The Supreme Court of India on Thursday also asked the local markets regulator to investigate any manipulation in the Adani stocks and apprise the court and the expert panel of its findings within two months. The committee is also tasked with assessing if there has been a regulatory failure in this situation and to suggest measures for strengthening the regulatory framework.
The panel will be led by retired top court judge A.M. Sapre and have veteran bankers O.P. Bhat and K.V. Kamath as well as Nandan Nilekani, Somasekhar Sundaresan and retired judge J.P. Deodhar.
The ruling came after public interest petitions were filed seeking the court’s intervention after US-based Hindenburg Research’s Jan 24 report alleged accounting fraud and stock manipulation by the conglomerate helmed by billionaire Gautam Adani, triggering a stock rout. The Adani Group has denied the short seller’s allegations.
The market regulator, the Securities Exchange Board of India, is already inquiring into the allegations levied by Hindenburg while the banking regulator has asked Indian lenders for details of their exposure to the Adani group, Bloomberg reported in February citing people familiar with the matter.
The pleas sought a probe by a committee into various aspects, including exposure of and risk to public money through public sector undertakings. Four petitions have been filed by individuals flagging the larger public interest in this crisis. Of these, one is by a member of the Indian National Congress, the country’s main opposition party.
The episode has become a flash point between India’s ruling party and the opposition parties since the tycoon is often seen as being close to Indian prime minister Narendra Modi.
The parliament session held in February saw disruptions on several days with the opposition demanding a probe into the ports-to-power conglomerate that was expanding at a breakneck speed in the past few years, foraying into new sectors including renewable energy, airports, cement, mining and media.
The Adani Group in the past few weeks has been in overdrive to assuage investor concerns about the corporate governance and indebtedness at the conglomerate.
The tycoon, who used to be Asia’s richest person, and his aides have so far junked a US$2.5 billion share sale by the flagship Adani Enterprises Ltd., scrapped new acquisitions, prepaid some debt, plan to repay more, reined in capital spending as well as hired top-shelf US crisis communication and legal teams.
The group also held investor roadshows this week in Singapore and Hong Kong as a confidence-building measure, which has helped Adani stocks stage a rebound.
When the top court agreed to hear the petitions against the Adani Group last month, it said it is “treading with caution” and is concerned with protecting investors’ interest. The Indian government, later on, informed the court that it is not opposed to a court-appointed probe panel.
The court had earlier refused to consider the Indian government’s recommendations for committee members in the interest of transparency and instead said it will appoint the panel on its own. But it had invited recommendations from the government and all the petitioners for pinning down the scope of the investigation by the court-appointed committee.