Six Adani group companies receive show-cause notices from Sebi

Other firms of the Ahmedabad-based conglomerate including Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Wilmar and Adani Total Gas too informed the bourses about the regulator's show-cause notices to them this week.

These firms said that based on the legal opinion they had received, the regulator's notices were unlikely to have an impact. However, auditors of these entities, except Adani Wilmar and Adani Total Gas, have issued a qualified opinion, implying that the outcome of Sebi's investigation might affect financial statements in the future.

"... on account of pending adjudications/ outcome of the investigations by the Securities and Exchange Board of India and based on our review of related documents, we are unable to comment on the possible adjustments and /or disclosures, if any, that may be required to be made in the accompanying Statement in respect of this matter. We will continue to evaluate the impact of this matter on our opinion based on any changes in circumstances or additional information that may become available, " auditors of Adani Enterprises said in their qualified opinion.

These notices were issued following Sebi's investigation into the allegations made against the Adani Group by US-based Hindenburg Research.

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 allegations are that the company has not obtained the requisite approvals, and have not made the required disclosure in the financial statements/ annual report. Not recalling security deposits against terminated contracts leading to not using the funds for company's core business purposes and thus not complying with the company's code of conduct," Adani Ports and SEZ said in its disclosures.

Adani Power said it has responded to Sebi's notices. It disclosed that the regulator alleged that certain transactions were not reported in the financial statements of the relevant years and requisite approvals for such transactions were not taken.

Sebi in its report to the Supreme Court in August had submitted that it had identified 13 specific related party transactions where it was investigating the underlying deals.

The Hindenburg Report of January 2023 referred to over 6,000 related party transactions and questioned their appropriateness.