Credit rating firm CARE has issued a report on Adani Energy Solutions (formerly Adani Transmission) regarding its use of funds raised through a Qualified Institutional Placement (QIP) in August 2024. The company had raised Rs 8,873 crore through the QIP, with specified objectives for the use of funds, including expansion of transmission systems, installation of smart meters, repayment of borrowings, and general corporate purposes. However, the CARE report revealed that Adani Energy Solutions deviated from these objectives by diverting funds earmarked for smart meters to transmission systems.
The company utilized Rs 175 crore more than planned in its transmission segment, which was taken from the funds allocated for the purchase and installation of smart meters. This diversion, while within the 10% materiality threshold, still requires formal disclosure and audit committee review. The report noted that the company’s board of directors, chaired by Gautam Adani, stated that the over-utilization was necessary due to the growth in transmission project capex outlay, which increased to Rs 60,000 crore by the end of fiscal 2025.
According to the QIP offer document, the company had allocated Rs 2,060 crore for expansion in transmission systems, Rs 1,800 crore for installing smart meters, and other amounts for repaying borrowings, general corporate purposes, and issue-related expenses. However, by March 31, 2025, the company had utilized Rs 2,235 crore on transmission projects, Rs 916 crore on smart meter installations, and the balance on other stated purposes.
The Securities and Exchange Board of India (SEBI) rules require companies to strictly monitor and clearly disclose how funds raised through public issues are spent. While the deviation in this case was within the allowed threshold, it still raises questions about the company’s use of funds and its compliance with regulatory requirements. The incident highlights the importance of transparency and accountability in the use of public funds, and the need for companies to adhere to the stated objectives of their fundraising efforts.