Swelect Energy Systems Ltd Directors Report.

Our Valued Shareholders

Your Directors have pleasure in presenting the Twenty Sixth Annual Report on the business and operations of the Company together with the Audited Financial Statements (Standalone and Consolidated) for the year ended 31st March 2021.

FINANCIAL HIGHLIGHTS

(Rs. in Lakhs)

Standalone Consolidated
S.No. Particulars For the year ended 31/03/2021 For the year ended 31/03/2020 For the year ended 31/03/2021 For the year ended 31/03/2020
1 Revenue from operations 18453.22 14204.04 25253.61 25221.82
2 Finance and Other income 3279.04 3170.98 2985.18 2759.30
3 Total Income 21732.26 17375.02 28238.79 27981.12
4 Total Expenditure (Excluding Finance cost, Depreciation and Amortisation) 15813.20 13679.08 20207.37 22449.57
5 Profit Before Finance cost, Depreciation and Amortisation and Tax 5919.06 3695.94 8031.42 5531.55
6 Finance Costs 1249.12 981.15 1775.87 1725.90
7 Depreciation and Amortisation expense 1547.79 1659.43 2813.57 2985.26
8 Profit Before Exceptional Item and Tax 3122.15 1055.36 3441.98 820.39
9 Add: Exceptional items # (691.00) (2471.99) (691.00) (1522.61)
10 Profit (+) / Loss (-) Before Tax 2431.15 (1416.63) 2750.98 (702.22)
11 Income Tax Expense - 256.53 147.39 314.66
12 Net Profit (+) / Loss(-) after Tax 2431.15 (1673.16) 2603.59 (1016.88)
13 Other Comprehensive income for the year, net of tax (0.40) 45.29 (175.37) 911.63
14 Total comprehensive income / Loss(-) for the year, net of tax 2430.75 (1627.87) 2428.22 (105.25)
15 Interim Dividend paid on Equity Shares - 189.48 - 189.48
16 Dividend Distribution Tax (Interim) - 38.95 - 38.95
17 Final Dividend Proposed / Paid on Equity Shares 454.76 113.69 454.76 113.69
18 Equity Share Capital 1515.88 1515.88 1515.88 1515.88
19 Reserves (Other Equity) (excluding revaluation reserve) 66580.11 64263.04 72372.42 70053.39
20 EPS (Rs.) 16.04 (11.04) 17.18 (6.71)

# The Company had revisited the projections made in the financial year 2019-20 on the recoverability of its investments on an annual basis taking into account the probable beneficial results arising from various initiatives being undertaken with regard to restructure of the customer contracts, submission and pursuing with appropriate authorities (by legal right with TANGEDCO for release of NOC) on relevant claims and recoverability of REC sales. This was resulted in the Company considering an additional diminution in the value of its investments in subsidiary (SWELECT Green Energy Solutions Private Limited) during the previous financial year ended March 31,2021. The same was considered as an exceptional loss in the financial results of the Company.

STATE OF THE COMPANYS AFFAIRS MAJOR LINE OF BUSINESS

I - Manufacturing: Solar PV Modules, Solar Inverters and Mounting structures

II - Solar Power Systems Integration & Turnkey EPC contracts

III - Solar Power Generation (IPP and under RESCO)

IV - Solar Energy Storage Solutions (new vertical)

V - Solar water pumping (new vertical)

VI - Servo stabilizers (new vertical)

SWELECT has continued to stay as one of the most reputed companies in Indian Solar PV Industry with its high quality products, best installations standards, guaranteed uptime and energy generation as well as technical superiority. SWELECT had undertaken many activities to extend its support during the pandemic including donation of Rs.25 lakhs and Rs.1.00 Crore to Chief Minister Covid Relief fund, Tamil Nadu Government, for the financial year 2020-21 and 2021-22 respectively and distribution of groceries to municipality workers of Idappadi, Salem District etc.

GENERAL REVIEW OF THE BUSINESS OF THE COMPANY:

During the year, the Company registered a turnover (Standalone) of Rs.18,453.22 Lakhs against the previous year turnover of Rs.14,204.04 Lakhs registered a growth of 29.92% compared to previous year revenue. The company recorded an EBIDTA of Rs.5,919.06 Lakhs compared to the corresponding figure last year of Rs. 3,695.93 Lakhs and recorded a Profit of Rs.2,431.15 Lakhs against the previous year Loss of Rs.1,673.16 Lakhs (the Company had to account for "Exceptional items" amounting to Rs.2,471.99 Lakhs resulting in a Loss in the previous year and the reason for loss was explained in previous year report).

DIVIDEND

The Board of Directors have recommended a final Dividend of Rs.3/- (Rupees Three Only) per equity share [@ 30% on the equity share capital of Rs.15,15,87,600/-(Rupees Fifteen Crore Fifteen Lakhs Eighty Seven Thousand Six Hundred Only), for the year ended 31st March 2021, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. The outflow for the Company would be Rs. 454.76 Lakhs towards final dividend.

As per the Finance Act, 2020, the dividend declared on or after 1st April 2020 is taxable in the hands of shareholders, if the dividend value exceeds Rs.5,000/- in a financial year and accordingly the payment of dividend is subject to the deduction of income tax as applicable.

SHARE CAPITAL

During the year under review, there was no change in the Companys issued, subscribed and paid-up equity share capital. On March 31, 2021, it stood at Rs.15,15,87,600/- divided into 1,51,58,760 equity shares of Rs.10/- each.

TRANSFER TO GENERAL RESERVE.

During the year, your Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

The Company has Seven Wholly Owned subsidiaries, One Subsidiary and Two step down subsidiaries as on the date of this report. The Board of Directors at their meeting held on 14th June 2021, approved the consolidated accounts of subsidiaries. Pursuant to the provisions of section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, (as amended) a statement containing salient features of the financial statements of the Companys subsidiaries, in Form AOC-1 is attached to the financial statements of the Company. The Company does not have Associates or Joint Ventures as on the date of this report.

SWELECT SUN ENERGY PRIVATE LIMITED:

The Board of Directors at their meeting held on 23.12.2020 had proposed to incorporate a Wholly Owned Subsidiary namely SWELECT Sun Energy Private Limited (SSEPL) to execute the solar power project under Captive use scheme and the said Company was incorporated on 29th December 2020 as per the Certificate of Incorporation issued by the Ministry of Corporate Affairs, Government of India. After incorporation, the Power Purchasing Companies namely HATSUN Agro Product Limited and SICGILSOL Gases Private Limited had executed the Power Purchase Agreement (PPA) with SSEPL and made an investment of 19.50% and 6.51% respectively of the total Equity Share capital of the SSEPL to fulfil the Electricity Rules of the Government of India. The shares were allotted to these parties on 23.03.2021 for 26.01% as stated earlier which changed the Status of the SWELECT Sun Energy Private Limited from Wholly Owned Subsidiary to Subsidiary Company and SWELECT Energy Systems Limited is holding 73.99% of Equity Shares in SSEPL.

SWELECT HHV SOLAR PHOTOVOLTAICS PRIVATE LIMITED:

The Board of Directors at their meeting held on 26.4.2021 had proposed to incorporate a Wholly Owned Subsidiary namely SWELECT HHV Solar Photovoltaics Private Limited to engage in Manufacture and Maintain Solar Photovoltaic Cells and Modules suitable for Renewable Energy power generation using Indigenous and Imported Technology under the Make in India and Production Linked Incentive scheme. Subsequently, the said Company was incorporated on 3rd May 2021 as per the Certificate of Incorporation issued by the Ministry of Corporate Affairs, Government of India.

SWELECT ENERGY SYSTEMS LLC:

The step down subsidiary namely SWELECT Energy Systems LLC incorporated at United States of America was struck off with effect from 31.12.2019.

DEPOSITS

The Company did not receive deposits from the public during the year and no amount of principal or interest was outstanding as of the Balance Sheet date.

CHANGE IN DIRECTORS OR KEY MANAGERIAL PERSONNEL

Directors

• Mr. K. V. Nachiappan (DIN:00017182) and Mrs. V. C. Mirunalini (DIN:07860175) Whole Time Directors, are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

• At the Annual General Meeting (AGM) held on 28th July, 2016, the shareholders of the Company had appointed Mr. G. S. Samuel (DIN: 05284689) as an Independent Director of the Company for a period of 5 years with effect from the date of AGM. The term of office of Mr. G. S. Samuel will expire on 27th July, 2021. After taking into consideration and recommendation of Nomination and Remuneration Committee, the Board at its meeting held on 14th June 2021, recommended for re-appointment of Mr. G. S. Samuel as an Independent Director of the Company for a further period of 4 years with effect from 28th July, 2021 as per the terms and conditions as set out in the Notice of AGM.

• At the Annual General Meeting (AGM) held on 11th August, 2017, the shareholders of the Company had appointed Mr. S. Annadurai (DIN: 00137561) as an Independent Director of the Company for a period of 5 years with effect from 28th June 2017. The term of office of Mr. S. Annadurai will expire on 27th June, 2022. After taking into consideration and recommendation of Nomination and Remuneration Committee, the Board at its meeting held on 14th June, 2021, recommended for re-appointment of Mr. S. Annadurai as an Independent Director of the Company for a further period of 5 years with effect from 28th June, 2022 as per the terms and conditions as set out in the Notice of AGM.

The Profiles of Mr. k. V. Nachiappan, Mrs. V. C. Mirunalini, Mr. G. S. Samuel and Mr. S. Annadurai are given separately in the notice of AGM.

The Board recommends necessary resolutions for the approval of Shareholders at the ensuing Annual General Meeting for the above appointments.

Key Managerial Personnel

Ms. Nikhila Ramesh, was appointed as Head- Finance & Accounts of the Company by the Board of Directors at their Meeting held on 20.08.2020 based on the recommendation of Nomination and Remuneration Committee (NRC) and Audit Committee.

After evaluating the performance and based on the recommendation of NRC and approval of Audit Committee, the Board at its meeting held on 12th November 2020 re-designated Ms. Nikhila Ramesh, as Chief Financial Officer of the Company with effect from 12.11.2020.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

There was no appointment of Independent Director during the financial year 2020-2021.

NUMBER OF BOARD MEETINGS

During the Financial Year 2020-21, seven meetings of the Board of Directors of the Company were held. The details are provided in the Corporate Governance Report that forms part of this Annual Report.

DISCLOSURE ON COMPOSITION OF AUDIT COMMITTEE AND ITS RECOMMENDATION

The details of Composition of Audit Committee along with its terms of reference are given in the Corporate Governance Report. All recommendations of the Audit Committee were accepted by the Board.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has adopted the Vigil mechanism and the details are given in the Corporate Governance Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and complied with the provisions relating to the constitution of an Internal Complaints Committee (ICC) as required under the said Act to redress the complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The members of the Committee are:

Corporate Office (Chennai):

1. Mrs. C. Shenbagapushpam,

2. Mrs. Rebecca Teresa Briggs,

3. Mr. M. Madhava and

4. Mr. R. Kalidasan

Plant (Idappadi):

1. Ms. Malathi,

2. Ms. A. Kokilavani,

3. Mr. S. Namasivayam and

4. Mr. K. Karthikeyan

Solar Photovoltaic Plant (Bangalore)

1.Ms. Lavanya,

2. Ms. Manjula T,

3. Ms.Roopa Shree

4. Ms. Rathnamma and

5. Ms. S.Preema

The following is a summary of sexual harassment complaints received and disposed off during the year 2020-2021

No. of complaints filed during the financial year : Nil
No. of complaints disposed off during the year : Nil
No. of complaints pending as on end of the financial year : Nil

CODE OF CONDUCT AND PREVENTION OF INSIDER TRADING

The Company has adopted the Code of Conduct as per the Guidelines issued by the Securities and Exchange Board of India for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company. The Code prohibits trading in securities of the Company by the Directors and the designated persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

All Directors, Key Management Personnel and Senior Management Personnel of the Company have confirmed compliance with the code of conduct applicable to them and a declaration to this effect made by the Managing Director is attached to this report. Code of conduct of Board of Directors and Senior Management Personnel are available in Companys website www.swelectes.com under investors page.

Mr. karthik Subramaniam who is falling under the category of immediate relative of "Promoters Group" has acquired 100 equity shares of the Company during the Trading Window Closure period and it was informed by him that the acquisition of shares was made inadvertently. Therefore, the Board directed him to remit the gain of Rs.1,490/- made towards such acquisition to SEBI Investor Protection and Education Fund(IPEF) and such amount was remitted to IPEF by the above shareholder.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 (1) of the Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Chennai (Firm Registration No.117366W/W - 100018) were appointed as the Statutory Auditors of the Company by the Shareholders at the 22nd Annual General Meeting (AGM) held on 11.8.2017 for a term of five consecutive years from the conclusion of the 22nd AGM up to 27th AGM of the Company.

STATUTORY AUDITORS REPORT

There were no qualifications or observations or remarks made by the Statutory Auditors in their report for the financial year 20202021. The same is being attached to the financial statements of the Company.

SECRETARIAL AUDIT REPORT

Secretarial Audit was conducted during the year by the Secretarial Auditor Mr. R. Kannan, Partner of KRA & Associates, Practicing Company Secretaries, in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditors Report is also attached as part of this Report as Annexure -1. There were no qualifications made by the Secretarial Auditor in his Report.

COST AUDIT

Pursuant to the provisions of the Companies (Cost Records and Audit) Rules, 2014, the Company has completed the filing of Cost Audit Report, with the Ministry of Corporate Affairs, for the financial year 2019-2020 in Xtensible Business Reporting Language (XBRL) format. M/s. Ravichandran Bhagyalakshmi & Associates, Cost Auditors of the Company will submit their report for the financial year 2020-2021 within the time limit applicable under the Companies (Cost Records and Audit) Rules, 2014.

The Board, on the recommendation of the Audit Committee, has appointed M/s. Ravichandran Bhagyalakshmi & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year 2021 - 2022. The Board also considered and approved the remuneration of Rs.1,32,000/- as recommended by the Audit Committee. In terms of the provisions of section 148 (3) of the Companies Act, 2013 read with Rule 14 (a) (ii) of the Companies (Audit and Auditors) Rules 2014, the remuneration of the Cost Auditor has to be ratified by the members of the Company. Accordingly, the Board recommends necessary resolution at the ensuing AGM for ratification.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis for the year, as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Conservation of energy, technology absorption and foreign exchange earnings and outgo forms part of the Boards report and is given in Annexure - 2

ANNUAL RETURN

The Annual Return of the Company is available on the Companys website www.swelectes.com under web link https://swelectes.com/annual-return/

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The details of development and implementation of risk management system are provided in the Corporate Governance Report which forms a part of this report.

CORPORATE SOCIAL RESPONSIBILITY

The Company undertakes "Corporate Social Responsibility" (CSR) initiatives directly / through agency to the public in improving the quality of life. During the year 2020-21, the Company has undertaken many initiatives through a policy framework for expanding some of the present initiatives and undertaking newer CSR initiatives in the year to come.

The Annual Report on CSR Activities in the prescribed format is given in the Annexure - 3.

Details of composition of the CSR Committee, number of meetings held during the year and other particulars are set out in the Corporate Governance Report which forms a part of this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered into by the Company during the financial year with Related Parties were in the ordinary course of business and on an arms length basis. During the year, the Company has not entered into any contracts/ arrangements / transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Accordingly, the disclosure required u/s 134 (3) (h) of the Companies Act, 2013 in form AOC-2 is not applicable to the Company. The Policy on materiality of Related Party Transactions and dealing with related party transaction as approved by the Board may be accessed on the Companys website www.swelectes.com under investors page. Members may refer to the notes to the financial statements which set out related party disclosures for the current and previous financial year.

SIGNIFICANT AND MATERIAL ORDERS

During the year there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and companys operations in future.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which forms a part of this report.

ANNUAL BOARD EVALUATION AND FAMILIARIZING PROGRAMME

The Board carried out an annual evaluation of its own performance, the directors and committees of the Board based on the guideline formulated by the Nomination & Remuneration Committee. Board composition, quality and timely flow of information, frequency of meetings and level of participation in discussions were some of the parameters considered during the evaluation process.

Further, during the year the Independent Directors of the Company met on February 12, 2021 to review the performance of nonindependent directors, Chairman of the Board and the Board of Directors as a whole. The Independent Directors had conveyed their satisfactory opinion with regard to review and access of certain details as stated above.

The Independent Directors of the Company are being familiarized by the management and outside professional experts at frequent intervals with regard to nature of the business, business model, their roles, rights and responsibilities and other relevant information to the Company. The details of the programs attended by the Independent Directors are available on the website of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company between the end of the financial year 31st March 2021 and the date of the report 14th June 2021 except the impact of COVID-19 which hit the overall economy of the world as the same is explained in the Report of Management and Discussion analysis and Corporate Governance.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has followed the Accounting Standards specified under Rule 3 and 4 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) to the extent applicable, in the preparation of the financial statements.

CORPORATE GOVERNANCE CERTIFICATE

A report on Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached to this Report.

A Compliance Certificate from Mr. R. Kannan, Partner of KRA & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance as stipulated under the aforesaid regulation is also annexed to this report.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(5) of the Companies Act, 2013, your directors confirm that:

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

(b) the Directors had 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 at the end of the financial year and of the profit of the company for that year;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

The Statutory Auditors have stated that, no fraud by the Company or no material fraud on the Company by its officers and employees had been noticed or reported during the year.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section149 (7) of the Companies Act, 2013, the Independent Directors of the Company have given a declaration to the Company that they qualify the criteria of independence as required under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.

POLICY ON NOMINATION AND REMUNERATION AND PERFORMANCE EVALUATION OF DIRECTORS, KMP AND SENIOR MANAGEMENT PERSONNEL

The Board, based on the recommendation of the Nomination and Remuneration Committee, has formulated a policy on remuneration of Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy covers the appointment, including criteria for determining qualification, positive attributes, independence and remuneration of its Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Policy is given in Annexure -4.

PARTICULARS OF EMPLOYEES

Pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, the required details are given in Annexure - 5.

SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standards in pursuant to the directions of Ministry of Corporate Affairs, issued by the Institute of Company Secretaries of India during the year.

ACKNOWLEDGEMENT

Your Board places on record its appreciation of the support and co-operation received from the Government of India, State Governments, Banks, Suppliers, Employees, Customers and Vendors, whom your company looks upon as its valued partners in the path of progress. Your Directors also wish to place on record their appreciation for the valuable services rendered by Depositories, Stock Exchanges and the Registrar and Transfer Agent. Your Directors thank all valuable Investors who have been with the Company all these years and are also very much pleased to welcome all the new Investors and thank them for their continued patronage and confidence reposed in the Management.

For and on behalf of the Board of Directors
Sd/- Sd/-
R. CHELLAPPAN A.BALAN
Managing Director Joint Managing Director
Place: Coimbatore Place: Salem
Date: 14th June 2021 Date: 14th June 2021