Adani Total Gas Ltd on Wednesday, May 3, announced that a chartered accountancy firm based in Ahmedabad has resigned from its position within the company, citing "pre-occupation" as the reason for its departure. The appointment of this particular firm had previously been questioned by a US short seller, Hindenburg, in a critical report regarding the conglomerate run by Gautam Adani, a billionaire businessman.
Earlier, on January 24, Hindenburg Research published a report that levelled allegations of fraud, stock manipulation, and money laundering against the Adani group. The report also questioned the size and competence of the auditing firms responsible for overseeing the conglomerate.
According to Hindenburg, the auditing firm responsible for overseeing Adani Enterprises, the flagship company of the Adani group, and Adani Total Gas Ltd, the city gas retailer, is a "tiny firm" called Shah Dhandharia.
"Shah Dhandharia seems to have no current website. Historical archives of its website show that it had only 4 partners and 11 employees. Records show it pays Rs 32,000 (USD 435 in 2021) in monthly office rent. The only other listed entity we found that it audits has a market capitalization of about Rs 640 million (USD 7.8 million)," it said.
Following this, Adani Total Gas Ltd filed a statement with the stock exchange.
"We wish to inform that M/s. Shah Dhandharia & Co. LLP, Chartered Accountants, have resigned as the statutory auditors of the company i.e., Adani Total Gas Limited (ATGL) with effect from May 2, 2023," it said.
The company also attached the auditor's resignation letter dated May 2, 2023, to the filing.
According to the letter, the auditor said it was granted a second term of five years on July 26, 2022. The letter also stated that the firm had completed the audit of Adani Total Gas Ltd for the financial year ended March 31, 2023.
"We have carefully evaluated and due to increased professional pre-occupation in other assignment, we regrettably propose our resignation," the auditor said.
"Our resignation does not result from an inability to obtain sufficient appropriate audit evidence," Shah Dhandharia added.
Additionally, the letter stated that there were "no other circumstances connected to their resignation that needed to be brought to the attention of the Board." The letter concluded by stating, "In view of the above and as discussed and agreed with the management, we express our inability to continue as the statutory auditors for the company. Please accept our resignation with immediate effect."
It is currently unclear whether the chartered accountancy firm will also resign as auditors for Adani Enterprises. The board of directors of company, which includes businesses such as airports and data centres, is scheduled to meet on May 4 to consider the company's financial results.
The Adani group has been facing significant scrutiny since Hindenburg Research accused the conglomerate of fraud, corruption, stock manipulation, and money laundering. The US-based short seller also alleged that the group had been using a complex network of shell companies to conduct opaque financial transactions. These allegations have put the Adani group under immense pressure in recent months.
The report caused a significant drop in the Adani group's market value, resulting in nearly $140 billion being wiped out at one point.
The Adani group has denied all allegations.
With inputs from PTI
(Edited by : Shoma Bhattacharjee)
