Adani Enterprises received two show cause notices from Sebi on Hindenburg report in March quarter

Adani Enterprises on Thursday disclosed that it received two show-cause notices (SCNs) from the Securities and Exchange Board of India (Sebi) in the March quarter of FY2024, where the regulator alleged non-compliance of its provisions of the listing agreements and disclosure requirements (LODR regulations).

In a stock exchange filing, which was part of its Q4 FY24 results, the company said the alleged non-compliance mentioned by Sebi is related to party transactions with respect to certain transactions with third parties and validity of peer review certificates of statutory auditors in previous years.

The company clarified that there is no material consequential effect of above SCNs to FY24’s financial statements and there is no material non-compliance of applicable laws and regulations.

The company said following the Hindenburg report published on Adani Group companies in January 2023, Adani Enterprises undertook a review of transactions referred to in short-seller’s report (SSR) in April 2023 through an independent assessment by a law firm.

The law firm’s assessment revealed that none of the alleged related parties mentioned in the SSR were related parties to the parent company or its subsidiaries, the company clarified.

“During the quarter ended 31st March 2023, a short seller’s report (“SSR”) was published making certain allegations against some of the Adani Group Companies (including the Parent Company). In this regard, certain writ petitions were filed with the Hon’ble Supreme Court (“SC”) seeking independent investigation of the allegations in SSR. During the proceedings, SC observed that the Securities and Exchange Board of India (“SEBI”) was investigating the matter. The SC also constituted an Expert Committee to investigate as well as suggest measures to strengthen existing laws and regulations and also directed the SEBI to consider certain additional aspects in its scope. The Expert Committee submitted its report dated 6th May 2023, finding no regulatory failure in respect of applicable laws and regulations. The SEBI also concluded its investigations in 22 of the 24 matters as per the status report dated 25th August 2023 to the SC,” the company said.

“On 3rd January 2024, the SC disposed off all matters in various petitions including those relating to separate independent investigations relating to the allegations in the SSR. Further, the SC directed SEBI to complete the pending two investigations, preferably within three months, and take its investigations (including 22 already completed) to their logical conclusion in accordance with law. 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 management believes that there is no material consequential effect of above SCNs to relevant financial statements and no material non-compliance of applicable laws and regulations,” it added.

It further added: “Based on above independent assessment, the SC order and the fact that there are no pending regulatory or adjudicatory proceedings as of date, except as mentioned above, the management concludes that there is no material non-compliance of applicable laws and regulations and accordingly, these financial statements do not carry any adjustments in this regard.”

Earlier in the day, Adani Enterprises reported that its net profit saw a major fall of 38% year-on-year to Rs 451 crore, on the back of exceptional expenditure and the rise in material costs and operating costs.

The flagship firm of Adani Group reported that its revenue from operations rose nearly 1% YoY to Rs 29,180 crore in the fiscal fourth quarter, said the company in an exchange filing on May 2.

The company also declared a dividend of Rs 1.3 per share for the full fiscal year 2023-24.

Shares of Adani Enterprises closed at Rs 3,037.15, down by 0.56%.