Adani Group Faces Regulatory Scrutiny in India
India's market regulator, the Securities and Exchange Board of India (SEBI), has sent notices to seven companies of the Adani conglomerate, including its flagship Adani Enterprises, citing potential regulatory violations. This action follows a January 2023 report by Hindenburg Research alleging improper use of tax havens and stock manipulation by the group, which Adani has denied.
Adani Enterprises received two notices from SEBI in the first quarter of 2023, alleging non-compliance with provisions for listed companies and violation of disclosure rules on some related-party transactions. The company maintains that these notices have no material impact on its financial statements and that it has not violated any applicable laws or regulations.
Other Adani group companies, including Adani Green Energy, Adani Power, Adani Total Gas, Adani Energy Solutions, Adani Wilmar, and Adani Ports, have also received notices from SEBI. The notices pertain to various issues, including unreported third-party transactions, validity of auditor peer review certificates, and qualified opinions issued by auditors due to the ongoing SEBI investigations.
The Adani group has not yet responded to requests for comment on these notices. The potential consequences of these violations could include monetary penalties or restrictions on the group's access to capital markets. The severity of the penalties will depend on the seriousness of the alleged violations, which remains unclear at this time.
The stock market reaction to these notices has been mixed. Shares of Adani Green and Adani Energy rose slightly on Friday, while shares of other Adani group companies declined. The ongoing investigations by SEBI will likely continue to impact the Adani group's financial performance and market standing in the coming months.