At least six Adani group firms have received show cause notices from Securities and Exchange Board of India (SEBI) for alleged violation of related party transactions and non-compliance with listing regulations, the companies said in stock exchange filings.

Group's flagship Adani Enterprises, Adani Ports & Special Economic Zone, Adani Power, Adani Energy Solutions, Adani Total Gas and commodities firm Adani Wilmar in notes to their respective March quarter and FY24 financial results disclosed information on the SEBI notice.

The firms said there is no material non-compliance with applicable laws and regulations and no material consequential effect.

However, auditors of the companies, except those for Adani Total Gas and Adani Wilmar, issued a qualified opinion on the financial statements, implying that the outcome of the SEBI investigation may have a bearing on financial statements in the future.

Adani Green Energy is yet to announce its earnings while ACC and Ambuja Cement said they have not received any notice from SEBI on the matter and there was no open matter relating to them and any non-compliance with applicable regulations.

The SEBI notices to the six companies are part of a probe that followed short seller Hindenburg Research making damning allegations of corporate fraud and stock price manipulation against Adani Group in January 2023. Though Adani vehemently denied all allegations and any wrongdoing, the report triggered a stock rout that wiped off about USD 150 billion of the group's market value at its lowest point.

Most of the group stocks have bounced back as the group plotted a comeback strategy.

A show cause notice (SCN) is not an indictment. It asks entities to explain why legal action should not be taken.

Adani Enterprises in its earning statement on Thursday said a short seller's report (SSR) made certain allegations against some of the Adani Group companies.

The matter also went to the Supreme Court, which observed that SEBI was investigating the matter. The SC also constituted an expert committee to investigate and suggest measures to strengthen existing laws and regulations.

The committee in its May 6, 2023 report found "no regulatory failure in respect of applicable laws and regulations," it said. "SEBI also concluded its investigations in 22 of the 24 matters as per the status report dated August 25, 2023 to the SC." On January 3, 2024, the SC disposed of 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 3 months, and take its investigations (including 22 already completed) to their logical conclusion in accordance with law.

During Q4 "the Parent Company received two SCNs from 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 firm said.

It however did not disclose the nature of the allegations.

"The management believes that there is no material consequential effect of above show cause notices to relevant financial statements and no material non-compliance of applicable laws and regulations," it said.

The company said that in April 2023, the parent company had undertaken review of transactions referred in SSR through an independent assessment by a law firm, which confirmed "that (a) none of the alleged related parties mentioned in the SSR were related parties to the Parent Company or its subsidiaries, under applicable frameworks; and (b) the Parent Company is in compliance with the requirements of applicable laws and regulations." "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 that there is no material non-compliance of applicable laws and regulations..." it added.

APSEZ said during FY24 "SCNs were received from SEBI alleging (i) non-compliance of provisions pertaining to related party transactions under applicable regulations including Listing Agreement and LODR Regulations with regard to transactions entered in the earlier years with certain parties..." "The allegations are that the company has not obtained the requisite approvals, and have not made the required disclosure in financial statements/ annual report (ii) Not recalling security deposits against terminated contracts leading to not using the funds for company's core business purposes and thus not complying with the company's code of conduct," it said.

It added the amounts due in respect of these transactions along with interest thereon have been received in full before March 31, 2023 and there are no transactions with these parties in the current financial year and there are no losses suffered.

"In April 2023, the company had obtained a legal opinion by an independent law firm, confirming (a) none of the alleged related parties mentioned in the short-seller report were related parties to the Group, under applicable frameworks...," APSEZ said.

In its replies to SEBI, the company has denied the charges in its entirety on grounds that these transactions were in full compliance with the prevailing laws and regulations.

Adani Power said it received two SCNs from SEBI in March quarter and that the company has responded to SEBI on both.

"Based on legal advice obtained, management believes that considering that alleged transactions with third parties were undertaken in compliance with applicable law at the relevant time... there is no non-compliance of applicable laws and regulations as alleged by the SCNs," it said.

Adani Total Gas, Adani Energy Solutions and Adani Wilmar in separate filings said that during Q4, the holding company received SCN from SEBI relating to validity of Peer Review Certificate (PRC) of predecessor auditors in previous financial year, which has been responded to.

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