Sebi asks IPO-bound Sterlite Electric to explain

On paper, Anil Agarwal does not have a direct stake in Sterlite Electric Ltd, which submitted its draft (DRHP) for IPO last year. However, the Securities and Exchange Board of India (Sebi) has flagged Vedanta Group’s role as an individual promoter of the power transmission company despite not having a direct equity stake, two of the three sources said.

Sebi suspended the initial public offering in October, the regulator said.

The regulator then sought clarity on how Agarwal was involved with Mauritius-based sales promoter Twin Star Overseas Ltd and the extent of his direct equity stake in Sterlite Electric, the first person said.

Sterlite Electric’s IPO includes a new issuance component and an offer for sale of 7.79 million shares by existing shareholders. Among these sellers, Twin Star Overseas is the only ‘supporting’ company that transfers shares via the OFS route, according to the DRHP. It owns 69.46% of Sterlite Electric’s pre-IPO equity capital.

Mauritius unit Twin Star Overseas lists group holding company Vedanta Inc. as its 100% shareholder. Of course, it is common for global business groups to direct their investments to tax havens such as Mauritius.

It is unclear what percentage of Vedanta Inc. is owned by Agarwal. According to the Sterlite Electric DRHP, which was first filed on August 29, 2025, there is no person with 15% or more voting rights in Vedanta Inc.

Mauritius Road

Sebi now asks Sterlite whether Anil Agarwal was the ultimate beneficiary of Twin Star Overseas and, if so, to what extent.

Twin Star Overseas also holds a 42.91% stake in Vedanta group’s listed company, Sterlite Technologies Ltd, as of September 30, 2025, as per stock exchange data. Sterlite Electric was spun off from Sterlite Technologies in 2016 as the group decided to focus independently on the telecoms and energy sectors.

However, Twin Star Overseas is a separate entity from Twin Star Holdings Ltd, which holds a 40.02% stake in the group’s India-listed entity Vedanta Ltd. Twin Star Holdings is classified as part of Vedanta’s promoter group. Vedanta, on the other hand, holds a 61.84% stake in Hindustan Zinc, as part of its stock exchange disclosures for the quarter ending September 30, 2025.

Twin Star Overseas, a Mauritius-based entity, lists group holding company Vedanta Inc. as its 100% shareholder. It is unclear what percentage of Vedanta Inc. is owned by Agarwal.

Naming a founder with zero direct equity as a backer creates a higher burden of proof, a corporate law expert said. According to current regulations, a promoter is a person or organization involved in the formation of a company and is subject to fiduciary duties and certain legal obligations, including civil and criminal liabilities. These duties include, but are not limited to, disclosing to relevant stakeholders all material facts regarding the business and formation of the company.

“SEBI’s role is to ensure that investors have a clear picture of who ultimately controls or influences the company,” said Hardeep Sachdeva, senior partner at law firm AZB & Partners. “When a promoter is appointed as a promoter despite not holding direct shares, SEBI must examine indirect control mechanisms such as family ties, board influence or beneficial ownership structures.”

Beyond this, the regulator is also seeking clarity on a group of uncooperative family members who would otherwise be part of the company’s promoter group, a second person explained.

Sebi specifically asked why five of Agarwal’s in-laws refused to be identified as members of the promoter group and why they did not give details of their interests in the IPO-bound firm, this person said.

Family steps back from promotional label

Under Indian securities law, the promoter group must include immediate family members, including siblings and their spouses and entities they control, to ensure full transparency of ownership and potential conflicts of interest.

According to the company’s statements, these five people did not allow themselves to be identified as members of the promotional group. They also failed to provide required information regarding their financial interests in Sterlite Electric or entities they control. DRHP added that these entities may also include some shares of Anil Agarwal.

Sterlite Electric’s letters to five relatives went unanswered, leaving the company’s bankers unable to certify to Sebi that its IPO disclosures were complete or up-to-date, draft documents said.

These five relatives and their promoter group, whose shares are excluded, hold 0.88% of the shares before the offer. This group includes Agarwal’s wife, two brothers and sister. This includes his recently deceased son and daughter, but they do not own any shares in the company, according to the draft filing.

AZB’s Sachdeva said the emergence of ‘uncooperative individuals’ in IPO processes is relatively rare, but they do occur where the definition of ‘supporting group’ under Indian securities law includes relatives not directly involved in the business.

Legally, the scope for exiting the relationship is limited unless the company can prove that these individuals have no role in financing, decision-making or control. In practice, companies either persuade these individuals to cooperate or provide sufficient evidence to Sebi that the participation of these individuals is not material to the functioning of the promoter group. “This often requires a careful balance between compliance and family sensitivities, and if not resolved could delay or even derail the IPO,” Sachdeva added.

The company, at the time of filing the DRHP, also filed an application with Sebi seeking exemption to exclude mandatory disclosures and confirmations from these five uncooperative relatives and their associated entities.

In talks with Sebi: Sterlite Electric

All three sources in this story confirmed that the company, merchant bankers and legal experts have been in constant contact with the regulator over the past two months and that these issues are now being resolved.

“We are also in active discussions with the regulator and are responding to all inquiries,” a Sterlite Electric spokesman said. Mint in an emailed response. “In line with the bid period communication requirements, the company is following the prescribed process for addressing bid-related issues through disclosures contained in the statutory bid documents. Therefore, there is no ‘inadequate disclosure’.”

Mint Reached out to Sebi for comments on the story. An emailed request for comment sent on January 5 remained unanswered at the time of this story’s publication.

The draft documents were first submitted to the Registrar of Companies in August 2025 and were subsequently suspended in late October. The regulator has not commented publicly on why the offer was suspended.

Although Sterlite Electric’s offer was canceled in early December, Sebi is still awaiting clarification from the leading executives on the issue as of January 9.

Formerly Sterlite Power Transmission Ltd. Sterlite Electric, known as Sterlite Electric, operates in over 70 countries and reported revenue as follows: ₹4,956 crore in FY2025.

The company first made an application. ₹1,250 crore IPOs were made in 2021, news agency PTI reported. He later withdrew the offer, citing market volatility. There were no examples of uncooperative individuals at the time.

The delay in the IPO is the latest hurdle for the Agarwal-led business empire, which is trying to list its power transmission unit to cut debt and finance capital expenditure.

In July, US-based Viceroy Research exposed the debt pile of Vedanta Resources, the parent company and majority owner of Vedanta Ltd. It claimed that the group structure was financially unsustainable and posed a significant risk to creditors. Vedanta then rejected the Governor General’s offer ₹Loan transactions were carried out in full compliance with applicable laws, with a loan referral request of ₹ 2,500 crore added.