Shah Dhandharia steps down as Adani Total Gas’s statutory auditor after being mentioned in the Hindenburg Report
The size and expertise of the company auditing the Adani Group had been questioned by Hindenburg Research.
Shah Dhandharia & Co. steps down as Adani Total Gas’s statutory auditor
According to a report by Hindenburg Research, the chartered accounting firm Shah Dhandharia & Co. of Ahmedabad has resigned from its position as statutory auditor of Adani Total Gas.
Firms that audit Adani Group companies
Two accounting firms that audit the majority of Adani Group companies, Shah Dhandharia & Co. and Dharmesh Parikh & Co., have ties to one another, according to a report in the Morning Context from October 2022, raising questions about the corporate governance of the group.
Additionally, it claimed that Reliance Industries paid them Rs 84 crore, whereas Adani Group only paid them slightly more than Rs 7 crore.
The size and competence of the companies auditing the Adani Group was another issue brought up by US-based short seller Hindenburg Research in its report from January 24.
About Shah Dhandharia & Co.
It was mentioned that a “tiny firm” by the name of Shah Dhandharia serves as the independent auditor for Adani Enterprises and Adani Total Gas.
Shah Dhandharia doesn’t appear to have a website right now. Its website’s historical archives indicate that there were only 4 partners and 11 employees at the time. According to records, it pays a monthly office rent of INR 32,000, or $435 in US dollars in 2021. The market capitalization of the sole other publicly traded company that it audits is approximately INR 640 million (US $7.8 million), according to the Hindenburg report.
The Shah Dhandharia audit partners who approved the annual audits of Adani Enterprises and Adani Total Gas were as young as 24 and 23 years old when they started doing so. They were essentially recent graduates and hardly qualified to examine and hold accountable the financials of some of the biggest companies in the nation, run by one of its most powerful people, the report stated.
Adani group statement in response to Hindenburg’s accusations
In response to Hindenburg’s accusations, the Adani group stated that each auditor hired by the conglomerate had received the proper certification and qualification from the applicable statutory bodies. Additionally, it stated that all of the appointments had been made by the regulations.
Shah Dhandharia’s resignation letter
According to Shah Dhandharia’s resignation letter, which was published by the Telegraph on Tuesday, May 2, “Our resignation is not due to an incapacity to collect adequate suitable audit proof.”
“We do not believe that there are any additional circumstances related to our resignation that the board should be made aware of.”
Shah Dhandharia & Co. informed the newspaper that it had decided to leave “due to increased professional preoccupation in other assignments”.
The choice was made public during the board meeting where the company approved the full year’s financial results, which ended on March 31, and the quarter’s financial results for January through March.
Walter Chandiok & Co. assumed the auditing firm’s place.
It’s unclear, though, whether Shah Dhandharia & Co. will also stop auditing Adani Enterprises.