Market regulator Sebi and the Directorate of Revenue Intelligence (DRI) are probing some Adani Group companies for alleged non-compliance with rules, the government told the Lok Sabha on Monday.
Minister of State for Finance Pankaj Chaudhary in a written reply to a question said accounts of three of the six Mauritius-based funds, that have invested most of their money in Adani Group firms, were frozen in 2016 over the issuance of Global Depository Receipt (GDR) by certain listed firms. No freeze was ordered for their holding in other firms.
"Sebi is investigating some Adani Group companies with regard to compliance with Sebi regulations," he said without giving details.
Also, DRI "is investigating certain entities belonging to the Adani Group of Companies under laws administered by it," he said.
The minister did not name which of the Adani Group companies were being investigated by Sebi and DRI. He also did not elaborate on the nature of the violation.
He however said the Enforcement Directorate (ED) wasn't investigating the Adani Group.
Shares of port-to-energy group nosedived last month after reports that accounts of three of the six Mauritius-based funds that have invested most of their money in Adani Group firms had been frozen by the national share depository. The three funds owned about USD 6 billion of shares across the conglomerate.
The Adani Group on June 14 denied the report of the freeze, calling it "blatantly erroneous". A day later it clarified that three demat accounts of Cresta Fund Ltd, Albula Investment Fund Ltd and APMS Investment Fund were "suspended for debit", adding to the confusion over the status of the offshore funds.
Shares of Adani Total Gas Ltd, Adani Power Ltd, Adani Transmission, Adani Ports & Special Economic Zone , Adani Green Energy and flagship Adani Enterprises were impacted by the reports.
Prior to the episode, some of Adani Group's listed stocks had soared more than six folds in value since the start of 2020.
Group's billionaire founder-chairman Gautam Adani had earlier this month blamed "reckless and irresponsible" reporting for the fall.
"In a matter pertaining to issuances of GDR by certain Indian listed companies, Sebi vide order dated June 16, 2016, had directed depositories to freeze particular beneficiary accounts of certain FPIs including Albula Investment Fund Ltd, Cresta Fund Ltd, and APMS Investment Fund Ltd," Chaudhary said.
But no order in respect of other beneficiary accounts of these three FPIs has been passed by Sebi, he said.
"Six companies of the Adani Group are listed and traded on recognized stock exchanges in India. The holding of Foreign Portfolio Investors (FPIs) in these companies is based on day-to-day trading of shares and thus dynamic," he added.
Gautam Adani had on July 12 stated that the diversions caused by "twisted narrative" would not impact the group in the long run.
"Unfortunately, some of our small investors were affected by this twisted narrative which seemed to imply that companies have regulatory powers over their shareholders and that companies can compel disclosure," he had said.
Commenting on the issue, Adani Group spokesperson said the conglomerate has always been compliant with Sebi regulations and it hasn't received any request from the market regulator recently.
On the DRI probe, the spokesperson said Adani Power was show caused five years back but the investigating agency had found "no over-valuation of equipment" and the matter is before the appellate tribunal.
"We have always been transparent with all our regulators and have full faith in them," the spokesperson said. "While we have always been fully compliant with applicable Sebi regulations, we have made full disclosure to SEBI on specific information requests from them in the past. However, we have not received any communication or information requests recently."
With regard to the DRI matter, the spokesperson said Adani Power was issued a show-cause notice by DRI about 5 years back.
"Subsequently, DRI passed an order in favour of Adani Power confirming that there is no over-valuation of equipment," the spokesperson said. "The department has approached the Tribunal and the matter stands sub judice now."
It wasn't clear which department approached the tribunal and if it was to challenge the 'clean chit' over alleged over-valuation of coal imports to get higher traffic for electricity generated from it.
"Adani Group is a responsible corporate citizen and strongly believes in compliance of appliable laws and adheres to prudent corporate governance framework," the group spokesperson added.