Mumbai: Capital markets regulator Securities and Exchange Board of India (SEBI) has imposed penalties totalling nearly Rs 29 crore on Suzlon Energy and several former senior executives after finding multiple violations related to financial reporting, profit recognition and disclosure practices.

In a detailed 96-page order issued on May 29, the regulator concluded that the company presented a distorted picture of its financial position through transactions involving subsidiaries, accounting treatments and inadequate disclosures. The order also overturned an earlier adjudication ruling issued in June 2025 while upholding findings of regulatory breaches.

Former executives also penalised

Alongside the company, SEBI imposed substantial penalties on former senior officials linked to the alleged violations.

Former executive Vinod R. Tanti has been fined Rs 5.75 crore, while Girish R. Tanti faces a penalty of Rs 5.45 crore. Former Group Chief Financial Officer Kirti J. Vagadia has been directed to pay Rs 1.5 crore, and former CFO Amit Agarwal has been fined Rs 30 lakh.

The penalties relate to alleged breaches of provisions under the SEBI Act, the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, listing obligations and disclosure requirements.

Investigation began after anonymous complaint

The regulatory action stems from an anonymous complaint received by SEBI in December 2019.

Following the complaint, the regulator initiated a forensic audit and a detailed investigation covering the period from FY15 to FY20, along with the first three quarters of FY21.

The probe examined transactions involving subsidiaries, impairment reversals, contingent liabilities and the accuracy of disclosures made in Suzlon’s financial statements.

SEBI questions subsidiary transaction

One of the key findings relates to the transfer of Suzlon’s operations and maintenance services business to its subsidiary, Suzlon Global Services Ltd, in March 2014.

According to SEBI, the business was valued at approximately Rs 77 crore but was transferred for nearly Rs 2,000 crore. The regulator said this enabled Suzlon to recognise an accounting gain of Rs 1,922.92 crore.

SEBI observed that the subsidiary did not possess sufficient financial resources to execute the transaction independently. The order further noted that a significant portion of the consideration appeared to have been settled through circular movement of funds between related entities.

The regulator concluded that the arrangement generated an artificial profit and substantially increased the company’s reported net worth.

Alleged double profit recognition highlighted

SEBI also flagged a subsequent transaction involving the transfer of Suzlon’s stake in the subsidiary to another wholly owned unit.

According to the regulator, the transaction resulted in an additional gain of Rs 829.78 crore, effectively leading to profits being recognised twice on the same underlying assets.

The order stated that such accounting treatment did not accurately reflect the economic substance of the transactions.

Contingent liability disclosure under scrutiny

Another significant issue identified by the regulator involved a standby letter of credit linked to borrowings by a foreign subsidiary.

SEBI noted that a contingent liability of approximately $569 million, equivalent to around Rs 4,050 crore, was disclosed in FY17 but omitted from FY18 contingent liability disclosures following a reclassification under an accounting standard.

The regulator said the treatment was inappropriate and had the effect of understating the company’s financial exposure.

Additional concerns over subsidiary transactions

The order also examined transactions involving subsidiaries SE Forge Ltd and Suzlon Gujarat Wind Park.

SEBI identified instances of circular fund routing, loan-to-equity conversions and impairment-related accounting adjustments that allegedly failed to represent the true economic reality of the transactions.

According to the regulator, these practices contributed to financial statements that did not provide investors with a fair and accurate view of the company’s financial health.

SEBI stresses importance of transparent disclosures

In its order, SEBI emphasised that investors rely heavily on published financial statements and disclosures when making investment decisions.

The regulator stated that while it may be difficult to precisely quantify investor losses or gains resulting from the violations, the matter remained serious because transparent financial reporting is fundamental to market integrity.

SEBI directed the company and the individuals concerned to deposit the penalties within 45 days of receiving the order.

Conclusion

The Rs 29 crore penalty imposed by SEBI marks a significant regulatory action against Suzlon Energy and its former executives. The regulator’s findings underscore the importance of accurate financial reporting, transparent disclosures and adherence to corporate governance standards in maintaining investor confidence and market credibility.