Seven of the ten Adani Group companies have disclosed that they received show cause notices from the Securities and Exchange Board of India (SEBI) in the last fiscal year for various regulatory violations, including non-compliance with listing and related party transaction norms. Despite these notices, the companies asserted that there were no significant impacts on their financial statements.
SEBI’s Progress and Court’s Final Directive
The flagship company, Adani Enterprises, along with Adani Green Energy, Adani Power, Adani Energy Solutions, Adani Total Gas, and Adani Wilmar, reported receiving SEBI notices in the fourth quarter of FY2024 for breaches of specific regulations, according to filings made to stock exchanges. Adani Ports and Logistics acknowledged receiving a similar notice within the same fiscal year.
Adani Enterprises, in a recent exchange filing, detailed that during the quarter ending March 31, 2024, it received two show cause notices from SEBI. These notices alleged non-compliance with provisions of the Listing Agreement and LODR Regulations concerning related party transactions with third parties and questioned the validity of peer review certificates of statutory auditors for prior years.
The management of the Adani Group companies stated that the SEBI show cause notices had no significant impact on their financial statements and that there was no substantial non-compliance with applicable laws and regulations. However, none of the seven companies provided specific details about the SEBI norm violations cited in the notices.
Adani Green Energy revealed that it received a SEBI notice concerning the validity of the Peer Review Certificate (PRC) for one of its joint auditors in previous financial years, to which it has already responded.
In January 2023, U.S.-based short seller Hindenburg Research published a report accusing the Adani Group of blatant stock manipulation and accounting fraud, allegations which the Adani Group firmly denied.
Subsequently, writ petitions were filed in the Supreme Court seeking an independent investigation into Hindenburg’s claims. In March 2023, the apex court established an expert committee, led by former Justice A M Sapre, to examine potential regulatory failures in handling the alleged securities market violations by the Adani Group and its affiliates. According to a Supreme Court status report dated August 25, 2023, SEBI had concluded investigations in 22 out of 24 matters.
In January of this year, the Supreme Court resolved all matters related to various petitions, including those calling for independent probes into the Hindenburg allegations. The court directed SEBI to complete the two pending investigations within three months and to bring all 24 investigations, including the 22 already concluded, to their logical conclusion.
