After the junior finance minister told the parliament that several of the companies controlled by Indian billionaire Gautam Adani are being investigated by the country’s markets regulator over compliance with securities rules the stocks plummeted for a second day on Tuesday.
In addition to the SEBI, the Directorate of Revenue Intelligence(DRI), is “investigating certain firms” connected to the Adani Group for compliance with another set of local regulations, according to junior FM Pankaj Chaudhary. Mr. Chaudhary did not go into detail about the investigations and also did not name the Adani group entities that are being investigated.
The minister’s statement comes after a local media report last month that indicated the national stock depository had frozen the accounts of three Mauritius-based funds with large exposure to Adani Group stocks due to insufficient disclosures.
While the ports-to-power conglomerate vehemently denied the report, investor concerns sparked a stock sell-off that wiped off billions of dollars from Adani’s businesses.
“We have always been transparent with all our regulators and have full faith in them,” an Adani group spokesperson said in a statement on Monday.
The conglomerate has always complied with SEBI regulations and made full disclosures on “specific information requests” from the regulator in the past, according to the statement which added that the group had not received any communication or information requests recently.
The DRI investigation stems from a five-year-old show-cause notice issued to Adani Power. The federal agency issued an order stating that Adani Power had “no over-valuation of equipment,” a finding that has been contested in a local tribunal and is currently under appeal, according to the spokeswoman, who did not elaborate.
Mr. Chaudhary declined to clarify whether a new investigation by the federal income tax department was ongoing, citing legal restrictions but emphasized that the Enforcement Directorate, which investigates economic crimes, including violations of India’s money laundering laws, was not conducting one.
Three Mauritius-based funds invested over 95% of their assets in Adani Group companies, which is a very rare strategy for foreign funds.
Except for a 2016 regulation that only applied to issuances of global depository receipts by specific Indian listed businesses, Mr. Chaudhary told legislators on Monday that there were no restrictions on the funds. Nonetheless, since last month, when the funds’ contents were initially revealed, shares of Adani companies have fallen.
According to the Bloomberg Billionaires Index, Gautam Adani’s net worth, which had risen to the highest in the world in March, has now dropped to $52.7 billion. The tycoon is now Asia’s fourth wealthiest person, down from second earlier this year.
