A day after the Securities and Exchange Board of India (Sebi) barred ADA Group chairman Anil Ambani and other key directors from investing in listed securities, the younger Ambani brother on Sunday clarified that the Sebi consent order will not have any kind of financial implications on the company?s growth prospects.
?The full financial flexibility of the group is protected and there are no restrictions that could impact the growth of group companies,? he said, adding that the group has strengthened their internal systems and process to avoid such future instances.
In a bid to calm market sentiments following the regulatory order, Anil Ambani also said the group companies are allowed to raise funds through primary market issuances, can subscribe to rights and preferential issues and are free to participate in any mergers and acquisitions (M&A) if required. ?The restrictions are only for investing in listed stocks. But if we want to acquire a company, we are allowed to give an open offer,? said Ambani while addressing the media here, adding that ?generally it is not our mandate to invest in other companies shares.?
On Friday, Sebi had passed a consent order barring Reliance Infrastructure (R-Infra) and Reliance Natural Resources (RNRL) along with senior directors of the firms from investing in the secondary market. The terms also include payment of Rs 50 crore as settlement charges, which have already been paid by the directors without any financial burden on the companies involved.
The consent order was passed to settle a probe into alleged violation of Sebi regulations for foreign investment and unfair trade practices by R-Infra and RNRL. It was alleged that the ADA Group firms (R-Infra and RNRL) had misused the funds raised through External Commercial Borrowing (ECB) by investing in the stock market.
The consent terms also requires the ADA Group firms to implement the policy of rotation of statutory auditors. ?We have done our due diligence internally. We have changed our audit firm and have put in place checks and balances,? he said.
Apart from Ambani, the other executives named were R-Infra?s CEO & Whole-time Director Lalit Jalan, Director (operations) S C Gupta and vice chairman Satish Seth, as well as Reliance Power CEO J P Chalasani. However, the regulator in its order had stated that these entities and individuals will be allowed to invest in mutual funds and can also subscribe to primary issuances, buybacks and open offers.