The supreme court on Thrusday directed the Securities and Exchange Board of India to complete the investigation started by it in the wake of the Hindenburg report on the Adani group of Industries and submit a report within two months. A three Judge Bench presided over by the chief justice of India asked the market regulator whether there has been a violation of Rule 19(a) of the Securities contract regulation rules ,to see if the company has disclosed it’s transactions or not and check whether there has been a stock price manipulation.
An another three Judge Bench comprising of PS Narasimha and JB Baradiwala set up an expert committee headed by it’s former judge Justice AM Sapre to review the report ,regulatory mechanisms.
The former Justice AM Sapre would head the committee
The former Supreme Court Justice AM Sapre would head the six-member committee comprising OP Bhatt, Justice JP Devdhar, Nandan Nilakeni, KV Kamath and Somasekharan Sundaresan.
It will look into the overall issue and the factors that might have led to volatility in the securities market and increase investors awareness of the stock market , investigate whether there has been a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani group of industries.
It will also suggest changes in the regulatory mechanism if needed in order to ensure the safety of investors .Adani pre posting of the Hindenburg report was in the top 10 list of the richest persons in the world having a net worth of 120 billion , after the Hindenburg report went public ,his net worth declined by $65 billion within a span of 3 days ,the stock prices fell sharply .
The committee was formed in response to the 4 PILS filed by various lawyers.
Vishal Tiwari filed a PIL demanding setting up of committee headed by the Apex court judge .The 2nd PIL was filed by ML Sharma who wanted setting up of a committee to prosecute Short seller Nathan Anderson and his associates in india .Congress leader Jaya Thakur filed a PIL to set a committee against the Adani group headed by the Apex court judge .
The committee is expected to be transparent and impartial and it will check the truthfulness of the allegations.The focus will also be on Hindenburg’s admitted position of acquiring a short position with Adani group and gather all the details of its transactions undertaken by it and it’s linked companies.Gautam Adani has welcomed the step and he has said that he expects it would bring out the truth.
Accusations against Adani group of Industries by Hindenburg report:
1.Adani has used aggressive and unconventional accounting practices to inflate it’s profits and undestimate the debt it has taken over the years which is huge .
2.Revene of some subsidiaries and joint ventures is not shown in the financial statements of the company which does not reflect its real financial condition.
3.Tax evasion and Insider trading.
4.Adani group of Industries has been accused of damaging Environment,ecosystems.
5.It has a strong connection with the political stalwarts and it is with the help of those ,Adani group of industries was able to rise in the recent past .
6.The minor shareholders do not have a say in the company ,but the whole is run by Gautam Adani himself .
7.The political affiliation has helped it to be profitable in the port business .
8.Companies of they Adani group of industries have been targeted by the report and stock price manipulation has been done in these .They include .
1.Adani Green energy while deals with the generation of Renewable energy.
2.Adani enterprises dealing in coal mining and trading.
3.Adani total gas dealing in gas distribution.
4.Adani power dealing In coal based power generation.
6.Adani transmission dealing with power transmission.
7.Adani Wilmer ,a joint venture with Singapore Wilmar international.
However ,the Adani group of Industries has rejected all of these as bigotary .The Hindenburg company has been accused of doing the short selling of Adani group of Industries stocks which means when you gain profit owing to the fall in the stock prices of a company. The Hindenburg has claimed that it has done a 2 year long research on the company with getting a cognisance of thousands of documents and has challenged Adani to prove the report wrong.