Adani Group Faces Scrutiny from SEBI
Six companies belonging to the Adani Group have received show-cause notices from the Securities and Exchange Board of India (SEBI) for alleged violations related to party transactions and non-compliance with listing regulations. This information was disclosed by the companies in their regulatory filings to the stock exchanges.
Adani Enterprises, the flagship company of the group, received two show-cause notices during the quarter ending March 31, 2024. The notices alleged non-compliance with provisions of the listing agreement and LODR regulations pertaining to related party transactions and the validity of peer review certificates of statutory auditors.
Other Adani Group companies that received notices include Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Wilmar, and Adani Total Gas. These notices also pertain to alleged breaches in related party transactions and non-compliance with listing regulations.
The companies have stated that their legal counsel suggests minimal impact from the regulatory notices. However, auditors have expressed concern that SEBI's investigations could have implications on future financial statements.
The SEBI scrutiny follows an investigation into allegations leveled against the Adani Group by US-based Hindenburg Research. The regulator identified 13 specific related party transactions under investigation, echoing concerns highlighted in the Hindenburg Report.
The Supreme Court has disposed of all matters related to the allegations in the short seller's report and directed SEBI to complete the pending two investigations. The court also constituted an expert committee to investigate and suggest measures to strengthen existing laws and regulations.
It is important to note that a show-cause notice is not an indictment. It asks the entities to explain why legal action, including monetary penalties, shouldn't be taken against them. The outcome of SEBI's investigations and any potential legal action will determine the full impact on the Adani Group.