Swelect Energy Systems Ltd

Board's Report

Our Valued Shareholders,

Your Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of the Company together with the Audited Financial Statements (Standalone and Consolidated) for the year ended March 31, 2024.

FINANCIAL HIGHLIGHTS

# The details of Gain on Sale of investment/fair value of investment in subsidiary has been given in the Note no.45 A of the financial statements (consolidated)

## Net Profit after tax for previous financial year is post adjustment of loss on discontinued operations (due to technology obsolescence) as per Note No.40 of the financial statements (standalone).

STATE OF THE COMPANY'S AFFAIRS Major Line of Business

I Manufacturing: Solar PV Modules, Solar Inverters,

String Combiners and Mounting structures

II Solar Power Systems Integration - Roof top & Ground Mounted Turnkey EPC contracts

III Green Energy Generation - Independent Power Producer (IPP), Renewable Energy Service Company (RESCO)

IV Solar water pumping

V Servo stabilizers

VI Solar Energy Storage Solutions (new vertical)

SWELECT continues to be a world class Solar Photovoltaic (PV) Solution provider with the reputation of having given the highest quality of products and services.

GENERAL REVIEW OF THE FINANCIAL PERFORMANCE OF THE COMPANY

During the year, the Company registered a turnover (Standalone) of '24,636.60 Lakhs against the previous year turnover of '22,891.46 Lakhs. The Company recorded a Net Profit of '5,130.05 Lakhs against the previous year Net Profit of '934.42 Lakhs.

DIVIDEND

The Board of Directors have recommended a final Dividend of '3/- (Rupees Three Only) @ 30% and a Special Dividend of '1/- (Rupee One only) @ 10% aggregating of '4/- (Rupees four only) per equity share @ 40% on the Equity Share Capital of '15,15,87,600/- (Rupees Fifteen Crore Fifteen Lakhs Eighty Seven Thousand Six Hundred Only), for the year ended March 31, 2024, subject to approval of the shareholders at the ensuing Annual General Meeting of the Company. The outflow for the Company would be '606.35 Lakhs towards final and special dividend.

As per the Finance Act, the dividend amount is taxable in the hands of shareholders, if it exceeds '5,000/- (Rupees Five Thousand Only) 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 issued, subscribed and paid-up equity share capital of the Company. On March 31, 2024, it stood at '15,15,87,600/- divided into 1,51,58,760 Equity Shares of '10/- each.

TRANSFER TO GENERAL RESERVE

During the year, the Company has not proposed to transfer any amount to general reserve.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

The Company has Seven Wholly Owned Subsidiaries (Out of which Two are incorporated outside India), Five subsidiaries and Three step down subsidiaries as on the date of this report. The Board of Directors at their meeting held on May 24, 2024, have reviewed

the financial statements of the subsidiary companies. In pursuant to the provisions of section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, (as amended) a statement containing salient features of the financial statements of the Company's subsidiaries, in Form AOC-1 is being attached to the financial statements of the Company. The Company does not have any Associates or Joint Ventures as on the date of this report.

SALE OF EQUITY INVESTMENT MADE IN WHOLLY OWNED SUBSIDIARY COMPANY (AMEX ALLOYS PRIVATE LIMITED)

In order to focus and strengthen its core business activities of the Company i.e. Solar Photovoltaic Modules Manufacturing, distribution of Solar Panels and Balance of Systems in India and Abroad, Engineering, Procurement and Construction (EPC) of Solar Projects and Solar Power Generation (IPP), the Board at its meeting held on October 11, 2023 had decided to sell the entire Equity Investment held in one of its Wholly Owned Subsidiary namely AMEX Alloys Private Limited (AAPL) and obtained the shareholders' approval through Postal Ballot (remote e-voting only) on November 18, 2023.

Accordingly, the Company sold its investment (Tranche 1 - 81.54%) held in equity shares of AAPL to DMW CNC Solutions India Private Limited (Buyer) on March 18, 2024 vide a Share Purchase Agreement (SPA) and subsequent amendment Agreements entered with the Buyer. Consequent to this, AMEX Alloys Private Limited ceased to be a wholly owned subsidiary w.e.f. March 18, 2024. The remaining part of sale consideration (Tranche 2 - 18.46%) shall be made by the Buyer on or before June 30, 2024 as per the terms and conditions of the SPA. As per the Accounting Standard "IND AS", the financial statement of AAPL as on March 18, 2024 (i.e. date of sale of 81.54% shares) has to be consolidated in the financial statements of the Company for the financial year ended March 31, 2024. The remaining financial details (from March 19, 2024 to March 31, 2024) will be consolidated in the financial statements of DMW CNC Solutions India Pvt Ltd to be prepared for the year ended March 31, 2024. Accordingly, the Company prepared its consolidated financial statements for the year ended March 31,2024 including the financial details of AAPL as on March 18, 2024.

1. SWELECT CLEAN ENERGY PRIVATE LIMITED (SCEPL)

SCEPL was incorporated on June 15, 2023 for the purpose of executing Solar Power Projects under Group Captive Model. Under this entity a 12 MW (6 MW + 6 MW) Solar Power Project was commissioned on Decembr 29, 2023 at Vadakuveli Village, Thuraiyur Taluk and Reddimangudi Village, Lalgudi Taluk, Tiruchirappalli District, Tamil Nadu to enable Intra State Open Access option of supplying contracted quantity of electricity to third party consumers.

2. ESG SOLAR ENERGY PRIVATE LIMITED

The Company was incorporated on January 4, 2024 with an object of manufacturing, generating, supplying, distributing, transmitting and dealing in electricity and all forms of energy including Solar and Wind Energy and power sales from the Green energy sources. The Company is exploring the various avenues to commence its business activity.

3. SWELECT SUSTAINABLE ENERGY PRIVATE LIMITED

The Company was incorporated on February 5, 2024 for the purpose of executing Solar Power Projects under Group Captive Model. Under this entity a 7 MW Solar Power Project has been finalised and the construction of solar power plant is under process.

AMALGAMATION OF SUBSIDIARY COMPANIES

On August 12, 2022, the Board of Directors of the Company, had approved the scheme of Amalgamation of SWELECT Solar Energy Private Limited (Wholly Owned Subsidiary) - Transferor Company - 1 and K J Solar Systems Private Limited (Stepdown Wholly Owned Subsidiary) Transferor Company - 2 with the Company.

Subsequently, the combined petition for the above Amalgamation along with the scheme was filed with the National Company Law Tribunal (NCLT), Chennai Bench.

In the process of hearings, on August 31, 2023 the NCLT had passed an order to dispense for convening of the meetings of shareholders and creditors of Transferor Company 1 and 2 and shareholders meeting for Transferee Company. However, NCLT had directed to convene the meeting of unsecured creditors of Transferee Company to approve the proposed Amalgamation. Accordingly, the meeting of unsecured creditors was held on October 26, 2023 at the registered office of the Transferee Company in the presence of Chairperson and Scrutinizer appointed by the NCLT and the unsecured creditors present at the meeting have approved the resolution for the scheme of Amalgamation.

Subsequently, No objection letters from Regional Director and official Liquidator have been filed with NCLT for its consideration and approval.

The final order for approving the scheme of Amalgamation is awaiting from the NCLT

DEPOSITS

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

DIRECTORS OR KEY MANAGERIAL PERSONNEL

• Mr. K.V. Nachiappan (DIN: 00017182) Whole Time Director and Mrs. Jayashree Nachiappan (DIN: 03173327) Non-Executive Director of the Company are liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible offers themselves for re-appointment. The Nomination and Remuneration Committee and Board of Directors have recommended the same.

• Dr. S. Iniyan (DIN:08355447), was reappointed as an Independent Director of the Company for a second term of five consecutive years with effect from April 1, 2024 by the Shareholders of the Company at the AGM held on July 26, 2023.

• At the AGM held on July 26, 2023 the Shareholders had passed a special resolution for continuing the directorship of Mr. S. Annadurai, Independent Director of the Company after attaining the age of 75 years.

• At the Board Meeting held on May 24, 2024, Mr. R. Chellappan and Mr. V. C. Raghunath, were reappointed as the Managing Director and Whole Time Director of the Company for a period of five years with effect from May 1, 2025 and July 28, 2024 respectively. Such appointments are subject to approval of the shareholders at the ensuing Annual General Meeting.

• Mr. S. Krishnan, was reappointed as an Independent Director of the Company for a period of five years (second term) w.e.f. April 1,2019. His term of office was completed on March 31, 2024.

The Profiles of Mr. R. Chellappan, Mr. V.C. Raghunath, Mr. K.V. Nachiappan and Mrs. Jayashree Nachiappan are given separately in the notice of AGM.

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

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

The Board at its meeting held on May 29, 2023 had reappointed Dr. S. Iniyan as an Independent Director of the Company for a second term of five years with effect from April 1, 2024 after taking into consideration of integrity, expertise and experience which are needed for sustainable growth of the Company. The above appointment was approved by the Shareholders of the Company at the Annual General Meeting held on July 26, 2023.

Pursuant to the provisions of section 150 of the Companies Act, 2013 and the Companies (Appointment and Qualifications of Directors) Rules, 2014 (as amended from time to time), the above Director had registered his details in the portal of Indian Institute of Corporate Affairs and he had completed an online test conducted by the above said institute.

INTEGRITY, EXPERTISE, EXPERIENCE AND PROFICIENCY

Qualification: Dr. S. Iniyan, had completed B.E., M.E., Ph.D. from Anna University, He was a former Professor & Dean, College of Engineering Guindy, Anna University, Chennai. He had teaching and research experience over 35 years. During his service he was Director of Institute for Energy Studies and also Director of Centre for University Industry Collaboration. He had completed the International collaborative projects with Croatia, Italy, Australia, Israel and UK. He had received 12 research projects from government funding agencies. He had guided 20 PhD research scholars.

He had published over 300 research papers in the reputed referred International Journals and the International and National conference proceedings. He had received active researcher award 2015 from Anna University. He was the Convener for Kudankulam Nuclear Power Project assigned by the Tamil Nadu government. He was a member of various Technical Societies, Board of Studies, Academic Council, Governing Council etc.

Dr. S. Iniyan possess appropriate Skills, Experience and knowledge in Teaching and research in the electrical and electronics engineering field will benefit the growth of the Company.

NUMBER OF BOARD MEETINGS

There were ten meetings of the Board of Directors held during the Financial Year 2023-2024. The details are provided in the Corporate Governance Report which 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 put in place an Anti-Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has 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 for sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The members of the Committee are:

Corporate Office (Chennai):

Presiding officer: Ms. Aarthi Balan

Members: Ms. C. Preethy, Ms. Mary Preetha, Mr. R. Kalidasan Plant (Idappadi):

Presiding officer: Ms. Preetha Balan

Members: Ms. P. Malathi, Ms. A. Kokilavani, Mr. P. Kathirvel

The following is a summary of sexual harassment complaints received and disposed off during the year 2023-2024.

No. of complaints filed during the financial year: Nil

No. of complaints disposed off during the financial 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 for its Directors and Employees while performing their duties and responsibilities.

Similarly, Code of Conduct to Regulate, Monitor and Report Trading by Designated Persons has also been adopted by the Company as per the Guidelines issued by the Securities and Exchange Board of India for Prohibition of Insider Trading. The Code prohibits trading in securities of the Company by 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.

As per the requirement of SEBI, the Company is maintaining a software (Structural Digital Database) wherein the details of Directors, Promoters, Employees and their immediate relatives including the members of the Audit team (statutory, internal, cost and secretarial auditors) have been entered therein and the Company is monitoring the same on periodical basis.

The intimation of trading window closure and handling of unpublished price sensitive information is being communicated to the above persons through the above-mentioned software. The PAN of these persons will be frozen during the trading window closure period by the Stock Exchanges based on the details given by the Company to prevent the insider trading.

All the Directors, Key Managerial Personnel and Senior Management Personnel are aware of the above codes and an annual confirmation on the compliances of the said codes have been received by the Company from the concerned. The declaration to this effect made by the Managing Director is being attached to this report. Code of conduct of Board of Directors and Senior Management Personnel and Code for Insider Trading are made available in the Company's website www.swelectes.com under investors' page.

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No.117366W/W-100018) were reappointed as Statutory Auditors of the company at the 27^th AGM held on July 28, 2022, for a period of five years commencing from the conclusion of 27^th AGM till the conclusion of 32^nd AGM.

STATUTORY AUDITORS REPORT

The Statutory Auditors in their report for the financial year 2023-2024, have given an unmodified opinion on the financial statements of the Company and the same is being attached to this report.

SECRETARIAL AUDIT REPORT

Secretarial Audit was conducted by KRA & Associates, Practicing Company Secretaries, Chennai in pursuant to the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditors' Report is also being attached as a part of this Report as Annexure -1. There were no qualifications made by the Secretarial Auditor in their Report.

COST AUDIT

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Company is required to maintain cost accounting records in respect of the products of the Company and accordingly the Cost Accounting Records are maintained by the Company and Audited as required. Further, the Company has completed the filing of Cost Audit Report, with the Ministry of Corporate Affairs, for the financial year 2022-2023 in eXtensible Business Reporting Language (XBRL) format.

M/s. Ravichandran Bhagyalakshmi & Associates, Cost Auditors of the Company will submit their report for the financial year 2023-2024 within the time limit stipulated in 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 2024-2025. The Board also considered and approved the remuneration of '1,50,000/- 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 shall 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 Report 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 Board's report and is given in Annexure - 2.

ANNUAL RETURN

The Annual Return of the Company for the financial year 2023-2024 is due to be filed with the Ministry of Corporate Affairs within 60 days from the date of AGM scheduled to be held on July 29, 2024 and the same will be made available on the website of the Company www.swelectes.com under web link https://swelectes.com/annual-return/, after the said filing is completed.

The Annual Return of the Company for the previous year 2022-2023 is available on the Company's 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 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 for improving the quality of life which includes education, environment, rural development, healthcare and women empowerment etc. During the year 2023-2024, the Company has contributed funds to the society for their betterment and the Company will undertake newer CSR initiatives in the years 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 given 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 by the Company during the financial year with Related Parties were in the ordinary course of business and at arm's length basis.

The disclosure required u/s 134 (3) (h) of the Companies Act, 2013 in form AOC-2 is being annexed to this Report.

The Policy on materiality of Related Party Transactions and on dealing with related party transactions approved by the Board can be accessed on the Company's website www.swelectes.com under investors' page. Members may refer to the notes to the financial statements which sets out related party disclosures for the current and previous financial years.

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 company's 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, Report which forms a part of this report.

ANNUAL BOARD EVALUATION AND FAMILIARIZING PROGRAMME

The Nomination and Remuneration Committee had evaluated the performance of all Directors of the Company at its meeting held on February 8, 2024 and satisfied with the same. The Board at its meeting held on February 9, 2024 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. The Board conveyed their satisfactory opinion on the above evaluation.

Further, during the year the Independent Directors of the Company met on February 8, 2024 to review the performance of nonindependent directors, Chairperson 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, updation on the statutory requirements applicable to the Company 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 March 31,2024 and the date of this report May 24, 2024.

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 being 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 SECTION 143(12) OF THE COMPANIES ACT 2013, 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 Section 149 (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, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT PERSONNEL

The Board, based on the recommendation of the Nomination and Remuneration Committee, had 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. The same is also available on the Company's website under a web link : https://swelectes.com/wp-content/ uploads/2018/01/Nomination-remuneration-policy.pdf

PARTICULARS OF EMPLOYEES

Pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the required details are given in Annexure - 5.

SECRETARIAL STANDARDS

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

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, professionals 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.