In their regulatory filings to the stock exchanges, six Adani Group companies stated that they had previously received "show-cause notices" from the Securities and Exchange Board of India (Sebi) for alleged violations of related party transactions, listing rule non-compliance, and validity of auditor certificates.
The main firm in Gautam Adani's empire, Adani Enterprises, said that it was issued two show-cause letters during the quarter that concluded on March 31.
Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Wilmar, and Adani Total Gas are among the other companies in the Ahmedabad-based group that notified the bourses about the regulator's show-cause notifications they received this week.
These companies stated that the notifications from the regulator were not expected to have any effect, based on the legal advice they had obtained. With the exception of Adani Wilmar and Adani Total Gas, the auditors of these companies have provided a qualified opinion, meaning that the results of Sebi's probe might have an impact on financial statements down the road.
"We are unable to comment on any potential adjustments or disclosures that may need to be made in the accompanying Statement regarding this matter due to pending adjudications/outcomes of the Securities and Exchange Board of India's investigations and our review of related documents. The qualified opinion of Adani Enterprises' auditors stated, "We will continue to assess the impact of this matter on our opinion based on any changes in circumstances or additional information that may become available."
Following Sebi's examination into the accusations made against the Adani Group by US-based Hindenburg Research, these notifications were sent out.
An indictment is not what a show-cause notice is. It requests an explanation from the organizations as to why they should not be subject to fines or other legal action.
According to the charges, the corporation failed to secure the necessary permissions and failed to disclose certain information in the financial statements and annual report. Adani Ports and SEZ stated in its disclosures that it had failed to recall security deposits against canceled contracts, which prevented the firm from using the money for its primary business needs and, as a result, from abiding with its code of conduct.
Adani Power stated that it had addressed the notifications from Sebi. It revealed that the regulator claimed that some transactions were not recorded in the relevant years' financial statements and that the necessary authorization for them were not obtained.
In August, Sebi reported to the Supreme Court that it had traced 13 distinct related party transactions for which it was looking into the underlying agreements. In January 2023, the Hindenburg Report questioned the propriety of over 6,000 related party transactions.
