Adani Ports responds to Deloitte’s concerns; says independent examination not appropriate 'at this stage'

Adani Ports and Special Economic Zone’s (APSEZ’s) auditor, Deloitte Haskins & Sells LLP, on Tuesday raised fresh concerns about the company’s insufficient disclosures around the company transactions. It raised concerns about APSEZ’s transactions with three entities that the company had said were unrelated parties. However, the auditor said that it could not confirm if the parties were indeed unrelated. APSEZ has now issued a statement saying that an investigation now would not be appropriate. 

“The Audit Committee of the Company as well as the Company are of the view that an independent examination at this stage will not be appropriate given the ongoing investigations by SEBI and the Expert Committee appointed by the Hon’ble Supreme Court. Deloitte’s qualification this year, as we summarize it, is owing to the pending conclusion of these investigations,” said a company spokesperson. 

Deloitte had said that it could not confirm that the parties were unrelated and that the firm refused to get an independent external examination that would help in proving the case. It signed off the company’s books with what it called a “qualified opinion”. 

This is the first time a top-auditor has issued a qualified opinion on part of the conglomerate’s books, citing the Hindenburg report that accused the company of financial misdeeds. 

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The three transactions that were flagged by Deloitte are as follows: 

Adani Group’s engineering contract with a subsidiary of a company, which was identified in the Hindenburg report, from whom $453 million was recoverable as of March 31. The company told the auditor that the contractor was not a related party. 

Hindenburg had identified parties with whom Adani had financial transactions, and all payables were said to be settled with no dues remaining. 

Adani Port’s sale of its Myanmar port to Solar Energy was revised to just $30 million from around $242 million and an impairment charge was taken. The auditor was told that these were not related parties either. 

Shares of Adani Ports fell on Thursday to Rs 730 compared to its previous close at Rs 737.25 on Wednesday. Shares of Adani Ports turned multibagger from its 52-week lows at Rs 394.95 as the stock hit Rs 790 previous week, before correction.

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Also read: Fresh trouble for Adani? Deloitte flags Adani Ports transactions over lack of review