SEBI Slams Suzlon Energy for Misleading Financials and Group Transactions: Earlier Clean Chit Set Aside

The Securities and Exchange Board of India (SEBI) has reversed an earlier adjudication order that had absolved Suzlon Energy Limited and key officials. After re‑examining the record under its revisionary powers, SEBI has held that Suzlon’s intra‑group dealings during FY 2013-14 to FY 2019-20 distorted its published financial position, misrepresented profitability and net worth, and misled investors in the securities market.

SEBI concluded that the Adjudicating Officer (AO) had adopted an unduly formalistic approach—placing disproportionate weight on the fact that the transactions carried shareholder and board approvals, were supported by external valuation reports, and were disclosed as related party dealings—while failing to probe the actual economic substance and cash‑flow impact of the arrangements.

Financial statements of a listed entity underpin investor decision‑making. SEBI has therefore treated these lapses as serious violations affecting market integrity. Substantial monetary penalties have been imposed on the company and its senior management.

Penalties Imposed

SEBI has levied the following monetary penalties in the matter:

  • Suzlon Energy Limited – ₹15.95 crore
  • Vinod R. Tanti – ₹5.75 crore
  • Girish R. Tanti – ₹5.45 crore
  • Kirti J. Vagadia – ₹1.50 crore
  • Amit Agarwal – ₹30 lakh

The combined penalty exceeds ₹28.95 crore, reflecting SEBI’s view that the violations were grave, systemic, and directly linked to the integrity of financial reporting by a listed company.

Note: The full text of SEBI’s order runs through the investigation findings, the original adjudication, and the reasons for invoking revisionary jurisdiction under Section 15-I(3) of the SEBI Act and Section 23-I(3) of the Securities Contracts (Regulation) Act, 1956 (SCRA). Below is a structured summary of the core issues and findings.

Origin of the Case and Scope of Investigation

Anonymous Complaint and Preliminary Examination

  • SEBI received an anonymous complaint on December 12, 2019 alleging irregular financial dealings between Suzlon Energy Limited (SEL) and its subsidiaries/associates.
  • The complaint was forwarded to NSE for preliminary scrutiny. That exercise revealed potential red flags in:
    • Investments and loans within the group
    • Impairment accounting
    • Related party disclosures
    • Possible violations of:
      • SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations), and
      • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).

Forensic Audit and Investigation Period

  • SEBI launched a full investigation into whether SEL’s financial statements had been misstated in violation of:
    • Securities and Exchange Board of India Act, 1992 (SEBI Act)
    • Securities Contracts (Regulation) Act, 1956 (SCRA)
    • PFUTP Regulations
    • LODR Regulations
    • Applicable clauses of the listing agreement.
  • A forensic auditor, Sarath & Associates, was appointed.
  • The investigation period covered:
    • FY 2014-15 to FY 2019-20, and
    • The first three quarters of FY 2020-21.

Parties Involved

Based on the investigation, SEBI alleged non‑compliance by:

  • Suzlon Energy Limited (SEL / Noticee 1)
  • Tulsi R. Tanti
  • Vinod R. Tanti (Noticee 2)
  • Girish R. Tanti (Noticee 3)
  • Kirti J. Vagadia (Noticee 4)
  • Amit Agarwal (Noticee 5)

(collectively referred to as “Noticees” in the order).

An adjudication process was initiated; an AO issued a Show Cause Notice (SCN) dated November 09, 2022, followed by a corrigendum dated March 12, 2025.

Key Allegations on Financial Misstatement and Circular Transactions

1. Slump Sale of Operation & Maintenance (OMS) Business and Inflated Net Worth

Structure of the Transaction

  • On March 29, 2014, SEL sold its OMS business (book value around Rs.77.08 crore) to its wholly owned subsidiary Suzlon Global Services Limited (SGSL) under a slump sale for Rs.2,000 crore.
  • SEL booked a gain of Rs.1,922.92 crore as an exceptional item in FY 2013-14.
  • SGSL, prior to this, was practically a shell with negligible assets and turnover. Post‑transfer:
    • Total assets shot up to Rs.2,330.55 crore, which included Rs.2,000 crore attributed to the OMS business.

Delay and Circular Payment of Consideration

  • SGSL was to settle the Rs.2,000 crore consideration within 90 days, failing which interest at 11% applied.
  • SEL did not receive the full consideration within that period; it actually received only Rs.700 crore over FY 2014-15 to 2016-17.
  • For the balance Rs.1,300 crore, SEBI found circular fund movements:
    • On March 21, 2017, Rs.150 crore flowed back and forth six times between SGSL and SEL to simulate receipt of Rs.900 crore.
    • On March 22-23, 2017, Rs.100 crore was similarly rotated four times, creating the appearance of Rs.400 crore payment.
  • These circular entries meant there was no real inflow to SEL matching the recorded sale proceeds of Rs.2,000 crore.

Second Layer of Profit on the Same Assets