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Close Adani-KP links seen, Sebi to JPC

BS Economy Bureau in New Delhi

The Securities and Exchange Board of India has informed the Joint Parliamentary Committee investigating last year's stock scam that it has found instances of a close relationship between the Adani group and Ketan Parekh entities.

In its report on the second phase of investigations on Adani Exports which focussed on price variation in the shares of the company during October-December 1999, Sebi said there were fund flows involving crores of rupees between these entities for which no interest was charged. It said Ketan Parekh held 3.2 million shares as on December 29, 2000 in Adani Port, a closely held company.

Further, the investigation report said all sales transactions by Adani group entities were carried out through the same broker, Triumph International Finance (a KP group entity), and bought by other KP group companies.

In addition, violations of the takeover code were also observed. Data submitted by National Securities Depository to Sebi revealed that on certain dates the total number of shares held by KP entities acting in concert exceeded 5 per cent of the total paid up equity capital of Adani Exports. The total number of shares of the company on September 18, 2000 was 2.2 crore (22 million). On five instances, KP entities held between 14.02 lakh (1.4 million) and 16.89 lakh (1.7 million) shares.

In addition, Sebi's analysis of the bank accounts of KP entities for the period January 2000 and March 31, 2001 showed that funds have come from certain companies including Adani group companies.

"Investigations revealed that the Adani group has given around Rs 340 crore (Rs 3.4 billion) to Ketan Parekh entities and has received around Rs 208 crore (Rs 2.08 billion) from them," Sebi said in the report. It added that the Adani group has confirmed that it did not charge any interest.

Adani Exports has stated that it was agreed between them that from time to time, if either party requests the other party to provide financial assistance on a short term basis, the other party would agree to provide financial assistance to the extent possible.

They further stated that, since this was a reciprocal financial agreement, it was agreed that no interest would be charged or payable on the same unless it was specifically agreed otherwise, it said.

"It is surprising that no interest was charged on crores of rupees by the Adani group. In fact, in some cases, the time period between the funds provided and received by the Adani group runs into months. This shows that there is a well established link between these groups," the report said.

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