Adani Energy's Fund Diversion Under Scrutiny

Credit rating firm CARE has recently highlighted a significant deviation in the use of funds by Adani Energy Solutions, formerly known as Adani Transmission. The company raised Rs 8,873 crore through a Qualified Institutional Placement (QIP) in August 2024, with specific allocations outlined for various projects.

Details of the Diversion

According to the CARE report, Adani Energy redirected up to 10% of the funds initially earmarked for the installation of smart meters to meet the capital expenditure requirements of its transmission systems. This move, while within the permissible materiality threshold, has raised questions about transparency and corporate governance.

Regulatory and Legal Implications

A legal expert pointed out that such deviations, especially those exceeding 10%, necessitate formal disclosure and may require shareholder approval. The report also revealed that Adani Energy overspent by approximately Rs 175 crore on its transmission segment, utilizing funds allocated for smart meters.

Company's Justification

The board of directors, under the leadership of Gautam Adani, defended the reallocation, citing the increased capital expenditure outlay for transmission projects, which is projected to reach Rs 60,000 crore by the end of fiscal 2025.

SEBI's Stance on Fund Utilization

SEBI regulations mandate strict monitoring and clear disclosure of how funds raised through public issues are spent, emphasizing the importance of adherence to stated objectives in offer documents.