6 Adani Group companies get show-cause notices from SEBI

On Thursday, Adani Enterprises, the flagship company of Gautam Adani's business empire, acknowledged receiving two show-cause notices in the quarter ending on March 31, reported Economic Times.

Other entities in the Ahmedabad-based conglomerate, including Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Wilmar, and Adani Total Gas, also reported receiving similar notices from the regulator this week.

Although these companies have stated that, based on legal opinions they received, the notices from the regulator are unlikely to have much impact, auditors of most of these firms, with the exception of Adani Wilmar and Adani Total Gas, have issued a qualified opinion, implying that the outcome of AEBI's investigation might affect financial statements in the future, according to the report.

"... 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.

SEBI issued these notices after conducting an investigation into allegations made against the Adani Group by US-based Hindenburg Research.

It's important to note that a show-cause notice is not an indictment. Rather, it serves as a request for the entities to provide explanations as to why legal action, potentially including monetary penalties, should not be pursued 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, according to the report

Adani Power has confirmed that it has responded to SEBI’s notices.

The company revealed that the regulator raised concerns regarding certain transactions that were allegedly not reported in the financial statements of the relevant years and that required approvals for such transactions were not obtained.

In its report to the Supreme Court in August, AEBI stated that it had identified 13 specific related party transactions that it was investigating.

The Hindenburg Report from January 2023 highlighted over 6,000 related party transactions and raised questions about their appropriateness.