S&W Renewable Energy flags non-disclosure by embassy REIT, WeWork India in SEBI complaint

Sterling & Wilson Renewable Energy Ltd (S&W) has filed separate complaints with the Securities and Exchange Board of India (SEBI) against Embassy Office Parks REIT and WeWork India. They accuse both companies of withholding important information from investors.

As reported by Mint, the complaint filed on 22 July is related to a Rs 100 crore payment dispute connected to a 100-MW solar facility in Karnataka. This facility is operated by Embassy Energy Pvt Ltd (EEPL), a subsidiary of Embassy REIT. 

The dispute led to the Economic Offences Wing filing a charge sheet in 2023 against Embassy Group promoters Jitendra and Karan Virwani. Both are also involved with WeWork India. S&W claims that WeWork India did not include this issue in its draft red herring prospectus for its planned IPO earlier this year.

S&W alleges that despite the seriousness of these proceedings, WeWork India did not disclose them in its draft red herring prospectus for its proposed initial public offering earlier this year. 

In a separate filing on 3 April, S&W asked SEBI to evaluate the removal of the Virwanis from Embassy REIT according to the regulator’s ‘fit and proper person’ rules. Jitendra Virwani is the non-executive chair of Embassy Office Parks REIT. Karan Virwani serves on the boards of its sponsor and manager entities.

S&W's promoters include Reliance New Energy Ltd (holding 32.5 per cent), Shapoorji Pallonji And Co Pvt Ltd (6.94 per cent) and Daruvala family (6.3 per cent).

Background of the Dispute

The origins of the case trace back to a contract awarded to S&W by IL&FS Energy Development Co Ltd to build the solar project. Payments were to be routed through IL&FS Solar Power Ltd, with EEPL guaranteeing payment in case of default. However, in 2018, IL&FS suffered a financial crisis and became insolvent, halting payments to S&W amounting to around Rs 100 crore. S&W claims it stopped work until EEPL stepped in with payment assurances, but the dues remain unsettled.

According to documents reviewed by Mint, the EOW’s charge sheet was filed on 7 November 2024 before the Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai, naming EEPL, IL&FS entities, the Virwanis, and others as accused. The court took cognizance on 16 November 2024 and issued summons. On 15 January 2025, the Virwanis secured bail after surrendering their passports and executing bail bonds. The matter remains under trial.

Failing to disclose such important information could significantly affect investment decisions or market value. This may violate SEBI’s disclosure rules and impact REIT unit holders as well as potential IPO investors.