Our Bureau/Mumbai

Flagship Adani Enterprises and six other companies in the Gautam Adani-controlled group have received show cause notices from Securities and Exchange Board of India in the March quarter over non-compliance with regulations pertaining to related party transactions, the companies revealed in their annual accounts.

Adani Enterprises, in its notes to the accounts of its profit and loss statement stated, “During the quarter ended 31st March 2024, the parent company has received two show cause notices (SCNs) from the SEBI alleging non-compliance of provisions of the Listing Agreement and LODR Regulations pertaining to related party transactions in respect of certain transactions with third parties and validity of peer review certificates of statutory auditors with respect to earlier years.”

The company said that it believed that there was no material consequential effect of the show cause notices to relevant financial statements and no material non-compliance of applicable laws and regulations.

In January 2023, short seller hedge fund Hindenburg Research came out with a report that contained allegations of regulatory violations, round tripping of transactions through a complex network of entities and stock price manipulation. Violations with respect to related party transactions figured prominently in the report.

The other companies that have received show cause notices are Adani Green Energy, Adani Energy Solutions, Adani Power, Adani Total Gas, Adani Wilmar and Adani Ports and Special Economic Zone.

Adani Green Energy, which released its quarterly results today, and Adani Total and Adai Wilmar said the holding company had received a SCN from SEBI relating to validity of peer review certificate of one of joint auditors in earlier financial years, which the holding company had responded to.

Adani Power said the Sebi SCN issued to it stated that some third-party transactions had not been reported in the relevant years’ financial statements or annual reports, and the review and approvals of such transactions had not been sought.

Last year following the allegations several writ petitions were filed in the courts, and the Supreme Court formed an expert committee to investigate the allegations. The committee found no evidence of regulatory failure. In January, this year the top court disposed off all pending petitions relating to the case. An investigation by Sebi was also inconclusive.

The company said that it had also appointed a law firm to conduct an independent assessment of all the allegations contained in the short seller report and found that none of the related parties mentioned in the report were related parties and that it was in compliance with all regulations. 

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