Sterling & Wilson Renewable Energy Limited has entered into a full and final settlement agreement with the Kenya Revenue Authority (KRA), reducing a tax demand of ~₹26.50 crore to ~₹2.66 crore.

The settlement pertains to assessments for calendar years 2020 to 2023. The original demand, issued via an order dated December 12, 2025, included interest and penalties. Under the new agreement, the company will pay only the principal amount, effectively writing off the associated interest and penalties.

Settlement Terms and Financial Impact

The company disclosed this development under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The settlement absolves Sterling & Wilson from paying interest and penalties, provided the principal demand is paid by December 25, 2026, and other applicable legal compliances are met.

The reduction in liability stems from a lower attribution of profits to the company's Kenya branch during the assessment period. The expected financial implication on the listed entity is limited to the principal payment of ~₹2.66 crore.

Key Settlement Details

What the Numbers Show

The settlement represents a significant reduction in contingent liabilities, with the final payable amount constituting approximately 10% of the original demand. This outcome highlights the impact of profit attribution methodologies on cross-border tax exposures, as the primary driver for the reduced liability was the lower attribution of profits to the Kenya branch rather than a dispute over the underlying transactions themselves.

Sterling & Wilson Renewable Energy Limited disclosed that its step-down subsidiary, Sterling and Wilson Engineering (Pty) Ltd (SWEPL), initiated legal proceedings in South Africa to recover ₹25.50 crore from insurance providers.

The litigation stems from the liquidation of a sub-contractor engaged in the Doornhoek and Zondereinde projects. SWEPL invoked advance, performance, and retention bonds issued by Credit Guarantee Insurance Corporation of Africa Limited and Old Mutual Alternative Risk Transfer Insure Limited, but the insurers failed to honor the claims.

Litigation details

The case was filed before the High Court of South Africa, Gauteng Local Division, Johannesburg. The opposing parties include the two insurers and Lead Engineering and Projects (Pty) Ltd, which is currently in liquidation.

Disclosure timeline

The Notice of Motion was originally filed on August 25, 2026. The company stated that it received notification of the court taking cognizance of the motion on Friday evening, October 16, 2026, which accounted for the delay in making this public disclosure under SEBI regulations.