Market regulator Securities and Exchange Board of India (SEBI) has dismissed allegations of financial misconduct against the Adani group, ruling that transactions routed through Adicorp Enterprises Pvt Ltd, Milestone Tradelinks Pvt Ltd and Rehvar Infrastructure Pvt Ltd do not constitute violations of related-party disclosure norms or fraudulent practices. The orders, issued by SEBI’s whole-time member Kamlesh C Varshney, effectively give the Adani conglomerate a clean chit in one of the most high-profile regulatory probes triggered by the Hindenburg Research report of January 2023.
"On merit too, it is held that impugned transactions cannot be classified as manipulative or fraudulent transactions or unfair trade practice since: (i) there is no allegation of siphoning off of money or diversion of fund; (ii) all the money has come back with interest before the start of the investigation; and (iii) the impugned transactions have not been held as related party transactions. The show cause notice (SCN) does not refer to any evidence (other than related to non-classification of impugned transaction as related party transactions--RPTs) which can be used for considering the impugned transaction as fraudulent transaction in the absence of violation of the Listing Obligations and Disclosure Requirements (LODR) Regulations," the WTM says in two separate orders.
Hindenburg, a US-based short-seller, had alleged that obscure entities like Adicorp Enterprises, Milestone Tradelinks and Rehvar Infrastructure were used as conduits to route billions of rupees between Adani companies, concealing related-party transactions and inflating balance sheets. The report had claimed, for example, that Adicorp Enterprises with meagre financial capacity received loans of more than Rs1,200 crore from Adani Ports and Special Economic Zone Ltd (APSEZ) and transferred them almost entirely to Adani Power Ltd (APL). Similar allegations were made in respect of Milestone Tradelinks and Rehvar Infrastructure which, supposedly, channelled funds from APSEZ to Adani Enterprises and Adani Power between 2018 and 2023. These findings were cited by critics to allege systemic fraud and sparked a major sell-off in Adani stocks.
SEBI’s investigations, spanning financial years (FY)12–13 to FY20–21 in the Adicorp Enterprises matter and FY18–19 to FY22–23 in the Milestone Tradelinks–Rehvar Infrastructure matter, examined bank statements, board approvals, audit committee records and accounting standards compliance. The market regulator acknowledged that the transactions occurred and involved significant sums, but concluded that they were genuine loan arrangements repaid with interest and not schemes to siphon funds or evade disclosure.
In the Adicorp Enterprises case, SEBI noted that APSEZ had transferred Rs1,282 crore to Adicorp Enterprises, which onward lent the same to Adani Power, and that the loans were duly repaid with interest. Adicorp Enterprises earned a margin of 20bps (basis points) on the pass-through lending. In fact, APSEZ and its subsidiary Adani Logistics Ltd collectively received back more than what they had advanced, reflecting interest income. SEBI found no evidence that the transactions were sham or fictitious.
In the Milestone Tradelinks–Rehvar Infrastructure matter, SEBI examined loans exceeding Rs20,000 crore extended by APSEZ to Milestone Tradelinks and Rehvar Infrastructure and onward loans to Adani Power and Adani Enterprises. Once again, it was found that all loans had been repaid in full with interest within the investigation period.
SEBI rejected the allegation that Milestone Tradelinks and Rehvar Infrastructure were merely fronts to conceal related-party funding, noting that the companies operated as intermediaries but there was no contravention of disclosure rules when assessed under prevailing accounting standards. The orders stressed that 'substance over form' analysis did not establish that Adani group companies had attempted to misrepresent accounts or deceive shareholders.
The regulator also considered allegations of governance failures and a lack of audit committee approvals. While the show-cause notices (SCNs) had flagged that the Adani group did not specifically disclose these routed transactions as related-party dealings in annual reports, SEBI held that such classification was not required under the law because the intermediaries were not related parties under statutory definitions. Consequently, there was no obligation to seek shareholder approval or classify these as material related-party transactions (RPTs), it added.
The role of Gautam Adani and Rajesh Adani, both named in the notices for being on finance and management committees that approved the transactions, was also scrutinised. SEBI concluded that its approvals did not amount to intent to conceal or fraudulent structuring. Similarly, the involvement of group chief financial officer (CFO) Jugeshinder Singh in certifying financials was not found to be violative of regulations. The regulator observed that, while the entities had close business links with Adani companies, their independent corporate identities meant the transactions were legally distinct and compliant.
In its final directions, SEBI categorically ruled out violations of the SEBI Act, the LODR Regulations, and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations. No penalties or adverse directions were imposed against any of the Adani entities or their officials. The orders emphasised that 'no scheme or artifice to conceal related party transactions has been established' and that the allegations of misrepresentation were 'not substantiated'.
The clean chit is a significant relief for the Adani group which had seen its market value eroded by more than US$100bn (billion) in the immediate aftermath of the Hindenburg report. The conglomerate had consistently denied any wrongdoing, asserting that all transactions were fully compliant with Indian laws and accounting standards.
The outcome also carries political and regulatory ramifications. The Hindenburg report had triggered intense debate in India, with Opposition parties alleging crony capitalism and lax oversight. The Supreme Court had directed SEBI to probe the matter and the regulator had been under pressure to demonstrate rigour.
By closing the cases without finding violations, SEBI has effectively neutralised one of the most damaging allegations against the Adani group. However, questions are likely to persist among critics about whether the current regulatory framework is sufficient to capture complex intra-group financing structures and whether a narrow reading of 'related party' adequately protects investor interests.
For now, the regulator’s orders mark the conclusion of a two-year saga that roiled Indian markets, strained political discourse and drew global attention. The Adani group has emerged with its reputation officially restored in the eyes of the market regulator, though the shadow of the Hindenburg episode may linger in the political arena.
