Adani Energy Solutions Ltd (AESL), the power transmission arm of the Adani Group, on Tuesday said it has received a notice from Sebi alleging incorrect classification of certain investors as public shareholders. Without giving details, the firm said in a note to its second quarter earnings statement that it will respond to the regulatory and statutory authorities by providing relevant information/clarifications. The group’s renewable energy firm, Adani Green Energy Ltd, which also declared its second quarter earnings, did not receive any fresh notice from Sebi. “During the current quarter, it has received an SCN (show cause notice) alleging incorrect classification of shareholding of certain entities as public shareholding and the consequences thereof,” AESL said. “The company will respond to the regulatory and statutory authorities by providing applicable information, responses, documents and/or clarifications in due course.”
As per SEBI’s listing rule, listed firms should have a minimum of 25 per cent equity owned by public investors. Foreign portfolio investors associated with the promoter group are generally included as promoter holding. Seven of the 10 listed firms of the Adani Group have been booked by the Securities and Exchange Board of India for alleged violations of related party transactions and non-compliance of listing rules in the quarter ended March 31.
The show cause notices were received from the Securities and Exchange Board of India (SEBI), as disclosed by the companies in their regulatory filings to the stock exchanges. While group flagship company Adani Enterprises Ltd, renewable energy firm Adani Green Energy Ltd (AGEL) and city gas distributor Adani Total Gas Ltd said in May that Sebi has sent notices to their parent company or holding company controlled by group chairman Gautam Adani, port company Adani Ports and Special Economic Zone, Adani Power, power transmission firm Adani Energy Solutions and commodity firm Adani Wilmar. The Sebi notices were part of an investigation that was carried out in January 2023 after US short-seller Hindenburg Research levelled serious allegations of corporate fraud and stock price manipulation against the Adani Group. Though Adani vehemently denied all the allegations, the report triggered a massive drop in the stock, wiping out the group’s market value by about USD 150 billion.
Most of the group’s stocks have surged as the group, which has operations in sectors ranging from ports to energy, chalks out a comeback strategy. The show cause notice is not an indictment and seeks an explanation from the entities as to why legal action should not be taken against them. In the filing, AGEL said that certain allegations have been made against certain Adani Group companies in a short-seller’s report (SSR). The matter went to the Supreme Court (SC), which observed that SEBI is investigating the matter and also constituted an expert committee to examine and suggest measures to strengthen existing laws and regulations.
