Ahmedabad-based Chartered Accountancy firm Shah Dhandharia & Co LLP—named in the January 24 Hindenburg Research report on Adani Group—has resigned as statutory auditor of Adani Total Gas Limited.
The reason cited for the resignation is “increased professional pre-occupation in other assignment”, according to the resignation letter written by the firm to the Board of Directors of Adani Total Gas Limited on Tuesday.
“Our resignation does not result from an inability to obtain sufficient appropriate audit evidence. There are no other circumstances connected with our resignation which we consider should be brought to the notice of the Board”, the letter signed by Shubham Rohatgi, Partner, Shah Dhandharia & Co LLP said.
This Ahmedabad-based audit firm has now been replaced by Walker, Chandiok & Co as statutory auditor of Adani Total Gas.
It maybe recalled that Shah Dhandharia & Co LLP was appointed as statutory auditor of Adani Total Gas Limited in July 2022 to hold office for a second term of 5 years.
The resignation letter highlighted that Shah Dhandharia & Co LLP has completed the statutory audit of Adani Total Gas for the year ended March 31, 2023 and issued its report on Tuesday.
Meanwhile, Shah Dhandharia & Co LLP remain (as of Wednesday) as statutory auditor of Adani Enterprises, the flagship listed company of the Adani Group.
The board of Adani Enterprises Ltd will meet on Thursday for approving the financial results for the fourth quarter ended March 31, 2023 and full financial year 2022-23.
It maybe recalled that US-based short seller Hindenburg Research had in its January 24 report on the Adani Group also raised the issue of the size and capability of the firms auditing the Adani Group.
It noted that the independent (statutory) auditor for Adani Enterprises and Adani Total Gas 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 ₹32,000 ($435 in 2021) in monthly office rent. The only other listed entity we found that it audits has a market capitalisation of about ₹640 million ( $7.8 million),” the Hindenburg report added.
“The audit partners at Shah Dhandharia who respectively signed off on Adani Enterprises and Adani Total Gas’ annual audits were as young as 24 and 23 years old when they began approving the audits. They were essentially fresh out of school, hardly in a position to scrutinize and hold to account the financials of some of the largest companies in the country, run by one of its most powerful individuals,” it said.
However, the Adani Group had countered these observations and charges, stating that all the auditors engaged by the conglomerate were duly certified and qualified by the relevant statutory bodies. It had asserted that all the appointments were in compliance with applicable laws.