Former Kerala Chief Minister and Leader of the Opposition Pinarayi Vijayan has moved the Securities and Exchange Board of India (SEBI), seeking its intervention in the Adani Group’s proposed $1.4 billion (Rs 13,220 crore) stake sale in the Vizhinjam Port project, alleging that the move violates the project’s concession agreement.
In a letter sent on Friday, Vijayan urged SEBI to initiate action against Adani Ports, alleging that the company had failed to disclose that the proposed transaction lacked the mandatory prior approval of the Kerala government under the concession agreement, a safeguard intended to protect national security and public interest.
The former Chief Minister also sent a similar letter to the National Stock Exchange (NSE), where Adani Ports and Special Economic Zone (APSEZ) Ltd is listed.
The controversy arose after Adani Ports and Special Economic Zone (APSEZ) Ltd announced plans to divest a 49 per cent stake in Adani Vizhinjam Port Private Limited (AVPPL) to Terminal Investment Limited (TiL), a subsidiary of the Switzerland-based Mediterranean Shipping Company (MSC) Group.
Referring to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Vijayan said material information relating to such major transactions must be disclosed to the authorities in a timely manner.
He alleged that the Adani Group did not disclose the relevant information at the appropriate stage and that there appeared to be a pre-planned commercial strategy behind the transaction. He further alleged that although the Adani Group informed SEBI about the proposed share transfer, it neither informed the Kerala government nor sought its prior approval.
Under Clause 5.3.1 of the concession agreement, AVPPL is required to obtain the Kerala government’s prior approval for any transfer of ownership or change in shareholding exceeding 25 per cent. Vijayan alleged that the Adani Group informed SEBI first while keeping the state government completely in the dark, thereby rendering the proposed transaction unlawful.
Addressing a press conference at Pinarayi in Kannur on Saturday, Vijayan said the Opposition Left Democratic Front (LDF) would oppose the proposed stake transfer through both legal and political means. He accused the ruling United Democratic Front (UDF) government, led by Chief Minister V.D. Satheesan, of failing to protect the state’s interests and acting as a spokesperson for the Adani Group.
Vijayan questioned how the Adani Group had “dared” to transfer a 49 per cent stake in the Vizhinjam International Seaport to the Mediterranean Shipping Company (MSC) without obtaining the mandatory prior approval of the Kerala government.
He pointed out that under Clause 5.3 of the 2015 concession agreement, the Adani Group cannot sell or transfer any stake exceeding 25 per cent without the Kerala government’s explicit permission.
He further said that while the national Congress leadership, including Rahul Gandhi and K.C. Venugopal, frequently accuses the Adani Group of wielding undue corporate influence in BJP-ruled states, the Congress-led UDF government in Kerala appears to be giving the corporate giant a “free run”.
“The Congress, which has alleged that the Adani Group is exerting influence in BJP-ruled states, should clarify what it is doing in Kerala now,” he said.
The senior CPI(M) leader also demanded that Chief Minister V.D. Satheesan explain why the state administration had remained passive instead of taking immediate legal action to block the proposed transaction.
Chief Minister V.D. Satheesan, on Wednesday, told the Assembly that the proposed stake sale of the Vizhinjam Port violates the original tripartite concession agreement, which mandates prior approval from the state government for such ownership changes.
Replying during Question Hour, he said the state government is a stakeholder in the project and that any major investment or change in partnership requires its approval. He clarified that the Adani Group had neither held any official discussions with the state government nor sought its approval for the proposed transaction.
Adani Ports and Special Economic Zone informed the state government on Wednesday about its proposal to transfer a 49 per cent stake to MSC. The Adani Group stated that the proposed stake sale was part of a strategic partnership with the MSC Group.
Following this, the state government constituted an empowered committee headed by the Chief Secretary to examine the parameters of the proposed transaction. Chief Minister Satheesan said the government would obtain comprehensive legal advice and examine issues relating to national security, fair competition and public interest before considering any retrospective approval.