More trouble for Gautam Adani, Adani Enterprises slapped with SEBI show-cause notice; Adani Power, Adani Energy Solutions already under lens

In more trouble for embattled businessman Gautam Adani, Adani Enterprises—the flagship firm of his business group—on Tuesday mentioned three show cause notices received from capital market regulator Securities and Exchange Board of India (SEBI) along with its financial results for the July-September period. The notices were over issues including alleged non-compliance with certain rules related to related-party transactions and alleged wrongful categorisation of shareholding of certain entities, according to a regulatory filing. The development comes at a time when two other group firms, Adani Energy Solutions and Adani Power, have confirmed the receipt of similar notices.

The mention of the SEBI show-cause notices in Adani Enterprises' latest earnings report comes roughly two years into the release of a report by US-based Hindenburg Research leveling several serious accusations against the Indian conglomerate. The Adani group has denied the charges.  

In Tuesday's statement, Adani Enterprises wrote: "On 3rd January 2024, the Hon'ble Supreme Court disposed off all matters in various petitions including those relating to separate independent investigations relating to the allegation in the short-seller report and stated that SEBI should complete investigation in pending two matters and take its investigations to their logical conclusion in accordance with law."

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During the September quarter, SEBI concluded its investigation in one of the pending two matters, said Adani Enterprises. "Pursuant to the Supreme Court order, various legal and regulatory proceedings by SEBI, legal opinions obtained, independent legal and accounting review undertaken by the Adani Group and the fact that there are no other pending regulatory or adjudicatory proceedings as of date, except relating to three show cause notices from the SEBI alleging non-compliance with provisions of applicable laws and regulations pertaining to related party transactions in respect of certain transactions with third parties, validity of peer review certificates of statutory auditors with respect to earlier years and alleging wrongful categorisation of shareholding of certain entities," said Adani Enterprises. 

It also said that the management of the parent company concluded that "there is no material non-compliance of applicable laws and regulations and hence there are no material consequences of the allegations against the Group". 

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The charges are significant given that Hindenburg Research had accused the Indian conglomerate of indulging in stock manipulation to boost shares of its group companies and in money laundering. Meanwhile, SEBI is learned to have completed its investigations in 23 out of the 24 issues on its radar concerning the conglomerate. 

The notices sent to Adani group companies are aligned with some of the barrage of serious allegations leveled by US-based research firm Hindenburg Research against the conglomerate, which has repeatedly denied the charges. 

Adani Enterprises, Adani Power and Adani Energy Solutions are part of a conglomerate often considered excessively diversified by many analysts.

Additionally, SEBI's notice comes at a time when SEBI Chairperson Madhabi Puri Buch herself has denied a series of serious charges against her by Hindenburg this year. 

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