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Deloitte has resigned as auditor of Indian tycoon Gautam Adani’s logistics arm, in a fresh blow to the billionaire business empire as it struggles to revive investments after being attacked by short sellers confidence.
The auditor resigned over the weekend, citing concerns about not being able to thoroughly scrutinize transactions between the group companies and the logistics unit. The logistics unit is India’s largest commercial port operator and one of Adani’s most profitable businesses.
New York-based short-seller Hindenburg Research released a January report on Adani Group, centered on related-party transactions, that wiped billions off the market value of the group’s listed companies.
Hindenburg accused the Indian infrastructure group of using a network of offshore shells to manipulate earnings and “avoid a significant write-down and negative impact on net profit”. Adani denies all allegations.
Deloitte has been the auditor for Adani Ports and Special Economic Zone (Apsez) since 2017. But in May auditors raised questions about transactions with “related parties” and Adani’s refusal to conduct an “independent external review” of the short-seller’s allegations.
In its qualified opinion on the group’s performance, Deloitte said a memorandum written for Adani by an external law firm “did not constitute sufficient and appropriate audit evidence”.
Adani told Deloitte that Apsez did not consider it appropriate to conduct an external review while India’s securities regulator, the Securities and Exchange Board of India (Sebi), is conducting its own investigation into the short-seller’s allegations. Sebi will report its findings to India’s Supreme Court on Monday.
Gopal Krishna Pillai, chairman of Apsez’s audit committee and former special secretary at India’s commerce ministry, said the committee disagreed with Deloitte.
“The reasons presented by Deloitte for resignation . . . were not compelling or sufficient to warrant such a move,” Pillay said.
The issues identified in Deloitte’s resignation letter were “fully disclosed and resolved (by Adani),” Pillay said, adding that Apsez had appointed MSKA & Associates, a member of international accounting group BDO, as the firm’s new auditor.
Apsez and Deloitte did not immediately respond to requests for comment.
Adani’s public company has partially recovered $150 billion in stock market losses after the Hindenburg report, boosted by investment from Florida-based GQG Partners, but is still trading below pre-January levels.
This is the second high-profile resignation audit in India by Deloitte in the past three months. In June, Deloitte resigned as auditor of education technology company Byju’s, accusing the company of failing to provide financial documents.