SEBI Levies ₹28.95 Cr Penalty on Suzlon Energy, MD, Others Over Misleading Financial Statements

• SEBI imposed ₹28.95 crore fines on Suzlon Energy, Vinod Tanti, Girish Tanti for accounting irregularities and misleading financial disclosures

• Suzlon's financial statements failed to show true and fair view as OMS transaction chain inflated net worth from ₹741 crore to ₹2,664 crore through circular routing

• SEBI overturned earlier ruling exonerating the company after investigation from FY15-FY21 following December 2019 anonymous complaint alleging subsidiary transaction irregularities

Capital markets regulator Sebi on Friday imposed fines totalling ₹28.95 crore on Suzlon Energy Ltd, its Chairperson-MD Vinod Tanti, Girish Tanti and others for alleged accounting irregularities and misleading financial disclosures related to intra-group transactions involving subsidiaries.

In a 96-page order, Sebi said Suzlon Energy Ltd's financial statements failed to present a "true and fair view" of the profitability, net worth, leverage, financial exposure and risk profile.

The regulator imposed a fine of ₹15.95 crore on Suzlon Energy Ltd (SEL), ₹5.75 crore on Vinod R Tanti, ₹5.45 crore on Girish R Tanti, ₹1.5 crore on former chief financial officers Kirti J Vagadia and ₹30 lakh on Amit Agarwal.

Both Vinod and Girish R Tanti are promoters of the company.

The latest order came after Sebi overturned an earlier ruling by an adjudicating officer that had exonerated the entities and disposed of the proceedings without imposing any penalty.

Sebi noted that the OMS transaction chain, the SBLC/AERH reclassification, the SEFL transactions and the SGWPL/SPIL transaction resulted in the publication and dissemination of financial statements and disclosures which did not present a true and fair view of the profitability and net worth in the financial statements of Suzlon Energy Ltd.

Sebi's Whole Time Member Sandip Pradhan said the violations against SEL stand established.

According to the order, the transfer of Suzlon's operations and maintenance services (OMS) transaction chain commenced in FY14 with the transfer of the OMS business by SEL to Suzlon Global Services Ltd for ₹2,000 crore and recognition of profit of ₹1,922.92 crore, resulting in the presentation of SEL's net worth at ₹2,663.96 crore instead of ₹741.04 crore.

The transaction chain did not end in FY14. The balance consideration of ₹1,300 crore was shown as discharged only in March 2017 through repeated routing of ₹150 crore and ₹100 crore between SEL and SGSL.

During FY17, when the circular routing of ₹1,300 crore took place, Vinod Tanti was holding the position of Chief Operating Officer, and Girish Tanti acted as an Executive Director of Suzlon Energy Ltd.

In view of the same, their responsibilities stand established in relation to the OMS transaction chain, including the FY17 stage at which the balance consideration was discharged through circular routing.

The matter originated from an anonymous complaint received by SEBI in December 2019, alleging irregularities in transactions involving Suzlon and its subsidiaries.

Following a preliminary examination, forensic audit and investigation, the regulator found multiple transactions undertaken by the company and its group entities.

The period of investigation was from FY15 to FY20 and the first three quarters of FY21.