In another setback for the Adani group, the Securities and Exchange Board of India (SEBI) has issued show cause notices (SCN) to other Adani group companies. This comes after Adani Energy Solutions on Friday disclosed the SEBI show cause notice in its September quarterly results report.


In the latest, Adani Power on Monday disclosed SEBI’s show cause notices in its earnings report.



SEBI Show Cause Notice


“During the quarter ended September 30, 2024, SEBI announced in a press release that it has concluded one of the ongoing investigations. Further, during the current quarter, SEBI has finalized the other ongoing investigation and has issued a show cause notice (SCN) to the company, alleging incorrect categorization of shareholding of certain entities, relating to SEBI public shareholding norms and consequential consequences. regulatory and statutory requirements by providing information, responses, documents and/or clarifications, where applicable.


Adani Power submitted the disclosure with its earnings report on Monday. Although the group company did not give details, the company filing indicates that the notice was received during the September quarter. The notices issued by SEBI to Adani group companies allege that the companies have wrongly categorized the participation of certain entities as part of its public shareholding.



Hindenburg vs Adani Group

This is one of the allegations Hindenburg made against the Indian conglomerate in its scathing report in January last year. According to SEBI rules, every listed company must ensure that public shareholders hold at least 25 per cent of its equity. All assets held by entities, including foreign portfolio investors, that have links to the promoter group must be reclassified as promoter assets.


Adani Power, in its results filing with the BSE, said: “During the quarter ended September 30, 2024, SEBI announced in a press release that it has concluded one of the ongoing investigations. The company said, “Also during the current quarter, SEBI finalized the other ongoing investigation and issued a show cause notice to the company, alleging wrongful categorization of shareholding of certain entities, related to norms of public shareholding of SEBI and the resulting consequences.


Adani Power added: “The company is in the process of responding to regulatory and statutory authorities by providing information, responses, documents and/or clarifications, as appropriate.



Sequence of events


The controversy began after Hindenburg Research made accusations against the Indian business group in January last year. The American company Research claimed that several foreign funds held shares in Adani group companies with links to the promoter entities. Hindenburg accused the group companies of violating SEBI norms on minimum public shareholding as the promoter’s shareholding exceeded the stipulated 75 per cent.


This is consistent with SEBI’s allegations in its latest communications to Adani group companies. The Adani group has always refuted these claims. For now, all eyes will be on the earnings reports from Adani’s flagship company and Adani Ports later on Tuesday.


The timing of SEBI’s notice raises eyebrows. This comes as the tenure of SEBI chief Madhabi Puri Buch is coming to an end. The government is expected to soon launch a call for applications from potential candidates. Some fear that Buch will drag his feet in the face of summons issued by the Public Accounts Committee. The SEBI chief skipped the PAC deposition scheduled for October 24, citing unavoidable personal work. The PAC chairman postponed the meeting because Buch had skipped the deposition and was unhappy with the last-minute cancellation.