The Securities and Exchange Board of India has taken regulatory action against EKI Energy Services Limited and several senior officials, imposing monetary penalties totalling ₹88 lakh. The final order, dated October 30, 2026, also restricts the carbon-credit company from accessing the securities market for two months.

The action follows an investigation into EKI Energy’s financial reporting practices during FY22 and FY23. SEBI identified premature revenue recognition, unsupported business expenses and failures in corporate oversight that affected the reliability of the company’s financial disclosures.

An important distinction is that the ₹88 lakh penalty applies collectively to the company and seven individuals. EKI Energy itself faces a ₹12 lakh penalty, while the remaining amount has been imposed on directors and former senior officials.

The most significant finding concerns revenue recognition of ₹197.04 crore during the first three quarters of FY23. SEBI concluded that this revenue had been recorded before the company completed the contractual obligations required to recognise it.

EKI Energy operates in carbon-credit trading, carbon-offset solutions and environmental project development. Its business involves generating and supplying carbon credits associated with projects intended to reduce greenhouse gas emissions.

The disputed revenue arose primarily from improved cookstove projects. These programmes involved distributing cleaner cooking equipment to households and generating carbon credits based on verified environmental benefits over time.

SEBI examined whether installing and registering the cookstoves was sufficient to recognise revenue. The regulator concluded that EKI’s contractual obligations also included monitoring, verification, issuance and delivery of the associated carbon credits.

According to the order, the company prematurely recognised ₹74.06 crore in the first quarter of FY23, ₹104.80 crore in the second quarter and ₹18.18 crore in the third quarter. Together, these amounts reached ₹197.04 crore.

The timing of revenue recognition matters because it can materially change the financial performance reported to investors. Recognising income before contractual obligations are fulfilled may present a stronger picture of business activity than the underlying transactions support.

EKI maintained that deployment and registration of cookstoves substantially fulfilled its performance obligations. SEBI rejected that interpretation after examining the agreements and the conditions governing carbon-credit generation and delivery.

The regulator also considered concerns raised by statutory auditor Walker Chandiok & Co LLP in February 2023. Although the company subsequently revised its financial statements in September 2023, SEBI examined the continued publication of the earlier figures.

A separate part of the investigation concerned commission, consultancy, legal and professional expenses recorded during FY22 and FY23. SEBI concluded that expenses amounting to ₹26.34 crore lacked adequate evidence of services actually being provided.

The regulator identified deficiencies in supporting documents, including incomplete transaction records, inadequate descriptions of services and insufficient evidence connecting payments with completed business activities. It concluded that these expenses resulted in an understatement of reported profits.

SEBI also treated the payments associated with the unsupported expenses as diversion of company funds. The regulator directed Managing Director Manish Kumar Dabkara to take immediate steps to recover the amount identified in its findings.

The enforcement action extended beyond the company itself. SEBI imposed a ₹28 lakh penalty on Dabkara and barred him from accessing the securities market for 12 months, the longest restriction among the individuals named in the order.

Former Chief Financial Officer Mohit Kumar Agarwal received a ₹19 lakh penalty and an eight-month market restriction. Whole-time director Naveen Sharma was penalised ₹13 lakh and restrained for five months.

Whole-time director Sonali Sheikh received a ₹6 lakh penalty and a one-month restriction. SEBI also imposed penalties on two independent directors and a former compliance officer for failures connected with their respective responsibilities.

Independent directors Ritesh Gupta and Burhanuddin Ali Husain Maksi Wala were each penalised ₹4 lakh. Former compliance officer Itisha Sahu received a ₹2 lakh penalty, bringing the aggregate monetary penalties to ₹88 lakh.

The findings highlight the importance of independent oversight when auditors raise questions about financial statements. SEBI’s order emphasises that directors and senior officials have responsibilities extending beyond accepting management explanations without adequate examination.

In its November 2 exchange disclosure, EKI Energy stated that it disagreed with certain findings and was evaluating legal remedies. The company indicated that it was considering an appeal before the Securities Appellate Tribunal.

EKI also maintained that its ongoing projects and ordinary business transactions remained operational despite the regulatory order. The company stated that it did not expect the restrictions to create a separate material disruption to its regular activities.

For shareholders, the immediate concern extends beyond the monetary penalty to the credibility of historical financial statements and corporate governance.

Future developments, including any appeal, recovery of the identified funds and improvements in financial controls, will be important in assessing the company’s regulatory position.