction and guidance to the organization. As on the date of this report, the Board comprised of 4 (Four) Non- Executive Directors and 4 (Four) Non-Executive Independent Directors.

Cessation

During the year under review, Mr. Arif Saleh Doctor (DIN: 08390169), an Independent Director of the Company, demitted his office as a Director of the Company with effect from the close of business hours on February 18, 2022, on account of personal reasons. The Board placed on record its sincere appreciation for the valuable contribution and services rendered by Mr. Arif Saleh Doctor during his tenure as an Independent Director of the Company.

Mr. Bikesh Ogra (DIN: 08378235), a Non-Executive Director of the Company, demitted his office as a Director of the Company with effect from April 07, 2022, on account of his enhanced commitments in other avenues being presently pursued. The Board placed on record its sincere appreciation for the valuable contribution and services rendered by Mr. Bikesh Ogra during his tenure as a Non-Executive Director of the Company.

Appointment

Subject to the approval of the Shareholders and based on the recommendation of the Nomination and Remuneration Committee ("NRC"), the Board at its meeting held on March 29, 2022, appointed Mr. Cherag Balsara (DIN:07030974), as an Additional Director, designated as Non-Executive Independent Director of the Company, not liable to retire by rotation, for a period of 5 (Five) consecutive years commencing with effect from March 29, 2022 to March 28, 2027.

Pursuant to the terms of the SSA and SPA it was inter alia agreed between the parties to the agreements that 4 (Four) new Independent Directors shall be appointed to the Board of the Company to further increase the Boards strengths and to help bring in diverse thoughts and ideas at the Board level and thereby ensure that the Board achieves better decision making and governing abilities, with the diversity of experience, knowledge, perspective and gender in the Board of Directors. The existing Independent Directors of the Company shall continue to remain on the Board.

Accordingly, subject to the approval of the Shareholders and based on the recommendation of the NRC, the Board at its meeting held on April 07, 2022, appointed Ms. Naina Krishna

Murthy (DIN:01216114), as an Additional Director, designated as Non-Executive Independent Director of the Company, not liable to retire by rotation, for a period of 5 (Five) consecutive years commencing with effect from April 07, 2022 till April 06, 2027.

Further, pursuant to the terms of the SSA and SPA, it was also agreed between the parties to the agreements that RNEL would nominate 2 (Two) Non-Executive Directors on the Board of the Company.

Pursuant to the nomination made by RNEL and based on the recommendations of the NRC, the Board at its meeting held on April 07, 2022, appointed Mr. Balanadu Narayan (DIN:00007129) and Mr. Saurabh Agarwal (DIN: 09206293) as Additional Directors, designated as Non-Executive Non-Independent Directors with effect from April 07, 2022, subject to the approval of the Shareholders.

The Company has sought the approval of the Shareholders via Postal Ballot for appointment of Mr. Cherag Balsara as Non-Executive Independent Director for a period of 5 (Five) consecutive years commencing with effect from March 29, 2022 to March 28, 2027, Ms. Naina Krishna Murthy as Non-Executive Independent Director for a period of 5 (Five) consecutive years commencing with effect from April 07, 2022 till April 06, 2027, Mr. Balanadu Narayan as Non-Executive Non-Independent Director and Mr. Saurabh Agarwal as Non-Executive Non-Independent Director of the Company. The Notice of Postal Ballot was sent to the Shareholders on May 26, 2022 and the resolutions approving the said appointments was passed by the Shareholders on June 26, 2022.

Retiring by rotation and continuing as Director

Pursuant to the provisions of Section 152(6) of the Act and the Articles of Association of the Company, Mr. Khurshed Daruvala (DIN:00216905), Chairman and Non-Executive Director, is liable to retire by rotation at the ensuing 5th Annual General Meeting ("5th AGM").

The Board recommends the re-appointment of Mr. Khurshed Daruvala as a Non-Executive Director of the Company for your approval.

In compliance with Regulation 36(3) of the SEBI Listing Regulations and Secretarial Standards - 2, the brief resume, expertise and other details of Mr. Khurshed Daruvala are given in the Notice convening the ensuing 5th AGM.

Declaration by Directors

The Company has received necessary declarations from the Independent Directors required under Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, confirming that they meet the criteria of independence.

There has been no change in the circumstances affecting their status as an Independent Director during the year.

The Independent Directors have also confirmed that they have registered their names in the data bank maintained with the Indian Institute of Corporate Affairs.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.

Also, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, for attending the Board/ Committee meetings of the Company.

The details of sitting fees paid for attending the Board/ Committee meeting(s) during the Financial Year 2021-22 are as under:

Name of Director Designation Sitting fees paid during F.Y. 2021-22(1) (In )
Mr. Khurshed Daruvala Non-Executive Director 16,70,000
Mr. Arif Doctor Independent Director 8,50,000
Mr. Bikesh Ogra(2) Non-Executive Director 8,50,000
Mr. Keki Elavia Independent Director 16,50,000
Mr. Pallon Mistry Non-Executive Director 6,60,000
Ms. Rukhshana Mistry Independent Director 15,95,000
Mr. Cherag Balsara(3) Independent Director Nil

Note(s):

(1) Cross amount (before deducting TDS).

(2) Mr. Bikesh Ogra ceased to be a Director of the Company effective from April 07, 2022.

(3) Mr Cherag Balsara was appointed as an Independent Director in the Board meeting held on March 29, 2022. Sitting fees have been be paid to Mr. Balsara for the Board/ Committee meetings held after April 01, 2022.

Further, pursuant to Section 164(2) of the Act, all the Directors have provided declarations in Form DIR-8 that they have not been disqualified to act as a Director.

Key Managerial Personnel

Pursuant to the provisions of Section 2(51) and Section 203 of the Act read with the Rules framed thereunder, the following persons are Key Managerial Personnel of the Company as on March 31, 2022:

1. Mr. Chandra Kishore Thakur, Manager;

2. Mr. Bahadur Dastoor, Chief Financial Officer; and

3. Mr. Jagannadha Rao Ch. V., Company Secretary.

During the year under review, there were no changes in the Key Managerial Personnel of your Company.

The Members of the Company at their 3rd Annual General Meeting held on September 30, 2020, had by way of an Ordinary Resolution approved the appointment and remuneration of the Mr. Chandra Kishore Thakur, Manager of the Company for a term of 3 years (w.e.f. September 01, 2020) at a remuneration of Rs 2.04 Crore payable for the FY. 2021-22.

At the time of his appointment, the Company had adequate profits and the remuneration proposed to be paid to Mr. Chandra Kishore Thakur was well within the limits approved by the members. However, during the financial year 2021-22, the Company faced certain unprecedented adverse circumstances and the Company had registered a loss of approx. Rs 107 Crore calculated in terms of Section 198 of the Act.

As a result of the above, the aggregate remuneration paid to Mr. Chandra Kishore Thakur, Manager of the Company during the financial year 2021-22 exceeded the limits specified under Section 197 of the Act read with Schedule V thereto. An excess payment of Rs 0.69 Crore has been made to Mr. Thakur for the financial Year 2021-22.

Pursuant to Section 197(10) of the Act, the Members of the Company could waive the recovery of excess remuneration by passing a special resolution.

Considering the valuable contribution made by Mr. Chandra Kishore Thakur to the Company, it is appropriate and justifiable to waive off the requirement of recovery of proportionate excess remuneration paid to him due to inadequate profits.

The Board recommends the Special Resolution set out at Item No. 5 of the Notice for approval by the Members.

The information as required to be disclosed as per the provisions of Part II Section II(b)(iv) of Schedule V of the Act is given in the Annexure 2 to the Notice.

Familiarization Programme

In compliance with the requirements of the SEBI Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors. The programme aims

to provide insights into the Company to enable the Independent Directors to understand the working of the Company, nature of the industry in which the Company operates, business model, major litigations, internal control and so on and to familiarize them with their roles, rights and responsibilities as Independent Directors. The details of familiarization programmes imparted to Independent Directors during the Financial Year 2021-22 are available at the Companys website and can be accessed at https://www.sterlingandwilsonre.com/pdf/ familiarization-programme-for-independent-directors.pdf

Performance Evaluation of the Board, its Committees and Individual Directors

Pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board has carried out an annual evaluation of its own performance, its Committee(s), Independent Directors, Non-Executive Directors and the Chairman of the Board.

The NRC has laid down the manner in which the formal annual evaluation of the performance of the Board, its Committee(s) and individual Directors including the Chairman has to be made. The above criterias are based on the Guidance Note on Board Evaluation issued by the SEBI on January 05, 2017.

In order to have a fair and unbiased view of all the Directors, the Company engaged the services of an external agency to facilitate the evaluation process. The Directors were provided with an electronic platform to record their views and a consolidated report was generated by the agency based on the views expressed by each of the Directors. The Board evaluation was conducted through questionnaire designed with qualitative parameters and feedback based on ratings.

Evaluation of the Board was based on criteria such as composition and role of the Board, Board communication and relationships, functioning of Board Committees, review of performance of Directors, succession planning, strategic planning, etc. Evaluation of Committees was based on criteria such as adequate independence of each Committee, frequency of meetings and time allocated for discussions at meetings, functioning of Board Committees and effectiveness of its advice/ recommendation to the Board, etc.

In a separate meeting of Independent Directors of the Company held on March 29, 2022, the performance of NonIndependent Directors, the Board as a whole and the Chairman of the Company was evaluated, considering the views of the Non-Executive Directors.

In the Board meeting held on March 29, 2022, that followed the meeting of the Independent Directors, the performance of the Board and its Committees was discussed. The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual Directors.

The Chairman and other members of the Board discussed upon the performance evaluation of every Director of the Company and concluded that they were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.

Directors Responsibility Statement

Pursuant to the provisions of Section 134 of the Act, the Board of Directors of the Company hereby confirm that:

1. in the preparation of the Annual Financial Statements for the Financial Year ended on March 31, 2022, the applicable Accounting Standards have been followed and no material departures have been made from the same;

2. they have selected such accounting policies and applied them consistently and 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 March 31, 2022 and of the loss of the Company for the year ended on March 31, 2022;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. the annual accounts for the Financial Year ended on March 31, 2022 are prepared on a going concern basis;

5. they have laid down internal financial controls and the same have been followed by the Company and that such internal financial controls are adequate and were operating effectively; and

6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Meetings of the Board of Directors

During the year under review, 9 (Nine) Board meetings were held. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this Annual Report.

All the information that is required to be made available to the Directors in terms of provisions of the Act and the SEBI Listing Regulations, so far as applicable to the Company, is made available to the Board.

Committees of the Board

The Company has constituted the following Committees:

1. Audit Committee;

2. Corporate Social Responsibility Committee;

3. Management Committee;

4. Nomination and Remuneration Committee;

5. Risk Management Committee; and

6. Stakeholders Relationship Committee.

The composition of each of the above Committees, their respective roles and responsibilities are provided in detail in the Corporate Governance Report, which is a part of this Annual Report.

All the recommendations made by the various Committee(s) of the Board of Directors, during the year, were accepted by the Board of your Company.

In addition to the above Committees, a Committee of Independent Directors was constituted on October 19, 2021, to provide reasoned recommendations on the open offer of RNEL. The recommendation on the open offer was given by the Committee of Independent Directors on December 28, 2021 and the same was published in the format prescribed by SEBI on December 29, 2021. As the purpose of the Committee was met, the Board of Directors at its meeting held on February 14, 2022 dissolved the Committee.

Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel

The Board has adopted a Nomination and Remuneration Policy in terms of the provisions of Section 178(3) of the Act and the SEBI Listing Regulations, dealing with appointment and remuneration of Directors, Key Managerial Personnel ("KMP") and Senior Management Personnel ("SMP"). The policy covers criteria for determining qualifications, positive attributes, independence and remuneration of its Directors, KMP and SMP. The said Policy is annexed to this Report as Annexure B and is also available on the website of the Company at https://www.sterlingandwilsonre.com/investor-relations/ corporate-governance

Internal Financial Control Systems and their Adequacy

Internal Financial Controls are an integrated part of the risk management process, addressing financial risks and financial reporting risks. The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

An extensive program of internal audits and management reviews, supplement the process of internal financial control framework. Documented policies, guidelines and procedures are in place for effective management of internal financial controls. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively considering the nature of our industry and are operating as intended.

The Audit Committee comprises of professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors and management in dealing with matters within its terms of reference. The Audit Committee reviews the adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems. The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this Annual Report.

Annual Return

In terms of the provisions of Section 92(3) and Section 134 (3) (a) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company for the Financial Year 2020-21 in the prescribed Form No. MGT-7 is available on the Companys website at https://www.sterlingandwilsonre.com/investor-relations/ financials

Business Responsibility Report

As stipulated under Regulation 34 of the SEBI Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective forms part of this Annual Report.

Corporate Governance

Your Company believes that an effective framework of Corporate Governance is the foundation for sustainable growth and long term shareholders value creation. It is critical to ensure sound Corporate Governance for enhancing and retaining stakeholders trust and your Company seeks to ensure that its performance goals are met accordingly. The efforts of your Company are focused on long term value creation to all its stakeholders including members, customers, partners, employees, lenders and the society at large. The Board reaffirms its continued commitment to good corporate governance practices.

The Report on Corporate Governance, as stipulated under the SEBI Listing Regulations forms part of this Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Act.

During the year under review, the Company complied with the provisions relating to corporate governance as provided under the SEBI Listing Regulations.

A certificate from Manish Ghia & Associates, Secretarial Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the SEBI Listing Regulations, is annexed to this Report.

Credit Rating

The Company has obtained credit rating for the facilities availed/ being availed by the Company. For the details on the same, please refer to the Corporate Governance Report, which is a part of this Annual Report.

Employee Stock Options Plan

The Shareholders of the Company by way of Special Resolution(s) via Postal Ballot on May 30, 2021 had approved the Sterling and Wilson Solar Limited - Employee Stock Option Plan ("SWSL ESOP Plan") and authorized the Board of Directors/ NRC to create, grant, offer, issue and allot at any time, to or for the benefit of certain present and future employees of the Company, including its branches and subsidiary companies, within and outside India, such number of Stock Options exercisable within the overall limit of 16,03,600 Equity Shares of Rs 1/- each.

The NRC, inter alia, administers and monitors the SWSL ESOP Plan. The NRC at its meeting held on August 14, 2021 approved the grant of 13,01,213 out of total 16,03,600 Options to the eligible employees exercisable into not more than 13,01,213 equity shares of face value of Rs 1/- each fully paid-up of the Company. The said options shall vest in 4 (four) equal annual instalments after (one) year from the date of grant. Further, no grantee has exercised any options till date since vesting.

The name of the Company was changed from Sterling and Wilson Solar Limited to Sterling and Wilson Renewable Energy Limited w.e.f. November 16, 2021. In view of the change in the name of the Company, the NRC approved the change in name of the scheme from "Sterling and Wilson Solar Limited - Employee Stock Option Plan" to "Sterling and Wilson Renewable Energy Limited - Employee Stock Option Plan" ("SWREL ESOP Plan") on March 29, 2022.

There has been no material change in the SWREL ESOP Plan during the Financial Year 2021-22 and the scheme is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations").

The disclosures as required under Regulation 14 of SBEB Regulations have been placed on the website of the Company and can be accessed at https://www.sterlingandwilsonre. com/pdf/agm/202 2-2 3/ESOP-Disclosure-FY-2021-2 2-07- Sep-2022.pdf

A certificate from Manish Ghia & Associates, Secretarial Auditors of the Company certifying that the Plan has been implemented in accordance with SBEB Regulations pursuant to the resolution(s) passed by the Members will be available for inspection electronically at the 5th AGM.

Management Discussion and Analysis

As per Regulation 34 of the SEBI Listing Regulations, a separate section on Management Discussion and Analysis Report outlining the business of your Company forms a part of this Annual Report. It, inter alia, provides details about the Indian and Global economy, business performance review of the Companys various businesses and other material developments during the Financial Year 2021-22.

Auditors & Reports Statutory Auditor

The Board at its Meeting held on August 14, 2021, on the recommendation of the Audit Committee and subject to the approval of the Shareholders in the 4th AGM had appointed M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (ICAI Firm Registration No. 104607W/ W100166) as Statutory Auditors of the Company to fill casual vacancy caused by resignation of M/s. B S R & Co. LLP, Chartered Accountants, former Statutory Auditors of the Company from August 15, 2021 until the conclusion of the 4th AGM and had further recommended their appointment for a period of 5 consecutive years from the conclusion of 4th AGM till the conclusion of 9th AGM.

The Shareholders at their 4th AGM held on September 30, 2021, approved the appointment of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants as Statutory Auditors of the Company for a term of 5 (Five) consecutive years from the conclusion of 4th AGM till the conclusion of 9th AGM.

Pursuant to the SSA, RNEL has nominated M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W/ W-100018) to be appointed as a Statutory Auditor of the Company, in addition to the existing Statutory Auditor of the Company.

The Board at their Meeting held on September 07, 2022, on the recommendation of the Audit Committee and subject to the approval of the Members in the ensuing 5th AGM have recommended the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W/ W-100018) to be appointed as a Statutory Auditor for a period of 5 (Five) consecutive years from the conclusion of 5th AGM till the conclusion of 10th AGM, in addition to the existing Statutory Auditors of the Company.

Necessary resolutions and explanation thereto have been provided in the 5th AGM Notice seeking approval of the Members.

The Notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Manish Ghia & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit of the Company for the Financial Year 2021-22. The Secretarial Audit Report for the financial year ended March 31, 2022 is annexed herewith as Annexure Cto this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Branch Auditors

In terms of provisions of Section 143(8) of the Act read with Rule 12 of the Companies (Audit and Auditors) Rules, 2014, the audit of the accounts of the branch offices of the Company located outside India is required to be conducted by the person(s) or firm(s) qualified to act as Branch Auditors in accordance with laws of that country. The Board of Directors seek approval of the Members to authorise the Board of Directors/ Audit Committee to appoint Auditors for the branch offices of the Company and also to fix their remuneration. The Board of Directors recommends to the Members the resolution, as stated in Item No. 4 of the Notice convening the ensuing 5th AGM.

Reporting of Frauds by Auditors

During the year under review, neither the Statutory Auditors nor the Secretarial Auditors have reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed against your Company by its officers and employees, details of which would need to be mentioned in this Report.

Particulars of Contracts or Arrangement with Related Parties

All contracts/ arrangements/ transactions entered into by the Company during the financial year with its related parties were reviewed and approved by the Audit Committee from time to time and the details of the same are disclosed as part of the Financial Statements of the Company for the year under review, as per the applicable provisions of the Act.

All contracts/ arrangements/ transactions with related parties entered into during the financial year were at arms length and in the ordinary course of business and in accordance with the provisions of the Act and the Rules made thereunder, the SEBI Listing Regulations and the Companys Policy on Related Party Transactions. During the year under review, there were no transactions for which consent of the Board of Directors was required to be taken and accordingly, no disclosure is required in respect of the Related Party Transactions in the Form AOC-2 in terms of Section 134 of the Act and Rules framed thereunder.

The Policy on Related Party Transactions as approved by the Board is uploaded on the Companys website at

Vigil Mechanism/ Whistle Blower Policy

Your Company promotes ethical behavior in all its business activities and your Company has adopted a Policy on Vigil Mechanism and Whistle Blower in terms of Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations for receiving and redressing complaints from employees, directors and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud, violation of applicable laws and regulations.

Your Companys Whistle blower Policy encourages its Directors and Employees and also its Stakeholders to bring to your Companys attention, instances of illegal or unethical conduct, actual or suspected incidents of fraud, actions that affect the financial integrity of your Company, or actual or suspected instances of leak of unpublished price sensitive information that could adversely impact your Companys operations, business performance and/or reputation. The Policy requires your Company to investigate such incidents, when reported, in an impartial manner and take appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld. It is your Companys Policy to ensure that no complainant is victimised or harassed for bringing such incidents to the attention of your Company.

The whistleblowers have access to the Chairperson of the Audit Committee, whenever required.

The Policy is available on the Companys website at https://www.sterlingandwilsonre.com/pdf/whistle-blower- policy.pdf. During the year under review, no instance under Whistle Blower Policy was reported.

Code for Prevention of Insider Trading

In compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, ("PIT Regulations") as amended, the Company has formulated and adopted the Internal Code of Conduct to regulate, monitor and report trading by Insiders ("the Insider Trading Code"). The Insider Trading Code prohibits dealing in securities of the Company by the designated persons and their immediate relatives, while in possession of unpublished price sensitive information in relation to the Company and during the period(s) when the trading window is closed.

The Company has also adopted the Code of Practice and Procedures for Fair Disclosure of Unpublished Price Sensitive Information ("the Code of Fair Disclosure") in line with the PIT Regulations and formulated a Policy for determination of legitimate purposes as a part of the Code of Fair Disclosure. The Code of Fair Disclosure also includes policy for procedures of inquiry in case of leak of Unpublished Price Sensitive Information (UPSI) and aims at preventing misuse of UPSI. The Code of Fair Disclosure is available on the Companys website at https://www.sterlingandwilsonre.com/ investor-relations/corporate-governance

Pursuant to the above, the Company has put in place adequate and effective system of internal controls to ensure compliance with the requirements of the PIT Regulations.

Corporate Social Responsibility

A brief outline of the Corporate Social Responsibility ("CSR") policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure D of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this Report. The CSR policy is also available on the Companys website at https://www.sterlingandwilsonre.com/investor-relations/ corporate-governance

During the year under review, out of the total budget of Rs 4.01 Crore for the Financial Year 2021-22, an amount of Rs 0.82 Crore was spent for the projects approved for the Financial Year 2021-22. Out of Rs 0.82 Crore, Rs 0.04 Crore has been spent towards completed projects. The balance amount of Rs 3.19 Crore pertains to ongoing projects which has been transferred to the Unspent CSR account and shall be utilized as prescribed under the applicable laws.

Policy on Code of Business Ethics and Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company places importance in the way its business is conducted and the way each employee performs his/ her duties. The Company encourages transparency in all its operations, responsibility for delivery of results, accountability for the outcomes of our actions, participation in ethical business practices and being responsive to the needs of our people and society. The Company has adopted the Sterling and Wilson Code on Business Ethics Policy ("Code") setting out the guiding fundamentals for the organization to conduct its business. The Code provides for the matters related to governance, compliance, ethics and other matters.

The Company has always believed in providing a safe and harassment free workplace for every individual working in any office through various interventions and practices. The Company endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee (ICC) which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy.

During the year under review, the ICC has not received any complaint.

Human Resources

The Company understands that people are its most valuable asset and recognizes talent as the primary source of competitive edge. Realizing the criticality of talent, the Company continues to focus on capability building through dedicated talent pipelines and competency upgradation through Behavioral, Technical, Functional, and Digital learning and development initiatives.

Despite unprecedented challenges posed by Covid-19 pandemic, the Company leveraged all channels of communication, reviewed and monitored crisis resolution, Health, Safety & Hygiene of employees, connected with employees and their family to align with the new normal.

The employee relations remained cordial throughout the year. The Board places on record its sincere appreciation for the valuable contribution made by the employees across all levels whose enthusiasm, team efforts, devotion and sense of belonging has always made the Company proud.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The Company consciously makes all efforts to conserve energy across its operations. In terms of the provisions of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules 2014, the report on conservation of energy, technology absorption, foreign exchange earnings and outgo forms part of this Report as Annexure E.

Particulars of Employees

Disclosure with respect to remuneration of Directors and employees as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ("said Rules") forms part of this Report as Annexure F.

Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) and 5(3) of the above said Rules shall be made available to the Members by writing to the Company at ir@sterlingwilson.com

Risk Management

Risk Management is an integral and important aspect of Corporate Governance. It ensures adequate controls and monitoring mechanisms for a smooth and efficient running of the business. The Board of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Your Company has developed a risk management system commensurate with the size of the Company and the nature of its business. Your Company has an elaborate Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. Your Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

The Risk Management framework enables the management to understand the risk environment and assess the specific risks and potential exposure to the Company, determine how to deal best with these risks to manage overall potential exposure, monitor and seek assurance of the effectiveness of the management of these risks and intervene for improvement wherever necessary and report to the management on a periodic basis about how risks are being managed, monitored, assured and improvements are made.

Further details on the Risk Management activities including the implementation of risk management framework/ policy, key risks identified and their mitigations are covered in the Management Discussion and Analysis, which forms part of this Annual Report.

Details of utilization of funds raised through Preferential Issue

During the Financial Year 2021-22, the Company has on preferential basis allotted 2,93,33,333 (Two Crore Ninety

Three Lakh Thirty three Thousand Three Hundred and Thirty Three] equity shares of face value of Rs 1/- (Rupee One only] each fully paid up, at a price of Rs 375/- (Rupees Three Hundred and Seventy Five only] (including premium of Rs 374/- each] per Equity Share for a consideration of Rs 1,099,99,99,875/- (Rupees One Thousand Ninety Nine Crore Ninety Nine Lakh Ninety Nine Thousand Eight Hundred and Seventy Five only].

The Company has utilized the proceeds of preferential allotment for the purpose which was stipulated in the Offer Document/ Notice of Extra Ordinary General meeting i.e. to strengthen the balance sheet of the Company.

Secretarial Standards

The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings respectively.

General

The Directors state that no disclosures or reporting is required in respect of the following items, as the same is either not applicable to the Company or relevant transactions/events have not taken place during the year under review:

• No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and the Companys operations in future.

• There is no plan to revise the Financial Statements or Directors Report in respect of any previous financial years.

• The Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

• The Company has not issued shares (including sweat equity shares] to employees under any scheme save and except Employees Stock Options schemes referred to in this report.

• No material changes and commitments have occurred between the end of the financial year of the Company to which the Financial Statements relate and the date of the report affecting the financial position of the Company.

• In the absence of any amounts required to be transferred to the Investor Education and Protection Fund (IEPF] under Section 125(1] and Section 125(2] of the Act, the Company was not required to transfer any such sum to the IEPF.

• Maintenance of cost records as specified by the Central Government under Section 148 (1] of the Act, is not required to be done by the Company. Accordingly, such accounts and records are not prepared nor maintained by the Company.

• There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016.

• There was no instance of onetime settlement with any Bank or Financial Institution.

• There was no deviation or variation in the use of proceeds of preferential allotment from the objects stated in the offer document/ explanatory statement to the notice for the general meeting and the actual utilization of fund.

Acknowledgement

The Directors take this opportunity to thank all the Customers, Partners, Bankers, Vendors, Suppliers, Sub-Contractors and Members and all other stakeholders for their valuable and continuous support.

The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.

The Boards of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companys employees at all levels. Your Directors also appreciate and acknowledge the confidence reposed in them by the Members of the Company.

For & on behalf of the Board of Sterling and Wilson Renewable Energy Limited
Khurshed Daruvala Chairman & Non-Executive Director
Place: Mumbai
Date: September 07, 2022