Sunday, September 24

Deloitte steps down as the auditor at Adani Ports.

M S K A & Associates, an independent member firm of BDO International, has been appointed as auditor for APSEZ by Adani Group’s port business arm, Adania Ports and SEZ Ltd., which is the primary revenue generator for the Gautam Adan-led group.

On Friday, Mint revealed that Deloitte Haskins and Sells has stepped down as Adani Ports’ statutory auditor, citing disagreements.

According to Adani Ports, Deloitte’s recent meeting with APSEZ management and its audit committee, which is chaired by independent directors only, indicated that they do not hold a broader audit role as auditors of other listed AdANI portfolio companies.

According to the statement, Adani Ports’ audit committee found that Deloitte’s reasons for resigning as statutory auditor were not convincing or adequate.

The spokesperson, Adani Ports, explained that APSEZ and its board are not authorized to recommend group-wide appointments due to the fact that other Advani portfolio companies are completely independent. They have separate boards, executive teams, and minority shareholders. As a result, Deloitte was not willing to continue as APZ’s statutory auditor, so they agreed to end the client-auditor relationship amicably.

Deloitte Haskins has been the auditor of Adani Ports since FY2018 and was only reappointed to a five-year term as the statutory auditor last year.

In response to a question from the audit committee, Deloitte confirmed that they received all the APSEZ information from management before their resignation, as stated in the Adani Ports statement.

Adani Ports stated that Deloitte has confirmed the authenticity of their resignation letter to the company on August 12, 2023.

The early resignation of Deloitte has once again sparked concerns about the company’s accounting practices, but Adani Ports confirmed that the other issues highlighted in the auditor’S resignation were properly addressed in its FY23 financial statements.

Adani Ports stated that they are confident in resolving these issues when they file in September 23.

According to Deloitte’s notes to financial statements as the auditors, Adani Ports re-negotiated the terms of sale of its container terminal in Myanmar with Solar Energy Ltd, resulting in an impairment loss of Rs. 1,273.38 crore for FY23 and the June quarter.

Deloitte reported that the Adani group did not require an independent external investigation into the allegations made by Hindenburg, citing their evaluation and the ongoing investigation by the Sebi.

The company’s financial statements for FY23 revealed that Deloitte had identified financing transactions (including equity) with certain other parties, which were not considered related to the short-seller report by the group.

A short-seller from the US, Hindenburg Research, claimed that the Gautam Adani-led group staged what they described as “the most significant fraud in corporate history,” which caused a market value collapse of over $150 billion and stripped Gautham DANI of his spot on the top 10 richest list globally.

The third change in auditors for Adani Group companies is the most recent one. In May 2023, Shah Dhandharia & Co. LLP resigned as auditor of Adania Total Gas and was replaced by Walker Chandiok y/Co.

Deloitte highlighted certain aspects of the auditor review report in an exchange filing for Adani Ports’ June quarterly earnings statement on 8 August.

The interim financials of Adani Ports, the independent auditor for the June quarter were reviewed by Deloitte.

The scope of this review is significantly limited compared to an audit, and the auditor cannot be guaranteed to have knowledge of all relevant issues.

Deloitte’s review report on Adani Ports revealed that the contractor involved in EPC services was not affiliated with any entity, resulting in a net balance of 3,871 crore.

Nevertheless, Deloitte revealed that the contractor was identified as a related party in ‘a short seller (Hindenburg Research) report’ published in January 2023 and that their net balance with the company increased by 122 crore on -a sequential basis in the June 2022 quarter.

The Indian market regulator is expected to release a report on the Adani Group shortly, but Deloitte’s resignation comes just days before it did the same.

The Supreme Court mandated that the Securities and Exchange Board of India (Sebi) provide its investigation report on Adani Group’s market transactions involving 13 foreign portfolio investors who were considered suspicious by August 14th.

More information about the total gas produced by ADANI is available.

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