After the Hindenburg report on the Adani Group, almost $100 billion of the market value of the company was wiped off.
Securities and Exchange Board of India (SEBI) in the investigation of Adani Group found a violation of rules on disclosures by listed entities and limits on holdings of offshore funds, sources told Reuters in a report published on MoneyControl.
The inquiry by the SEBI came after the US-based Hindenburg Research raised several questions related to corporate governance in a report in January this year on the Gautam Adani-led Adani Group.
After the US short-selling firm made allegations about the Adani group, almost $100 billion of the market value of the company was wiped off. The conglomerate has been denying the allegations made in the Hindenburg report since January.
Reuters has quoted sources as saying that these violations are of “technical” type. After the completion of the investigation of their violations, no action would be taken more than the monetary penalty.
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The Supreme Court, which is dealing with SEBI’s investigation of the Adani group, is likely to hear the matter on Tuesday.
Until the regulators have passed orders on the Adani group, the regulators have no plans to publish the reports, stated the sources. SEBI also did not respond to the email on the matter.
Earlier on Friday, SEBI told the Supreme Court that it has almost completed the investigation of Adani Group’s transactions. Adani Group did not respond to a Reuters request on Monday for comment on SEBI’s findings. The e-mail sent for SEBI’s comment has not yet been answered by the market regulator.
Sources said that one of the important findings in the investigation is related to the violation of disclosure of some related party transactions. The source said, “Transactions with related parties should be identified and reported.” If this is not done, it may present a wrong picture of the financial position of the Indian-listed company. However, Reuters has not told which companies SEBI has investigated.
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SEBI said in the documents submitted to the court that it has investigated 13 cases of related party transactions. Sources said the maximum penalty for each violation on the part of each company could be up to Rs 1 crore ($121,000).
According to the report, the investigation also found that the offshore fund’s holding in some Adani companies was not as per the rules. Indian law allows an offshore investor to invest a maximum of 10 per cent through the FPI route. Investments greater than this are classified as Foreign Direct Investment (FDI). Sources say that some offshore investors have unknowingly crossed this limit.
