SEBI bars Tarapur Transformers over ₹31.46 cr diversion

What SEBI ordered and why it matters

The Securities and Exchange Board of India (SEBI) has barred Tarapur Transformers Ltd (TTL), its promoter group and connected entities from accessing the securities market after an investigation found fund diversion and fictitious transactions in the company’s books. The regulator said the conduct led to misleading financial disclosures and corporate governance failures. The action includes market access restraints of up to five years and monetary penalties on individuals. The order was passed by SEBI’s quasi-judicial authority (QJA) Santosh Shukla.

Investigation period and key findings

SEBI’s investigation covered the period from April 1, 2018 to March 2023. According to the regulator, TTL transferred ₹31.46 crore as interest-free loans and advances to connected and related entities. SEBI found that the funds were allegedly diverted by writing off these loans, creating provisions for them, or by not recovering them. The regulator also noted that TTL wrote off trade receivables of ₹14.37 crore.

SEBI further observed that transactions with connected entities involved fictitious sales and purchases. It said these entries resulted in inflation of TTL’s revenue and net worth, and misrepresentation of the company’s financial statements. The findings formed the basis for restraining the company and related entities from the securities market.

Entities restrained: who is covered under the ban

SEBI barred nine entities in total, including TTL and its promoter. The restraint on market access differs by entity and role. TTL and seven connected entities have been restrained for three years. Rajendra Kumar Choudhary, a promoter of TTL and a non-executive, non-independent director, has been restrained for five years.

The seven connected entities named in the order are:

• Choudhary Global Ltd (a promoter group entity)
• Veedhata Towers Pvt Ltd
• Lorraine Finance Pvt Ltd
• Rohit Steel Lamination Pvt Ltd
• Deekay Iron and Steel Pvt Ltd
• Kumudini Engineering Pvt Ltd
• Ashadeep Multitrade Pvt Ltd

Penalties: fines of ₹0.32 crore imposed

Alongside the market ban, SEBI imposed monetary penalties totalling ₹0.32 crore. Rajendra Kumar Choudhary was fined ₹0.30 crore for violations of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations. Ganesh Gangaram Madhari was fined ₹0.02 crore for failing to appear before the investigating authority and for non-compliance with summons.

Why SEBI did not fine the company and other connected entities

SEBI said it did not impose a monetary penalty on TTL, noting that any such penalty would ultimately be borne by shareholders. The regulator also refrained from levying monetary penalties on the other connected entities, describing them as non-operational paper companies. Instead, SEBI considered market-access restraint as proportionate in the circumstances. The ban remains the primary enforcement measure against the company and the connected entities.

Regulatory process: show-cause notice to 19 noticees

SEBI issued a common show-cause notice (SCN) to 19 noticees in June 2025. The final order that followed restricts access to the securities market for the entities and individuals named, based on SEBI’s findings on fund diversion, fictitious transactions and misstatements.

Stock price snapshot and recent trading references

The reports cited TTL’s share price around the mid-teens on the BSE. One reference put the share price at ₹13.75 with a 1-year return of -40.81%. Another noted the stock at ₹13.38 after a nearly 2% fall, with an intraday range of ₹13.84 to ₹12.54. It was also reported that the share touched ₹12.21 in August 2026, described as the 52-week low, while the 52-week high was stated as ₹40.25. Another market close reference put the share price at ₹14.65.

Financial snapshot mentioned alongside the order

Separately, TTL’s reported financial numbers were cited for FY26. The company reported a net loss of ₹1.8465 crore for FY26, reversing a profit of ₹16.1501 crore in the previous year. Total income was reported to have risen slightly to ₹1.3975 crore. These figures were referenced in the broader context of the company’s disclosures, alongside routine SEBI compliance filings.

Key facts at a glance

Why the order matters for investors and governance checks

SEBI’s findings focus on how transactions with connected entities can be used to move funds out of a listed company and distort reported financials. The regulator pointed to interest-free loans and advances, write-offs and provisions, and alleged fictitious sales and purchases as the mechanisms used. For investors, the case underlines the importance of scrutinising related-party and connected-party transactions and changes in receivables and advances over time. The order also shows SEBI’s approach of using market bans when monetary penalties may not be effective or may harm shareholders.

Conclusion

SEBI has restrained Tarapur Transformers, its promoter Rajendra Kumar Choudhary and seven connected entities after concluding that ₹31.46 crore was diverted and that the company’s books reflected fictitious transactions and misleading disclosures. TTL and the connected entities face a three-year market ban, while Choudhary faces a five-year ban along with a ₹0.30 crore penalty. The next formal reference point in the regulatory trail, as reported, was SEBI’s common show-cause notice issued in June 2025, which preceded the final order.