Business
Sebi fines Suzlon Energy Rs 29 crore for misleading financial statements; promoters, executives also penalised
In a 96-page order issued on May 29, Sebi held that Suzlon and several of its former executives violated provisions of the Sebi Act, PFUTP Regulations, listing regulations and disclosure norms.
The regulator also imposed penalties on key individuals associated with the company. Former executive Vinod R. Tanti was fined Rs 5.75 crore, while Girish R Tanti was penalised Rs 5.45 crore. Former Group CFO Kirti J Vagadia was fined Rs 1.5 crore and former CFO Amit Agarwal was penalised Rs 30 lakh. The order sets aside an earlier adjudication order passed in June 2025 but concludes that multiple violations stand established against the company and the executives.
The case originated from an anonymous complaint received by Sebi in December 2019 alleging irregularities in Suzlon’s dealings with subsidiaries and associates. Following a forensic audit and investigation covering FY15 to FY20 and the first three quarters of FY21, SEBI examined transactions involving subsidiary companies, impairment reversals, contingent liabilities and disclosures in the company’s financial statements.
A key finding relates to Suzlon’s transfer of its operations and maintenance services business to subsidiary Suzlon Global Services Ltd in March 2014. Sebi found that the business, valued at around Rs 77 crore, was transferred to the subsidiary for Rs 2,000 crore, resulting in an accounting gain of Rs 1,922.92 crore being recorded by Suzlon.
According to the regulator, the subsidiary lacked the financial capacity to make the payment and a substantial portion of the consideration was later shown as paid through circular fund movements between the two entities. Sebi said these transactions created an artificial profit and inflated Suzlon’s reported net worth. The regulator observed that without the transaction, Suzlon’s FY14 net worth would have been Rs 741 crore instead of the reported Rs 2,664 crore.
The order also noted that Suzlon subsequently recorded an additional gain of Rs 829.78 crore by transferring its stake in the subsidiary to another wholly owned unit, effectively booking profit twice on the same underlying assets. Sebi concluded that these transactions enabled the company to present a stronger financial position and raise funds through equity issuances and restructuring exercises.Another major issue involved a standby letter of credit linked to loans availed by a foreign subsidiary. Sebi found that a contingent liability of about $569 million, equivalent to roughly Rs 4,050 crore, which had been disclosed in FY17, was omitted from the FY18 contingent liability disclosures after being reclassified under an accounting standard relating to insurance contracts. The regulator held that the accounting treatment was not appropriate and materially diluted the company’s financial exposure in its disclosures.
Sebi also examined investments and loans involving subsidiaries SE Forge Ltd and Suzlon Gujarat Wind Park. According to the order, multiple transactions involved circular routing of funds, conversion of loans into equity and subsequent impairment of investments, resulting in financial statements that did not accurately reflect the underlying economic reality. The regulator held that the company’s financial statements and disclosures failed to present a true and fair view of its financial position.
“Financial statements and disclosures of a listed entity constitute the basis on which investors and market participants assess the financial position and prospects of such entity,” Sebi said while explaining the rationale for the penalties. The regulator said that although disproportionate gains and investor losses could not be precisely quantified, the violations were serious because they related to the publication and dissemination of financial information relied upon by investors.
The penalties have been imposed under provisions dealing with fraudulent and unfair trade practices, disclosure failures and violations of listing obligations. The noticees have been directed to pay the penalties within 45 days of receipt of the order.