The Securities and Exchange Board of India (SEBI) on Thursday issued its final order in the matter of Hindenburg Research’s allegations against the Adani Group relating to transactions with Milestone Tradelinks Pvt. Ltd. and Rehvar Infrastructure Pvt. Ltd.
The case concerned whether loan transactions between Adani Ports and SEZ Ltd., Adani Power Ltd. and Adani Enterprises Ltd. through the two private entities during FY2018–19 to FY2022–23 should be treated as undisclosed related party transactions. Hindenburg had alleged that these entities acted as conduits to channel funds within the Adani Group.
SEBI’s findings
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After detailed investigation and hearings, SEBI concluded that the transactions do not qualify as related party transactions under the Listing Obligations and Disclosure Requirements (LODR) Regulations as they stood during the relevant period.
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The regulator noted that while large sums were lent and repaid, all loans along with interest were fully repaid before March 31, 2023, and there was no evidence of fund diversion or investor losses.
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SEBI held that the 2021 amendment to broaden the definition of related party transactions was prospective in nature, effective only from April 2022, and could not be applied retrospectively to the transactions under scrutiny.
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The regulator also dismissed charges of fraudulent or unfair trade practices, citing lack of evidence of price manipulation, siphoning of funds, or inducement of investors.
Impact on Adani Group and individuals
The order effectively clears Adani Ports, Adani Power, Adani Enterprises, promoters Gautam Adani and Rajesh Adani, CFO Jugeshinder Singh, and the two private firms (Milestone and Rehvar) of alleged violations under SEBI Act, PFUTP Regulations, and LODR Regulations. SEBI stated that since no violations were established, no penalties or directions were warranted.
Background
The proceedings stemmed from the January 2023 Hindenburg Research report, which had raised questions about related party dealings and fund flows within the Adani Group. The matter was also monitored by the Supreme Court of India, which had directed SEBI to investigate.
Conclusion
In its 44-page order, SEBI’s Whole Time Member Kamlesh C. Varshney concluded:
“The allegations made against Noticees in the SCN are not established… Accordingly, the proceedings against Noticees are disposed of without any direction.”
This ruling marks the closure of one of the high-profile probes triggered by the Hindenburg-Adani saga, though SEBI continues to oversee disclosures and compliance across the group.
