Relief for Adani Group

A Supreme Court-appointed expert committee’s findings that it cannot conclude any regulatory failure around Adani Group’s stock rallies will come as a relief to the business conglomerate. No adverse observation has been made against it. The Modi government has been vehemently opposed to the Opposition’s demand for a joint parliamentary committee probe into the Hindenburg Research report. In January, the US-based short-seller raised concerns over the Adani Group’s high debt levels and alleged improper use of offshore tax havens as well as stock manipulation. It triggered a rout of the group stocks. According to the six-member committee, the market has re-priced and re-assessed the Adani stocks. Set up in response to writ petitions in the apex court, it noted that market regulator Securities and Exchange Board of India (SEBI) did not find any pattern of artificial trading during the period the Adani Group stocks scored hefty gains on the bourses.

The report has a caveat that its conclusions are based on the prima facie position of SEBI, which has decided to conduct further investigations. SEBI found that there were some entities who took short positions before the report was published and profited by squaring off once the prices crashed. The regulator has been given time till August 14 by the apex court to complete its probe into the allegations of brazen accounting fraud and stock manipulation. The Gautam Adani-led group has all through rejected the Hindenburg report as ‘maliciously mischievous’. The last word on the Adani-Hindenburg saga is yet to be heard.

The expert panel was also asked to suggest measures to strengthen the regulatory mechanism. In its estimation, SEBI is well-empowered and conferring more powers on it does not seem proper. At the same time, it has prescribed steps to improve regulatory functioning and increase investor awareness; these should be taken seriously by all stakeholders.