Auditor raises concerns over Adani Ports’ transactions with 3 entities

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 Auditor Deloitte raised concerns over Adani Ports’ transactions with three entities, which the company said were unrelated parties. However, the auditor said it could not confirm that the parties were indeed unrelated. It has also issued a qualified opinion on the accounts of Adani Ports.

In the auditors’ report on the audit of the fourth quarter and 2022-23 financials, Deloitte Haskins & Sells LLP highlighted transactions with three entities, which the company said were unrelated parties. Deloitte, however, said it could not attest to the company’s statement as no independent external examination has been done to prove the claims.

Deloitte has flagged three transactions of Adani Group. First, the group signed an engineering contract with a subsidiary of a company identified in the Hindenburg report from whom Rs 3,750 crore ($453 million) was recoverable as of March 31. The auditor was told by the group that this contractor is not a related party.

Second, there have been financial transactions, including of equity, made with parties identified in the short seller report. Adani Group told Deloitte that these are not related parties. All payables were settled with no dues remaining.

The third transaction flagged by the auditor was Adani Ports’ sale of its Myanmar port to Solar Energy Ltd, incorporated in Anguilla, earlier this month. The sale price was revised from Rs 2,015 crore to just Rs 247 crore and an impairment charge was taken. The group told the auditor these are not related parties.

Reuters reported that the company concluded this deal at a heavy discount, which was significantly lower than its investment in the project.

Hindenburg Research in its January 24 report that leveled allegations of fraud, stock manipulation, and money laundering against the Adani group, had also flagged inadequate disclosures of related party transactions.

While the group has denied all allegations, the Supreme Court constituted an expert committee for assessment of the extant regulatory framework and asked stock market regulator SEBI to complete its probe into allegations. Deloitte said the Adani group did not consider it necessary to have an independent external examination of these allegations because of their evaluation and the ongoing investigation by the Securities and Exchange Board of India (SEBI).

In the absence of the independent external examination and the pending completion of investigation by SEBI, the auditor said it cannot comment if the company was fully compliant with the law and if the transactions flagged may result in possible adjustments and/or disclosures in the financial statement in respect of related parties.

The six-member expert panel appointed by the Supreme Court this month found no regulatory failure or signs of price manipulation in the Adani group stocks in its interim report.

Deloitte said it conducted its audit in accordance with the Standards on Auditing specified under the Companies Act, 2013.

(With inputs from agencies)

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