Suzlon Energy Declines 4.46% Following Sebi Penalty of Rs 29 Crore for Misrepresentation in Financial Filings

Suzlon Energy Hit with Rs 29 Crore Penalty for Alleged Financial Irregularities

Shares of Suzlon Energy plummeted more than 3% on Monday following the Securities and Exchange Board of India's (Sebi) decision to impose penalties totalling nearly Rs 29 crore on the renewable energy company and several former executives for alleged violations related to financial reporting and disclosures.

The stock declined 3.56% to Rs 54.96 on the National Stock Exchange (NSE) at 10:50 am, with earlier session highs reaching as much as 4.46%. The penalty, announced in a 96-page order dated May 29, supersedes an earlier adjudication order issued in June 2025 and confirms multiple violations by the company and its former management.

Among those penalised, former executive director Vinod R. Tanti was fined Rs 5.75 crore, while Girish R. Tanti was directed to pay Rs 5.45 crore. Former Group CFO Kirti J. Vagadia was fined Rs 1.5 crore and former CFO Amit Agarwal was fined Rs 30 lakh.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The case originated from an anonymous complaint received by Sebi in December 2019, which alleged irregularities in transactions involving Suzlon's subsidiaries and associate entities. A subsequent forensic audit and investigation covering FY15 to FY20 and the first nine months of FY21 examined issues related to subsidiary transactions, impairment reversals, contingent liabilities and financial disclosures.

One of the regulator's key observations related to the transfer of Suzlon's operations and maintenance services business to subsidiary Suzlon Global Services Ltd in March 2014. Sebi noted that the business, valued at around Rs 77 crore, was transferred for Rs 2,000 crore, resulting in Suzlon recognising an accounting gain of Rs 1,922.9 crore.

According to Sebi, the subsidiary did not possess the financial capacity to fund the transaction independently. The regulator alleged that a significant portion of the consideration was settled through circular movement of funds between group entities, creating artificial profits and inflating the company's net worth.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Sebi said Suzlon's reported net worth for FY14 stood at Rs 2,664 crore, but would have been around Rs 741 crore without the transaction. The regulator also alleged that Suzlon subsequently booked an additional gain of Rs 829.8 crore by transferring its stake in the subsidiary to another wholly owned entity, effectively recognising profit a second time on the same underlying assets.

The order further highlighted issues surrounding a standby letter of credit linked to loans availed by a foreign subsidiary. According to Sebi, a contingent liability of around $569 million, or nearly Rs 4,050 crore, which had been disclosed in FY17, was not reflected in FY18 contingent liability disclosures after being reclassified under an accounting standard. The regulator held that the treatment materially reduced visibility into the company's financial exposure and constituted inadequate disclosure.