Adani Group Served With Show-Cause Notices From SEBI

Adani Group is the third largest conglomerate in India, headquartered in Ahmedabad. The group has a total market capitalisation of more than Rs.15 Lakh Crores. Six of these Adani Group companies including Adani Enterprises, Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Wilmar and Adani Total Gas have received show-cause notices from the regulator this week.

The reason for these notices

The Six Adani Group companies have received show-cause notices from the Securities and Exchange Board of India for alleged violation of related party transactions, the validity of auditor certificates in the past and also non-compliance with listing rules and regulations as mentioned by the companies under their regulatory filing to the stock exchanges. A show cause notice is a document that is issued to a party in dispute, it sets out details of the misconduct. These notices are issued following the investigations of SEBI on the allegations made against the Adani Group by Hindenburg.

Impact of These Notices on the Group

The Adani group firms have said that based on the legal opinion they have received, It is unlikely that any impact will be caused because of the regulator’s notice. Auditors of these mentioned entities except Adani Wilmar and Adani Total Gas have placed a qualified opinion which indicates that the outcome of this investigation by SEBI might affect the financial statements in future.

Adani Ports and Adani Power have said that the allegations against them were about not obtaining the requisite approvals and not making the required disclosures in the financial statements of the company,  

Furthermore, Auditors of Adani Enterprises have said,” On account of the outcome of the investigations by the Securities and Exchange Board of India on our review of related documents, we are unable to comment on the possible adjustments and  disclosures, if any, that may be required to be made in the accompanying Statement in respect of this matter.”

Conclusion: The regulators in India such as the SEBI have now become ruthless and very active when it comes to disclosures and compliances. They want to maintain transparency, stability and integrity in the system to protect the interest of depositors. The stocks of these six entities of the group after this news are trading lower by 0 to -1.5%.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.