Sterling & Wilson Renewable Energy Limited (SWRE) has received significant relief in its ongoing tax dispute with the Kenya Revenue Authority (KRA). The company announced that the tax demand for the period from January 1, 2020, to December 31, 2023, has been substantially reduced following a recent order from the Commissioner of Legal and Board Services Department, Tax Dispute Resolution Department.

Substantial Tax Demand Reduction

The latest development shows a marked improvement in SWRE's tax position in Kenya. The KRA has issued a revised order dated December 12, 2025, significantly reducing the company's tax liability.

Key Factors Behind the Reduction

According to the company's regulatory filing, the primary reason for the tax demand reduction is the lower attribution of profits to SWRE's Kenya Branch. This adjustment has led to a corresponding reduction in both corporate tax and withholding tax implications. However, the demand related to VAT and PAYE (Pay As You Earn) remains unchanged from the earlier order dated September 17, 2025.

Company's Current Position

SWRE has stated that it is currently in the process of evaluating the contents of the revised order and deciding on the future course of action. This measured approach suggests the company is carefully assessing its options before determining whether to accept the reduced demand or pursue further appeals.

Regulatory Compliance and Disclosure

The disclosure was made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Chief Financial Officer Ajit Pratap Singh certified the information as true, correct, and complete to the best of his knowledge and belief. The company has referenced its earlier disclosure dated September 18, 2025, maintaining transparency with stakeholders throughout the process.

Financial Impact and Outlook

The substantial reduction of ₹24.60 crore in the tax demand represents a positive development for SWRE's financial position. This relief could potentially improve the company's cash flow and reduce the financial burden related to its Kenya operations. The resolution of this matter will be closely watched by investors and stakeholders as it impacts the company's operational efficiency in the East African market.

Sterling & Wilson Renewable Energy Limited (SWREL) has disclosed that its wholly-owned step-down subsidiary, Sterling and Wilson Solar Solutions, Inc., is facing a significant legal challenge. Array Technologies, Inc., a US-based company, has filed a claim for approximately $10.00 million against the SWREL subsidiary.

Dispute Details

According to the company's filing with the stock exchanges, the dispute centers around allegations of breach of contract and negligence. The claim stems from the supply of allegedly defective products for the construction of a solar farm project in Bickleton, Washington.

Legal Proceedings

The case has been filed with the American Arbitration Association, indicating that the parties will likely attempt to resolve the dispute through arbitration rather than traditional court proceedings.

Financial Implications

While the claim amount is substantial at approximately $10.00 million, Sterling and Wilson Renewable Energy Limited has stated in its disclosure that the expected financial implications due to compensation or penalties are "Not Applicable" at this stage. This suggests that the company may be contesting the claim or believes it has a strong defense against the allegations.

Company's Response

Sterling and Wilson Renewable Energy has made this disclosure in compliance with the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements Regulations, 2015. The company's prompt disclosure aligns with regulatory requirements for transparency in material events that may affect investor decisions.

Market Impact

Investors and market analysts will likely monitor this situation closely, as the outcome of this dispute could have implications for Sterling and Wilson Renewable Energy's financial position and its reputation in the renewable energy sector.

As the arbitration process unfolds, more details may emerge about the nature of the alleged defects and the potential impact on the Bickleton solar farm project. Stakeholders will be keen to see how this legal challenge might affect Sterling and Wilson's operations and future contracts in the US market.