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May 4, 2024

SEBI Initiates Investigation into Seven Adani Group Companies for Regulatory Violations

India’s Securities and Exchange Board (SEBI) has taken action against seven companies within the Adani conglomerate for alleged regulatory violations, including its flagship Adani Enterprises. The investigation was initiated following allegations made by Hindenburg Research in January 2023, which accused the group of improper use of tax havens and stock manipulation. The Adani Group has consistently denied these accusations.

According to filings with the stock exchanges, Adani Enterprises revealed that it received two notices from SEBI during the January-March quarter of this year. The notices highlighted non-compliance with provisions for listed companies and violations of disclosure rules regarding related-party transactions. While specifics of the alleged violations were not disclosed, Adani Enterprises stated that it believed the notices would have no material consequential effect on financial statements and asserted that there was no material non-compliance with applicable laws and regulations.

In addition to Adani Enterprises, SEBI has issued notices to Adani Green Energy, Adani Power, Adani Total Gas, Adani Energy Solutions, Adani Wilmar, and Adani Ports during the first quarter. These notices typically attract monetary penalties or may result in management being barred from capital markets for a specified period, depending on the seriousness of the allegations. However, the severity of the allegations remains unclear.

None of the Adani Group companies responded immediately to requests for comment. On the stock market, Adani Green and Adani Energy saw slight increases of 0.9% and 0.7% respectively, while other companies experienced decreases ranging from 0.1% to 2%.

Adani Power disclosed that the notices it received pertained to unreported third-party transactions in previous financial statements or annual reports, where necessary review and approvals were not sought. Adani Wilmar, Adani Total, and Adani Green reported that their SEBI notices questioned the validity of peer review certificates from auditors for a prior financial year.

Furthermore, auditors for Adani Ports, Adani Power, and Adani Enterprises have issued qualified opinions due to the ongoing SEBI investigations. Until the investigations conclude, auditors are unable to comment on the potential impact on financial statements or the companies’ compliance with laws and regulations.

The outcome of these investigations could have significant implications for the Adani Group, as regulatory scrutiny continues to intensify. The group’s response and actions taken to address the allegations will be closely watched by investors and stakeholders alike.

Jhumpa Lahiri

Jhumpa Lahiri

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