The Delhi High Court is set to consider pleas filed by digital news platform Newslaundry and journalist Ravish Kumar on September 25, challenging the Centre's direction to remove reports and videos about the Adani Group. This development comes amid ongoing discussions about the Adani Group's financial strategies and recent regulatory clearances.

The petitioners argue that the case concerns the government's power to enforce an order between private parties. The Centre's counsel has clarified that the government only communicated a court order rather than passing its own directive.

This hearing follows a Delhi court's September 18 decision to set aside a civil judge's order that had directed journalists to remove alleged defamatory content against Adani Enterprises . The court noted that the removal order was too sweeping and effectively decided the case without trial.

Meanwhile, the Adani Group has been making headlines for other reasons:

Adani Enterprises stocks, including Adani Ports & Special Economic Zone Ltd., experienced a significant rally following the Securities and Exchange Board of India's (SEBI) final report that exonerated the conglomerate of allegations made by Hindenburg Research.

SEBI Findings

The market regulator's investigation found no evidence of wrongdoing by Adani Group companies. SEBI's report cleared Adani Ports & Special Economic Zone Ltd., Adani Power Ltd., and Adani Enterprises Ltd. of any violations. Moreover, key individuals including Gautam Adani, Rajesh Adani, and Jugeshinder Singh, along with related entities, were absolved of any liabilities.

Key Points from the Investigation

• No violations were found in related-party transactions
• No evidence of manipulative transactions
• No unfair trade practices were identified

Stock Performance

The positive news triggered a strong upward momentum across Adani Group stocks:

Market Sentiment

The SEBI clearance has significantly boosted investor confidence in Adani Group stocks. Additionally, a bullish note from Jefferies highlighted several positive factors for the group, including:

1. A robust renewable energy pipeline
2. The upcoming launch of the Navi Mumbai airport
3. The favorable SEBI report

These factors collectively contributed to the positive market sentiment and the subsequent rally in Adani Group stocks.

Adani Group's Future Plans

In light of these developments, Adani Group has announced plans to reduce leverage over the next five years. The group will not issue bonds in international capital markets until 2027, as stated by CFO Jugeshinder Singh. The next foreign currency bond is likely to be a dollar bond, while domestic market and Reg D issuances will continue.

Leverage Reduction Strategy

The group aims to reduce leverage levels of portfolio companies to match established utilities in OECD countries rather than emerging market levels. Currently, the net debt stands at 2.37 trillion rupees ($26.9 billion) with a net debt to EBITDA ratio of 2.63 times, down from 3.81 times three years prior.

Capital Spending and US Investment

Despite the leverage reduction strategy, Adani Group maintains ambitious capital spending plans of $15-20 billion annually over five years. This includes a $10 billion investment in US energy security and infrastructure projects. Singh indicated that the US investment will be funded from the group's cash envelope without additional borrowing.

The clearance from SEBI and the group's strategic financial plans mark a significant turning point for the Adani Group, potentially alleviating concerns that had been weighing on the conglomerate's stock performance since the Hindenburg allegations surfaced. As markets digest this new information, investors will likely continue to monitor the group's performance and future developments closely.

The upcoming Delhi High Court hearing on content removal adds another dimension to the ongoing Adani Group saga, highlighting the intersection of media freedom, corporate interests, and regulatory oversight in India's business landscape.

In a significant development for the Adani Group, the Securities and Exchange Board of India (SEBI) has cleared the conglomerate of allegations regarding violations of related party transaction rules. The ruling comes after a thorough investigation into transactions between Adani Enterprises Ltd (AEL), Adani Power Ltd (APL), and Adani Ports & Special Economic Zone Ltd (APSEZ) through intermediary companies.

Key Findings

SEBI's Whole Time Member, Kamlesh C. Varshney, concluded that the transactions in question did not qualify as related party transactions under the LODR (Listing Obligations and Disclosure Requirements) Regulations applicable during the investigation period of 2018-19 to 2022-23.

Transactions Under Scrutiny

The investigation focused on loan transactions between APSEZ and two intermediary companies, Milestone Tradelinks Pvt. Ltd. (MTPL) and Rehvar Infrastructure Pvt. Ltd. (RIPL), which subsequently provided loans to AEL and APL. SEBI examined whether these transactions should have been classified as related party transactions and disclosed accordingly.

SEBI's Reasoning

1. Regulatory Framework: The order states that the definition of related party transactions during the period in question did not include indirect transactions through unrelated parties.

2. 2021 Amendment: SEBI noted that the 2021 amendment to the LODR Regulations, which broadened the definition of related party transactions to include indirect transactions, was given deferred prospective effect from April 1, 2023.

3. No Evidence of Fraud: The regulator found no evidence of fund diversion or siphoning, noting that all loans were repaid with interest before the investigation began.

Implications for Adani Group

This ruling effectively clears the Adani Group of allegations related to:

• Misrepresentation in financial statements
• Non-compliance with audit committee approvals
• Failure to obtain shareholder approvals for related party transactions

Broader Context

The SEBI order also referenced the Supreme Court's judgment in the Vishal Tiwari vs. Union of India case, which had directed SEBI to investigate allegations stemming from the Hindenburg Research report. The regulator's findings align with the Expert Committee's recommendations submitted to the Supreme Court.

Newslaundry Challenges Government Directive

In a separate development, digital news outlet Newslaundry has filed a petition in the Delhi High Court challenging a Ministry of Information and Broadcasting (MIB) directive. The directive asked journalists and platforms to remove reports and videos related to the Adani Group, based on a Delhi Civil Court ex-parte order instructing the removal of 'defamatory and unverified' content against Gautam Adani and his companies.

Newslaundry argues that it wasn't party to the civil defamation suit filed by Adani Enterprises and had no prior knowledge of the court order. The company contends that the directive constitutes 'administrative overreach' and lacks legal basis, as it compels action based on a private dispute.

The petition claims that the government issued a blanket order without determining if the content was actually defamatory, citing examples where flagged videos made no mention of Adani or only referenced the Dharavi redevelopment project as 'controversial.' Newslaundry asserts that the directive violates constitutional principles and doesn't follow proper procedures under the Information Technology Act.

Conclusion

As the Indian markets digest these developments, it remains to be seen how SEBI's decision will impact investor sentiment towards Adani Group stocks in the coming days. Meanwhile, the legal challenge by Newslaundry adds another layer to the ongoing scrutiny of matters related to the Adani Group, highlighting tensions between media freedom and content regulation.