Market regulator Securities and Exchange Board of India (SEBI) has imposed penalties aggregating ₹28.95 crore on Suzlon Energy Ltd (SEL), vice-chairman Vinod R Tanti, managing director (MD) Girish R Tanti and two former senior executives for engaging in a series of transactions that allegedly misrepresented the company's financial position and misled investors.
The regulator has levied a penalty of ₹15.95 crore on Suzlon Energy, ₹5.75 crore on vice-chairman Vinod Tanti, ₹5.45 crore on Girish Tanti, ₹1.50 crore on former chief financial officer (CFO) Kirti J Vagadia and ₹30 lakh on former executive director Amit Agarwal.
The
order follows SEBI's review of an earlier adjudication order that had exonerated the company and its executives. After examining the records, the market regulator concluded that the transactions in question were not merely commercial decisions or internal restructuring exercises but had the effect of presenting a misleading picture of Suzlon Energy financial health during a period of severe financial stress.
The latest order comes nearly a year after questions were raised over SEBI's June 2025
adjudication order that had exonerated Suzlon Energy and its executives despite detailed findings from a forensic audit and investigation.
The case stems from an anonymous complaint received in December 2019 alleging irregularities in Suzlon Energy's dealings with its subsidiaries and associates. A subsequent SEBI investigation and forensic audit covering FY14-15 to FY20-21 examined several transactions involving business transfers, investments, loans, impairments and related-party arrangements.
One of the key issues related to the transfer of Suzlon Energy's operation and maintenance services (OMS) business to its wholly-owned subsidiary, Suzlon Global Services Ltd (SGSL), in March 2014, for ₹2,000 crore. The transaction generated an accounting profit of ₹1,922.92 crore despite the OMS business having a book value of only about ₹77 crore.
SEBI observed that SGSL lacked the financial capacity to pay the purchase consideration and that a substantial portion of the amount was subsequently shown as received through circular transactions involving loans and compulsorily convertible debentures (CCDs) routed between the parent company and the subsidiary. According to the regulator, these transactions created the appearance of receipt of sale proceeds without any corresponding economic substance.
The regulator also examined Suzlon Energy's subsequent transfer of its stake in SGSL to another wholly owned subsidiary, Suzlon Structures Ltd (SSL), resulting in an additional gain of ₹829.78 crore. SEBI held that the company effectively booked profits twice on the same underlying assets, thereby artificially improving its net worth.
According to the order, the gains generated through these transactions played a significant role in maintaining Suzlon Energy's positive net worth at a time when large impairments and losses were eroding its financial position. SEBI noted that without these accounting gains, the company's net worth would have been substantially lower and, in some years, negative.
The regulator also scrutinised transactions involving SE Forge Ltd (SEFL) and Suzlon Gujarat Wind Park Ltd (SGWPL), where loans were converted into equity through circular fund movements and subsequently written down or sold at substantial losses. SEBI concluded that these transactions lacked genuine economic substance and served primarily to alter the presentation of financial statements.
Another issue related to the treatment of contingent liabilities arising from a standby letter of credit (SBLC) linked to borrowings of the overseas subsidiary, AE Rotor Holding BV. SEBI found shortcomings in the way the liability was reflected in the company's financial statements.
Rejecting the conclusions of the earlier adjudicating officer, SEBI observed that board approvals, shareholder approvals, valuation reports, and disclosures cannot, by themselves, legitimise transactions if their underlying substance results in a distorted representation of a listed company's financial position.
The regulator emphasised that securities laws require an assessment of the real economic effects of transactions, rather than their legal form. It held that disclosures are meaningful only when they accurately reflect the true substance of the underlying arrangements.
SEBI further observed that investors rely heavily on financial statements, net worth figures and disclosures while making investment decisions. Transactions that artificially improve a company's financial appearance can influence investor perception, valuation, and market confidence, even if they do not immediately result in quantifiable investor losses.
Holding that Suzlon Energy and its executives violated provisions of the SEBI Act, the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and listing norms relating to fair disclosures and financial reporting, the regulator imposed penalties aggregating ₹28.95 crore and directed the noticees to pay the amounts within the stipulated period.
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