Deloitte, which has been Adani Ports’ auditor for the last six years, resigned from its position on Saturday amid concerns over certain transactions the company had entered into, including one with an EPC contractor that was named in the Hindenburg report.
While Deloitte had said Adani Ports had told the audit firm that the three transactions identified by it were not related-party transactions, the company refused to get an independent external examination done to allay its concerns and hence, it could not confirm if they were non-related party transactions. As a result, Deloitte issued a “qualified opinion” on Adani Ports’ FY23 results. A qualified opinion means an audit report that is not clean.
In its resignation letter, Deloitte said since it wasn’t the statutory auditor of a substantial number of other Adani Group companies, it could not audit transactions occurring between these group companies and any party that has a business relationship with Adani Ports and hence it has decided to resign from its role.
Adani Ports said the grounds advanced by Deloitte for resignation “were not convincing” or sufficient to warrant such a move”. It said it conveyed to Deloitte that it wasn’t within the remit of Adani Ports to recommend such appointments as other group companies are “completely independent”. Deloitte’s resignation has brought a fresh scrutiny of the accounting practices at the Adani Group.
The conglomerate had replaced Deloitte as the auditor of its UK subsidiaries including Adani Energy Holdings, with Crowe, according to a February 3 Financial Times report.
Hindenburg had accused the conglomerate for using unethical business practices for inflating profits and understating debt. The group had denied the allegations.