In what is deemed as another dent to the embattled Adani Group, the organisation has had to part ways with its auditor for the last six years. Deloitte, Adani Ports’ auditor and one of the world’s leading audit, consulting, financial advisory and risk management firms, has resigned from the group, amid concerns over certain transactions, including one involving an EPC contractor named in the Hindenburg report.
Adani Ports & Special Economic Zone has replaced Deloitte with MSKA & Associates as its statutory advisor.
Deloitte’s resignation has brought to the fore a fresh scrutiny of the Adani Group’s accounting practices. Its complex financial dealings had been flagged by Hindenburg Research which accused the group of stock manipulation and accounting fraud.
Deloitte has claimed that Adani Ports maintained that the three identified transactions were not of a related party. What caused the split, claimed media reports, was the company’s decision to not involve an independent external examination to address the concerns. It couldn’t be confirmed that they were non-related party transactions, compelling Deloitte to issue a ‘qualified opinion’ on Adani Ports’ FY23 results.
In financial parlance, a qualified opinion means an audit report is suspect.
Deloitte said since it wasn’t the statutory auditor of other Adani Group companies, it could not audit transactions involving the firm’s other groups and any party that has a business relationship with Adani Ports.
Adani Ports believes the reasons behind Deloitte’s resignation didn’t warrant such a move. According to media outlets, Adani Ports told Deloitte that group companies are “completely independent”.
Under the leadership of Gautam Adani, declared the third richest person in 2022, the Adani group has gone from strength to strength, with a presence in energy, ports, and airport sectors. It has also acquired businesses abroad.
However, questions have been raised about the way it has been acquiring so many businesses quickly. Analysts have pointed out that its shares have been rising unnaturally, which should have alerted regulatory agencies such as the income-tax department and SEBI. It’s asked whether the group benefitted from political connections or a lack of inquiry about the way it acquired assets, possibly at low prices.
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