Seven Adani Group entities, out of the conglomerate’s ten public firms, have been served show cause notices by the Securities and Exchange Board of India (SEBI). The regulator’s correspondence alleges possible contraventions related to transactions with related parties and breaches of listing norms. Adani Enterprises Ltd—the group’s flagship company, Adani Green Energy Ltd—a renewable energy venture, and Adani Total Gas Ltd—a city gas distribution entity, disclosed the regulatory enforcements, implicating the parent company run by the Indian billionaire Gautam Adani. Additionally, Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, and Adani Wilmar confirmed receipt of similar SEBI notices.
In an attempt to maintain transparency, these firms publicized the regulatory developments alongside their financial outcomes for the January-March quarter and the fiscal year 2023-24. Despite the notices, collective statements from the companies insisted there was a lack of substantial non-compliance with relevant laws and that no significant impact would follow.
Nonetheless, external auditors for most of the companies, barring Adani Green Energy, Adani Total Gas, and Adani Wilmar, furnished a qualified opinion—a sign hinting at prospective financial repercussions contingent upon the outcomes of SEBI’s ongoing investigation.
In separate news, ACC and Ambuja Cement—both forming a part of the Adani Group’s pervasive portfolio—declared that no such notices had been addressed to them by SEBI. Similarly, the media arm of the group, NDTV, did not report any communications from the regulatory authority.
These developments arrive in the wake of allegations by Hindenburg Research, a U.S. short-selling firm, which in January 2023 accused the Adani Group of committing corporate misconduct and manipulating stock prices. Although the conglomerate forcefully refuted these accusations, the subsequent market response eroded approximately $150 billion off the group’s market capitalization.
As the group has since bounced back, demonstrating resilience, it’s important to clarify that a show cause notice is not indicative of guilt but rather is a standard procedural query demanding an explanation to avert potential legal action.
Adani Green Energy, in a statement, acknowledged that the Hindenburg report did indeed target several Adani companies and that the Indian Supreme Court took note of SEBI’s investigation while it established an Expert Committee to scrutinize these matters further. The Committee’s findings negated any regulatory oversight regarding the pertinent laws and the SEBI’s inquiries into 22 of 24 scrutinized matters concluded as per the status report to the Supreme Court. The apex court has since directed a wrap-up of the remaining probes.
Adani Enterprises, on its part, asserted that the SEBI’s notices related to its past transactions with certain third-party entities and delved into the authenticity of its auditors’ peer review certificates but refrained from elaborating on the nature of the allegations. Adani Green Energy described the notices as “technical in nature”, suggesting no significant implications on their financial statements, a sentiment echoed by Adani Enterprises.
In April 2023, Adani’s parent company undertook an independent law firm’s review of the transactions mentioned in Hindenburg’s allegations, concluding that the purported related parties were indeed unrelated under existing frameworks and that the group was compliant with current laws and regulations.
Following the Supreme Court’s January 2024 verdict, the Adani Group has actively sought to reaffirm its adherence to regulatory guidelines by commissioning a comprehensive legal and accounting examination of the allegations. No discrepancies or irregularities were identified, strengthening the group’s claim of compliance.
In a final statement of confidence, Adani firms reasserted the absence of any material non-compliance and resultant fallout from the allegations. They emphasized that their financial statements, as they stand, require no adjustments in this context.
Adani Ports & Special Economic Zone, in a separate disclosure, underlined SEBI notices concerning past related party transactions and questioned the recall of security deposits for terminated contracts. The firm defended itself, denying the charges entirely, asserting compliance with the governing laws and regulations.
With the remaining two investigations ordered by the Supreme Court to be concluded promptly, the Adani Group navigates a complex regulatory landscape, with the intent to maintain its operations within the strictures of the law and corporate governance standards.
