EKI Energy Services to Challenge SEBI Order at SAT Over Rs 26.34 Crore Expense Finding

Carbon management and offset solutions provider EKI Energy Services Limited has decided to move the Securities Appellate Tribunal (SAT) to appeal an adverse ruling issued by the Securities and Exchange Board of India (SEBI). The market regulator's order, dated October 30, 2026, concluded that the company had booked Rs 26.34 crore in unsupported expenses across financial years 2021-22 and 2022-23, treating the payments as diverted funds, while also finding premature revenue recognition of Rs 197.04 crore during FY23.

In response, EKI Energy indicated that it will file an appeal under Section 15T of the SEBI Act, 1992, arguing that the findings warrant judicial review before SAT. The company noted that SEBI’s final order acknowledged there was no quantifiable investor loss, no quantifiable unlawful gain, and no history of repeat default.

SEBI Findings and Disciplinary Actions

The regulatory action stems from an extensive probe into EKI Energy’s accounting practices following its rapid expansion and mainboard listing in July 2022. SEBI's quasi-judicial authority determined that the company improperly recognised Rs 197.04 crore in revenue across the first three quarters of FY23 related to improved cook-stove (ICS) projects before fulfilling delivery commitments for verified carbon units.

Furthermore, the regulator asserted that EKI booked fictitious commission, consultancy, and professional expenses of Rs 26.34 crore without verifiable proof of service delivery, thereby understating profits and diverting corporate resources.

As part of the ruling, SEBI imposed penalties and market restraints across the board:

• A penalty of Rs 12 lakh on EKI Energy Services alongside a two-month ban from accessing the securities market.
• A 12-month market ban and a Rs 28 lakh penalty on Chairman and Managing Director Manish Kumar Dabkara, who was additionally instructed to initiate immediate steps to recoup the Rs 26.34 crore for the company.
• Market prohibitions ranging from one to eight months and fines on former Chief Financial Officer Mohit Kumar Agarwal (Rs 19 lakh) and Whole-Time Directors Naveen Sharma (Rs 13 lakh) and Sonali Sheikh (Rs 6 lakh).
• Monetary penalties of Rs 4 lakh each on independent directors Ritesh Gupta and Burhanuddin Ali Husain Maksiwala, and Rs 2 lakh on former compliance officer Itisha Sahu, taking aggregate fines to Rs 88 lakh.

The Grounds for EKI Energy's Appeal

EKI Energy stated that SEBI’s final order significantly scaled down the original allegations. The initial show-cause notice had alleged overstated expenses amounting to Rs 48 crore. Following an examination of the records submitted by the company, the regulator accepted Rs 21.66 crore as genuine business expenses, limiting the adverse finding to Rs 26.34 crore.

Regarding this remaining Rs 26.34 crore, EKI stated that SEBI’s primary reservation was whether the documentary evidence submitted to the Ministry of Corporate Affairs (MCA), the Income Tax Department, and independent experts matched the documentation placed before the markets watchdog. The company affirmed that it has maintained consistent records and intends to place the complete documentary trail before SAT to demonstrate that the outlays were genuine operational expenses incurred for carbon project procurement and advisory activities.

EKI Energy also highlighted governance safeguards during the review period, pointing out that promoters did not offload their holdings, keeping promoter shareholding intact at approximately 73.4% to 73.5%. The company also noted that the Ministry of Corporate Affairs had earlier reviewed an inspection report under Section 206(5) of the Companies Act, 2013, without initiating penal action under fraud provisions.

Implications for Investors and Carbon Markets

EKI Energy was once among the most prominent multi-bagger listings on Dalal Street following its BSE SME debut in 2021, but it subsequently faced sharp business contraction amid regulatory scrutiny and global volatility in voluntary carbon markets. The company’s consolidated revenue fell from over Rs 1,800 crore in FY22 to Rs 86.52 crore in FY26, making the disputed Rs 26.34 crore represent nearly 30% of its recent annual top line.

For market participants, the outcome of the SAT appeal will be critical in deciding whether the company must pursue fund recovery from its promoters and whether the operational bans on key management personnel will remain in force or be stayed during appellate proceedings.