In its media report, Bloomberg News mentioned that Adani Ports & Special Economic Zone Ltd’s auditor said that insufficient disclosures about certain transactions mean it can only issue a qualified opinion on the company’s accounts, retrieving the spotlight back to accusations made by short seller Hindenburg Research about Gautam Adani’s domain.
As per Bloomberg, Deloitte Haskins & Sells LLP expressed concerns on Tuesday about the port unit’s transactions with three unrelated firms. However, the auditor stated that it was unable to certify that the parties were unrelated, and that the firm has declined to obtain an independent external assessment that would help prove this.
According to Bloomberg, Deloitte Haskins & Sells LLP expressed concerns about the port unit’s transactions with three unrelated firms. Although, the auditor mentioned that it was not able to decipher whether the parties were related or not, and that the firm has denied to obtain an independent external assessment that would let it prove itself.
Deloitte mentioned that because “the evaluation performed by the group does not constitute sufficient appropriate audit evidence for the purpose of the audit,” it can’t comment if the company was completely compliant with local regulations, according to the Bloomberg report.
It’s the first instance when a top auditor has published a qualified opinion on a portion of the tycoon’s accounts, stating claims from the US short seller report, which has depreciated more than $100 billion off the group’s market value. The action could retrieve fears that disclosure gaps continue in the port-to-power empire’s financial dealings, which could affect its efforts to move on from Hindenburg’s charges of extensive corporate fraud.
The Adani Group refused committing all the charges mentioned in the Hindenburg report. It is waiting the results of a probe into suspected violations by the group by India’s market watchdog, which must be completed best before August 14. In its initial report, an expert panel published by India’s highest court this month found no evidence of regulatory failure or price maneuvering in Adani Group equities.
Below are the three transactions flagged by Deloitte:
Adani Group signed an engineering contract with a subsidiary of a company named in the Hindenburg report and owed 37.5 billion rupees ($453 million) as of March 31. The group informed the auditor that this contractor is not a related party.
There have been financial transactions, comprising equity trades, with the persons named in the short seller report. As per the Adani Group, these are unrelated parties. The payables were settled, and no outstanding debts were recorded.
In the beginning of this month, Adani Ports sold its Myanmar port to Anguilla-based Solar Energy Ltd. The sale price was depreciated from 20.15 billion rupees to 2.47 billion rupees, with an impairment charge levied. The group informed the auditor that they are not related parties.
Adani Ports and Special Economic Zone on Tuesday announced its results for the fourth quarter and the entire financial year 2022-23. Its net profits (Profit After Tax) increased three per cent in the January-March 2023 quarter to ₹ 1,141 crore and 9 per cent for the entire year 2022-23 to ₹ 5,393 crore.
The Adani company’s revenue surged 40 per cent in the January-March quarter to ₹ 5,797 crore, and 22 per cent in the whole year 2022-23 to ₹ 20,852 crore.
Karan Adani, CEO and Whole Time Director of Adani Ports and Special Economic Zone, said the company’s strategy of geographical diversification, among others, enabled robust growth.
In 2022-23, Adani Ports handled 339.2 million tonnes of cargo, which is 9 per cent more on an annual basis.
Cargo volumes are estimated to be at 370-390 MMT in 2023-24, valuing upto a revenue of ₹ 24,000-25,000 crore.