We cover what has happened with Adani Group in the past few days.

The News

Last Thursday (November 21st), Adani Group witnessed a significant fall in its stock prices, losing ₹2.24 lakh crore in market value.

The reason? US’s Department of Justice (DoJ) and Securities and Exchange Commission (SEC), have filed an indictment (a formal charge or accusation of a crime) against Gautam Adani and seven other individuals.

Why is this a big deal?
The filing isn’t submitted by an individual or institution but rather by a government department—the US equivalent of the Ministry of Law and Justice and SEBI.

Think of it this way: a government department goes to court and submits all the necessary documents as evidence. The court reviews these documents and then issues a notice saying there’s enough proof to proceed with a case.

This notice is called an indictment (an official accusation). Keep in mind that it’s only an accusation, not a final judgment.

The Allegation

Between 2020 and 2024, the Adani Group is accused of bribing Indian government officials to secure a lucrative solar energy supply contract. If you’re wondering what it has to do with USA, you are pointing in the right direction. Well, to execute those projects, the Adani Group has raised funds from US investors by selling bonds.

Basically, the allegation claims that the Adani Group didn’t disclose this bribery to its US bond investors. By hiding this critical detail, the company potentially exposed those investors to additional risks they weren’t aware of. It explains the involvement of the Securities and Exchange Commission (SEC), the SEBI equivalent in USA.

Here’s what has happened

There are two major parties involved in the power supply industry. The power producer and the distributor companies.

Power distribution companies (DISCOMs), usually owned by state governments, often purchase power from the producer to distribute it to end users (consumers).

The central government-owned Solar Energy Corporation of India (SECI), a power-producing entity focused on solar power, awarded energy contracts to Adani Group and Azure Power through a competitive bidding process.

These contracts required the companies to produce electricity and supply it to state-owned DISCOMs (distribution companies) at fixed tariff rates. However, DISCOMs found that the cost of solar energy was higher than thermal power, making it unaffordable.

SECI, unable to sell the power to state electricity boards, found itself stuck without buyers. Allegedly, from 2020 to 2024, the Adani Group paid over ₹2000 crores in bribes to Indian state officials to force these electricity boards to buy the power.

As per the accusations, Adani Green Energy was going to make ₹16000 crores in profits over 20 years from these deals.

What does Adani have to say?

Adani Group issued a media release saying that the allegations made by the US Department of Justice and the US Securities and Exchange Commission are baseless.

It further mentioned that the group maintains the highest standards of governance, transparency, and regulatory compliance across all jurisdictions of its operations.

The chief financial officer (CFO) of Adani Group has posted on ‘X’ that it relates to one contract of Adani Green, which is roughly 10% of the overall business of the company.

💡 Mutual funds exposure with Adani stocks

To conclude

The company that is at the center of this storm is Adani Green Energy, whose stock has been falling continuously, over 30% in the last three trading days, the highest among the Adani Group stocks. Other group companies of Adani recovered somewhat from their lows.

All these allegations are not coming from some research institute like Hindenburg but from the US government itself. Though it carries more gravity, at its ground, these are still allegations and not a verdict.