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Published: August 12, 2023
Updated: August 12, 2023

Adani Ports Auditor's Resignation Amplifies Concerns Amidst Ongoing Controversy

The auditing firm responsible for billionaire Gautam Adani's ports business, Deloitte Haskins & Sells LLP, is reportedly planning to step down from its role. This development adds to the growing apprehensions about the accounting practices of the Adani Group, which has been targeted by short seller Hindenburg Research. The impending resignation and the ongoing controversies surrounding the conglomerate's accounting quality have raised significant questions about its governance.

Audit Firm's Concerns and Planned Resignation:

In May, Deloitte Haskins & Sells LLP, a branch of the global accounting giant, expressed concerns regarding transactions between Adani Ports and three other entities. The auditor couldn't verify the legitimacy of these transactions and raised doubts about the company's compliance with local laws. The planned resignation of the auditing firm underscores these concerns and puts the spotlight on the governance of Adani's business empire.

Securities and Exchange Board of India (SEBI) Probe:

The timing of the resignation is notable as it comes just before SEBI is set to reveal the results of its investigation into the allegations made by Hindenburg Research. Hindenburg had accused Adani Group of accounting fraud and market manipulation, which Adani has vehemently denied. A panel appointed by India's Supreme Court found no evidence of regulatory failure or stock price manipulation. The resignation adds another layer of complexity to this investigation.

Potential Replacement:

Reports suggest that BDO India LLP audit arm, MSKA & Associates, might take over the auditing responsibilities from Deloitte Haskins & Sells. This transition would also be closely watched by stakeholders and industry observers, as the new auditors would inherit the responsibility of ensuring transparency and accuracy in the group's financial reporting.

History of Auditor Reservations:

This isn't the first instance where auditors have raised concerns about Adani Group's financial practices. Previously, S.R. Batliboi, a member firm of Ernst & Young, had issued qualified opinions on Adani Power Ltd.'s financials. Furthermore, a KPMG auditor resigned as co-auditor of Adani Green Energy in 2021 amidst heightened scrutiny of India's accounting industry. These past instances contribute to the ongoing debate about the conglomerate's financial transparency.

Adani Group's Response:

Throughout these controversies, the Adani Group has maintained its compliance with Indian laws and has welcomed SEBI's investigation. Despite the allegations from Hindenburg Research, the group has shown resilience, disclosing new fundraising plans, securing investments from prominent entities, and seeking refinancing from international banks.

Adds complexity to the already ongoing controversies surrounding Adani group:

The impending resignation of Deloitte Haskins & Sells from its role as the auditor of Adani Ports adds another layer of complexity to the ongoing controversies surrounding the Adani Group. The timing of this move, just before the SEBI probe's results are revealed, further intensifies the focus on the conglomerate's accounting practices and governance. As the saga continues to unfold, industry watchers and stakeholders remain eager to see how these developments will impact the conglomerate's trajectory moving forward.