Sebi imposes nearly ₹29 crore penalty on Suzlon Energy and top executives over disclosure lapses

New Delhi, May 29: Securities and Exchange Board of India has imposed penalties totalling nearly ₹29 crore on Suzlon Energy, its Chairman and Managing Director Vinod Tanti, Executive Vice-chairman Girish Tanti, and two others over alleged lapses in financial disclosures and reporting practices.

Sebi alleges misleading financial disclosures

According to the market regulator, Suzlon Energy’s financial statements and disclosures did not accurately represent the true nature of certain transactions. Sebi stated that the disclosures allegedly created a misleading picture of the company’s profitability, leverage, financial exposure, and overall risk profile.

The regulator said these disclosures may have affected how investors and market participants assessed the company’s financial health and future prospects.

Breakdown of penalties imposed

Sebi imposed:

• ₹15.95 crore penalty on Suzlon Energy
• ₹5.75 crore penalty on Vinod Tanti
• ₹5.45 crore penalty on Girish Tanti

The penalties relate to multiple alleged disclosure and accounting irregularities identified during the investigation.

Transaction involving operations and maintenance business

One of the key issues highlighted by Sebi relates to the transfer of Suzlon Energy’s Operations and Maintenance Services (OMS) business to Suzlon Global Services in FY14 for ₹2,000 crore.

According to the regulator, the company recognised a profit of ₹1,923 crore from the transaction, which allegedly resulted in an inflated presentation of the company’s net worth. Sebi noted that the reported net worth appeared as ₹2,664 crore instead of approximately ₹741 crore.

Concerns over contingent liabilities

Another major issue involved contingent liabilities linked to a standby letter of credit (SBLC) issued by State Bank of India.

The SBLC was reportedly used to secure a loan for AE Rotor Holding BV, a wholly owned subsidiary of the company. Sebi stated that exposure amounting to approximately ₹4,050 crore was reclassified under an insurance contract category and omitted from designated contingent liability disclosures during FY18.

According to the regulator, this allegedly diluted the presentation of the company’s financial exposure and risks.

Probe began after anonymous complaint

The investigation was reportedly initiated following an anonymous complaint filed in December 2019. The complaint alleged irregularities involving dealings with subsidiaries and associated companies linked to Suzlon Energy.

Sebi rejects defence by company executives

During proceedings, the Tanti brothers reportedly argued that they could not be held personally liable because they served as non-executive directors.

However, Sebi rejected the argument, stating that directors and key managerial personnel are responsible for overseeing company disclosures and ensuring regulatory compliance.

The order noted that individuals occupying executive or managerial roles cannot avoid accountability simply because disclosures were formally issued in the company’s name.

Importance of accurate corporate disclosures

Sebi emphasised that financial disclosures by listed companies form the foundation on which investors make decisions. The regulator described the violations as serious due to their potential impact on investor confidence and market transparency.

The case highlights increasing regulatory scrutiny around corporate governance and disclosure standards in India’s capital markets.