India's markets watchdog has "drawn a blank" in investigations into suspected violations in overseas investments in the Adani group and pursuing the case could be a "journey without a destination", a court-appointed panel said.
Shares of companies of the coal-to-airports conglomerate, controlled by billionaire Gautam Adani, were up between 1.2% to 7% in late trade on Friday in a largely flat wider market.
The group's listed companies lost more than $100 billion in market value earlier this year after US-based Hindenburg Research raised several governance concerns. The group has denied wrongdoing.
Following this, the Supreme Court asked the Securities and Exchange Board of India (SEBI) to probe some of the allegations made and submit its findings to a six-member panel formed in March, which included a retired judge and veteran bankers.
"The foundation of SEBI's suspicion that led to investigations into the overseas entities' ownership is that they have 'opaque' structures," said the panel in a report dated May 6 and seen by Reuters on Friday.
"The ultimate chain of ownership above the 13 overseas entities is not clear."
But despite involving various Indian and overseas agencies in the investigation across multiple countries, "SEBI has drawn a blank", the report said, adding that trying to prove who had invested in foreign portfolio investors who then pumped money into Adani could be an arduous task.
"It is evident that such an exercise could be a voluminous one but potentially a journey without a destination," the panel said. " ... it would be a humongous task to figure out who the ultimate beneficial owner is."
Adani and the SEBI did not immediately respond to requests for comment.
The court on Wednesday granted SEBI additional time until Aug 14 to complete its investigation into possible violation of securities law and regulatory disclosures by the Adani group. The court initially wanted it done by May 2.
SEBI is investigating alleged breach of related-party transaction rules, public shareholding norms and share price manipulation.
Related-party transaction rules lay down practices to be followed when a listed company is involved in a transaction with another party, while public shareholding norms set out the minimum shareholding of a listed company required to be held by the public.
Beside flagship Adani Enterprises, other group companies include edible oils business Adani Wilmar, Adani Ports, Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Power, broadcaster NDTV and cement units ACC Ltd and Ambuja Cements.
The panel said, citing SEBI, there was evidence of a build-up in short positions on Adani group stocks ahead of the Hindenburg report.
It was not possible to conclude whether there had been regulatory failures regarding price manipulations, the panel said in the report.