The Securities and Exchange Board of India (Sebi) has issued a 96-page order imposing penalties totaling Rs 29 crore on Suzlon Energy and several former executives for violating financial regulations. The order, dated May 29, highlights breaches of the Sebi Act, PFUTP Regulations, listing regulations, and disclosure norms by the company and its key personnel.
The penalties include Rs 5.75 crore on former executive Vinod R. Tanti, Rs 5.45 crore on Girish R. Tanti, Rs 1.5 crore on former Group CFO Kirti J Vagadia, and Rs 30 lakh on former CFO Amit Agarwal. The order overturns a previous adjudication from June 2025, affirming multiple violations by Suzlon and its executives. The case originated from an anonymous complaint in December 2019, alleging irregularities in Suzlon's dealings with subsidiaries and associates. Sebi's investigation, covering FY15 to FY20 and the first three quarters of FY21, revealed transactions involving subsidiary companies, impairment reversals, contingent liabilities, and financial disclosures.
A significant finding was the transfer of Suzlon's operations and maintenance services business to Suzlon Global Services Ltd in March 2014. Sebi found that the business, valued at Rs 77 crore, was transferred for Rs 2,000 crore, creating an artificial profit of Rs 1,922.92 crore and inflating Suzlon's reported net worth. Without this transaction, Suzlon's FY14 net worth would have been Rs 741 crore instead of Rs 2,664 crore.
Additionally, Suzlon recorded an extra 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 assets. Sebi concluded these actions allowed Suzlon to present a stronger financial position and raise funds through equity issuances and restructuring.
Another issue involved a $569 million contingent liability linked to loans by a foreign subsidiary, which was omitted from FY18 disclosures after reclassification under an insurance contracts accounting standard. Sebi deemed this treatment inappropriate, materially diluting the company's financial exposure in disclosures.
Sebi also scrutinized investments and loans involving subsidiaries SE Forge Ltd and Suzlon Gujarat Wind Park, finding circular fund routing, loan-to-equity conversions, and subsequent impairment of investments, which distorted the financial statements. Sebi emphasized that financial statements and disclosures are crucial for investor assessments, and the violations were serious due to their impact on financial information relied upon by investors.
Background
Suzlon Energy has faced scrutiny in the past for its financial practices, and this recent Sebi order highlights ongoing challenges in corporate governance and transparency. The penalties serve as a reminder of the importance of accurate financial reporting in maintaining investor trust and market integrity.
Looking ahead, the penalties must be paid within 45 days of receiving the order. The case underscores the importance of transparency in financial disclosures and could prompt tighter regulatory scrutiny on similar practices in the industry.
