Swan Energy Ltd Directors Report.

1) Your Directors are pleased to present the One Hundred Twelfth (112th) Annual Report together with the Audited Financial Statements (Standalone & Consolidated) for the year ended 31st March, 2020.

2) Financial Results

Standalone

Consolidated
For the year ended on 31.3.2020 For the year ended on 31.3.2019 For the year ended on 31.3.2020 For the year ended on 31.3.2019
(Rs. in lacs) (Rs. in lacs) (Rs. in lacs) (Rs. in lacs)
Profit before interest & depreciation 2056.34 5,933.50 6060.47 9716.84
Less: interest 1132.72 1843.58 5032.97 5400.44
: Depreciation 537.48 534.98 1452.43 1407.85
Profit before Tax 386.14 3554.94 (424.93) 2908.55
Less: Provision for Taxation (27.06) 3320.91 58.38 3506.88
Net Profit for the year 413.20 234.03 (483.31) (598.33)
Attributable to shareholders of the company - - (584.53) (530.93)
Non-Controlling interest - - 101.22 (67.39)
Add: Amount of Profit & Loss 19635.57 19695.53 15883.11 16708.03
Account brought forward
Opening balance of new subsidiaries - - (5.71) -
Amount available for Appropriation 20048.77 19929.56 15292.87 16177.10
Less: Appropriations:
Transfer to General Reserve - - - -
Dividend on Equity shares paid (including tax) * 294.48 293.99 294.47 293.99
Balance of Profit & Loss Account transferred to Balance sheet 19754.29 19635.57 14998.40 15883.11

* Pursuant to applicable provisions of indian Accounting Standards, the dividend amount mentioned in the columns for 2019 and 2020 represents the dividend amount paid (including tax) for the financial years 2018 and 2019 respectively.

On standalone basis, revenue from operations for the financial year 2019-20 was Rs. 30,684.03 lacs as compared to Rs. 85,972.73 lacs in the previous year. Earning before interest, tax, depreciation and amortization (EBiTDA) for the year was Rs. 2056.34 lacs as compared to Rs. 5933.50 lacs in the previous year. Profit after Tax (PAT) for the year was Rs. 413.20 lacs as compared to Rs. 234.03 lacs in the previous year.

On consolidation basis, revenue from operations for the financial year 2019-20 was Rs. 34,081.58 lacs as compared to Rs. 89,161.98 lacs in the previous year. Earning before interest, tax, depreciation and amortization (EBiTDA) for the year was Rs. 6,060.47 lacs as compared to Rs. 9,716.84 lacs in the previous year. Profitafter Tax (PAT) for the year was Rs. (483.31) lacs as compared to Rs. (598.33) lacs in the previous year.

3) Review of Operations A- LNG port project:

a- project development and implementation:

Your company is setting up Indias first Greenfield LNG Port Terminal with the total capacity of 10 MMTPA in Jafrabad Port area in the Amreli district of Gujarat, through its two subsidiary companies, namely, Swan LNG Pvt Ltd (SLPL) and Triumph Offshore Pvt Ltd (TOPL). The progress of the project is summarized under:

i- SLPL:

The first phase of 5 MMTPA capacity with Floating Storage and Regasification Unit ("FSRU") and a storage unit ("FSU"), both being connected by ship-to-ship transfer equipment, is under floating implementation. The Project comprises of development of LNG Port facilities, utilizing a FSRU for LNG receipt, storage, regasification and send-out, with a regasification capacity of 5 MMTPA of LNG.

The Project was awarded on the basis of international competitive bidding under the ‘Swiss Challenge route and is being developed on PPP basis under the Concession Agreement executed between SLPL, Gujarat Maritime Board ("GMB") and Government of Gujarat ("GoG"). Your company is the Lead Promoter of SLPL and hold 63% equity stake in SLPL. As per the Shareholders Agreement (SHA), Government of Gujarat entities holds 26% stake, (15% by GMB and 11% by Gujarat State Petronet Ltd.) and 11% is held by FSRU Venture india One Pvt. Ltd. (FViOPL), the indian subsidiary company of Mitsui OSK Lines (MOL), Japan. MOL, the technical partner for the project.

The Project shall be operated on tolling business model and out of 5 MMTPA capacity, the Company has already executed regasification agreements aggregating to 4.5 MMTPA for a period of 20 years with GSPCL (1.5 MMTPA) and BPCL, iOCL and ONGC (1 MMTPA each). The "Use or Pay" nature of these regasification agreement from highly credit worthy Central & State Govt PSUs and Concession

Agreement with GMB & GoG for 30 years (extendable to further 20 years) makes the future of the project very robust. Moreover, all the necessary approvals and EPC Contracts required for project implementation are in place and the construction is progressing well.

All the shareholders i.e. SEL, GMB, GSPL and FViOPL have contributed their share of equity as per the SHA agreement. The paid-up share capital of SLPL, as on date is Rs. 917,30,15,880/-, comprising Rs. 787,30,15,880/- as equity share capital and Rs. 130,00,00,000/- as preference share capital.

ii- TOPL

The Company was incorporated as a special purpose vehicle (SPV) for the purpose of acquiring and owning a new built Floating storage & Regasification Unit (FSRU) to be deployed for LNG port terminal project, being implemented by SLPL. TOPL has already executed a shipbuilding contract for the construction of one (1) 1,80,000 CBM LNG FSRU with M/s Hyundai Heavy industries Company Limited, South Korea (HHi). The FSRU construction is being done at HHis shipyard in Ulsan, South Korea under the supervision of Mitsui OSK Lines, Japan (MOL). The gas trials for the FSRU were completed in May 2020 and delivery of the FSRU is expected in the third quarter of 2020. During the year, TOPL issued equity shares on a preferential basis to Swan Energy Limited for Rs. 272,84,00,000 and to indian Farmers Fertiliser Cooperative (iFFCO) for Rs. 262,15,00,000/-. Post issue, iFFCO holds 49% and SEL holds 51% of the total equity of TOPL. The paid-up share capital of the TOPL, as on date is Rs. 535,00,00,000/-. iFFCO is one of indias biggest cooperative society which is wholly owned by indian Cooperatives. iFFCO was founded in 1967 and has an amalgamation of over 36,000 Indian Cooperatives with diversified business interests ranging from General insurance to Rural Telecom apart from core business of manufacturing and selling fertilisers. TOPL, as an Owner of the FSRU, has entered into a ‘BAREBOAT CHARTER AGREEMENT with SLPL, to charter the FSRU to SLPL on a long term lease for a period of 20 years.

Your company has issued a Corporate Guarantee (CG) amounting to US Dollars Two hundred and twenty four million and four hundred thousand only (US$ 224,400,000) in favour of M/s Hyundai heavy industries Company Limited, South Korea (HHiCL) on behalf of TOPL, which shall expire on delivery of the FSRU Vessel to the TOPL.

b- Total cost and Financial closure: On account of lockdown consequent to outbreak of Covid-19 pandemic and as per the revised appraisal of the banks, the total cost of the Project under SLPL and TOPL has been estimated to be Rs. 4089.66 crores and Rs. 2449.17 crores respectively.

On the financial closure, the Company has achieved complete debt tie-up under SLPL and TOPL, with State Bank of india (SBi) being lead banker, for total debt of Rs. 3152 Crore and Rs. 1803 Crore respectively. With execution of the facility and other documents and completion of balance formalities, the term loan disbursement is expected on or before Aug 2020.

c- Status of the project:

On Project implementation works, Company has achieved an overall approximately average 50% progress on the construction of Port Project. Delivery of FSRU, as mentioned above, is expected to be received in the third quarter of 2020. The revised scheduled commercial date of operation (SCOD) of the Project being 31st March, 2022, feasibility of giving FSRU on lease for a short period is being worked out.

B- REAL ESTATE Subsidiary Companies:

Your company own few properties through its wholly owned subsidiaries (WOS). The status of the same is summarized as under:

I- Cardinal Energy & Infrastructure pvt Ltd (CEIpL,100% wOS):

i- Sai Tech park, Bangalore - comprising 2.96 lac sq. ft, located at the IT park of Whitefield,

Bangalore. Leased out to Harman Connected Services (Samsung Group) at an annual rent of Rs. 16.94 Crores.

ii- Technova park, hyderabad - comprising 2.92 lac sq. ft, located at Gachibowli area of Hyderabad. Leased out to an indian subsidiary of Google at an annual rent of Rs. 14.95 Crores.

iii- BTM, Bengaluru – A land, admeasuring 0.75 acre, to be developed as a residential property.

iv- yeswantpur area, Bengaluru - A residential project of 22 story tower, having 3 wings is under construction, under Joint Development Agreement (JDA) with the Chigateri Family (land owners).

Construction has been completed up to 17th floor of one and a half wings. Total saleable area will be 3.22 lakh Sq ft and our share will be 1.91 lakh Sq ft, i.e., 60% of total saleable area. Decent return is expected once Project gets completed in September, 2021,

II- pegasus Ventures private Limited (pVpL, 100% wOS);

Land parcels at Bengaluru, Mangalore, Mysore and Chennai, to be developed in due course of time.

C- TEXTILE

During the current financial year, the Process House of the Company at Ahmedabad has posted profit before tax of Rs. 1068.09 lacs (Previous year Rs. 496.11 lacs).

4) Material changes and commitments:

The company has issued a Corporate Guarantee (CG) amounting to US Dollars Two hundred and twenty four million and four hundred thousand only (US$ 224,400,000) in favour of M/s Hyundai heavy industries Company Limited, South Korea (HHiCL) on behalf of its subsidiary TOPL, which shall expire on delivery of the FSRU Vessel to the TOPL.

5) dividend & Reserve

Your Company needs to conserve its resources mainly for its LNG Terminal / FSRU Project. Further, Profit before Tax (PBT) for the year is substantially down as compared to the year 2018-19. Yet as an investor friendly measure, your Directors have recommended payment of dividend @ Rs. 0.10 per Equity Share (10%) on 24,42,57,000 Equity Shares of Rs. 1/- each for the year ended 31st March, 2020, subject to approval of the shareholders at the ensuing 112th AGM.

The company has not transferred any amount to the General Reserve during the year.

6) Fixed deposits

The Company has not accepted any fixed deposits from public during the year under review.

7) Finance

Your Company has been regular in meeting its obligation towards payment of Principal/interest to the Banks and other institutions.

During the year under review, the Company has neither issued shares with differential voting rights nor has granted stock options/sweat equity. The paid-up Equity share capital as on 31st March, 2020 was Rs. 2442.57 lacs.

8) Statutory disclosures:

8.1 Management Discussion and Analysis:

As required under Regulation 34(2)(e) of the SEBi (LODR) Regulations, 2015, a Management Discussion and Analysis is annexed to this Report – Annexure – A.

8.2 Corporate Governance

As required under Regulation 17(7) of the SEBi (LODR) Regulations, 2015, a report on the ‘Corporate

Governance, together with a certificate of statutory the Corporate Governance, is annexed to this report – Annexure B.

Further, in compliance of Regulation 17(5) of the SEBi (LODR) Regulations, 2015, your Company has adopted a ‘Code of Conduct and Ethics for its Directors and Senior Executives.

8.3 Extract of Annual Return:

An extract of the Annual Return in Form MGT – 9 is annexed to this Report - Annexure – C and the same is placed on the website of the Company www.swan.co.in

8.4 Conservation of energy, technology absorption and foreign exchange earnings and outgo: information under Section 134 (3) (m) of the Companies Act, 2013 (‘the Act), read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report - Annexure D.

8.5 Corporate Social Responsibility (CSR) Policy:

The Report on CSR is annexed to this Report - Annexure - E. 8.6 Particulars of Employees:

Pursuant to provisions of Section 136 (1) of the Act and as advised, the statement containing particulars of employees under Section 197 (12) of Act, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be available for inspection at the registered office of the Company and will be made available to the shareholders on request.

8.7 Number of Board Meetings and composition of Audit Committee:

During the year under review, 6 (Six) Board Meetings were convened and held. The required details are given in the Corporate Governance Report forming part of this report.

8.8 Directors Responsibility Statement:

Pursuant to Section 134 (3) (c) of the Act, the Directors confirm

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(b) appropriate accounting policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as on 31st March, 2020 and of the profit of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Annual accounts have been prepared on a going concern basis;

(e) internal financial controls have been laid down and followed by the company and that such controls are adequate and are operating effectively;

(f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

8.9 Statement on declaration given by independent Directors:

The independent Directors of the Company have submitted their Declaration of independence, as required under the provisions of Section 149(7) of the Act, stating that they meet the criteria of independence as provided in section 149(6) of the Act.

8.10 Disclosure regarding Companys policies under the Companies Act, 2013:

i- Remuneration and Nomination Policy

The Board of Directors has framed a policy which lays down criteria for selection/appointment and framework in relation to remuneration of Directors, Key Managerial Personnel (KMPs) and Senior Management of the Company.

ii- Whistle Blower Policy The Company has a Whistle Blower policy to deal with instances of fraud and mismanagement, which is posted on the website of the Company.

iii- Risk Management Policy The Company has a structured Risk Management policy. The Risk Management process is designed to safeguard the organization from various risks through adequate and timely actions. it is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are integrated with the management process such that they receive the necessary consideration during decision making.

iv- Dividend Distribution Policy (DDP) The Report on DDP is annexed to this Report - Annexure – F and is available on website of the company. www.swan.co.in v- Business Responsibility Report (BRR) The Report on BRR is annexed to this Report - Annexure – G and is available on website of the company. www.swan.co.in

8.11 Particulars of loans, Guarantees or investments by Company: Details required to be disclosed pursuant to the provisions of Section 186 of the Act are disclosed in the notes to Financial Statements.

8.12 Related Party Transactions:

All transactions entered with Related Parties for the year under review were in the ordinary course of business and do not have any potential conflict with the interest of the company at large. The details of the transactions with the related parties are disclosed in the notes to Financial Statements.

8.13 Subsidiary Company:

A statement in Form AOC – 1 pursuant to Section 129(3) of the Act, relating to subsidiary companies is attached to the Accounts. The financial statements and related documents of the Subsidiary companies shall be kept open for inspection at the registered office of the Company.

8.14 Significant and material orders passed by the Regulators or courts:

There were no significant and material orders passed by the Regulators or Courts or Tribunals during the year under review which would impact the going concern status of the Company and its future operations.

8.15 Directors:

At the ensuing Annual General Meeting, Mr. Nikhil V. Merchant (DiN:00614790), retires by rotation and being eligible, offers himself for re-appointment. 8.16 Performance evaluation of the Board: Pursuant to the Section 134 of the Act and SEBi (LODR) Regulations 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of all the Committees of the Board. 8.17 Prevention of Sexual Harassment of Women at workplace: The Company has constituted a Committee in compliance of the provisions of "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". However, no case was reported to the Committee during the year under review.

8.18 internal Financial Controls:

Your Company has in place adequate internal financial controls with reference to financial statements.

During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

9 Auditors:

9.1 Statutory Audit

M/s N. N. Jambusaria & Co., Chartered Accountants, Mumbai (Registration No. 104030W) were appointed as Statutory auditors of the Company at the 109th AGM held on September 21, 2017 for a term of five consecutive years. in accordance with the Companies Amendment Act, 2017, enforced on 07th May,

2018 by Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

9.2 Cost Audit

Pursuant to the recommendation of the Audit Committee, the Board has appointed M/s V. H. Shah & Co., Cost Accountants (Registration No. 100257) as the Cost Auditor for the financial year ended 31st March, 2021, at a remuneration of Rs. 75,000/- (Rupees Seventy Five thousand only) plus applicable taxes, who have given consent and eligibility certificate to act as a Cost Auditors of your Company. The remuneration payable is required to be ratified at the ensuing 112th AGM.

9.3 Secretarial Audit

The Board has appointed M/s Jignesh M. Pandya & Co. (CP No. 7318), a practicing Company Secretary, to undertake the Secretarial Audit of the Company for the year ended 31st March, 2020 and their report is annexed to this Report - Annexure – H.

10 Auditors Report:

Report of the auditors, read with the notes to the financial statements, is self-explanatory and need no elaboration.

11 Industrial relations:

The relationship with all the concerned continued to remain harmonious and cordial throughout the year under review.

12 Appreciation:

The Directors place on record their appreciation for support and timely assistance from Financial institutions, Banks, Government Authorities and above all, its Shareholders, who have extended their valuable support to the Company.

The Directors also wish to appreciate sincere and dedicated efforts and services by all the employees/ staff.