Ishika Roy, Pune
Deloitte Haskins & Sells LLP resigned as Adani Ports’ auditor on Aug. 13, pushing shares of all ten Adani Group stocks to go 4% down on the National Stock Exchange. Adani Enterprises and Adani Ports were among the worst-hit Nifty50 stocks on Aug. 14. Deloitte was handling the firm’s accounts on all kinds of related party transactions. Adani Ports has chosen MSKA & Associates as its new auditor.
Deloitte’s resignation triggered a sell-off that wiped out Rs. 25,419 crores in market capitalization in a single trading session. Adani Group lost close to 3.1 billion dollars in investor wealth due to the resignation, which occurred citing “differences of opinion”. The current total market capitalization of Adani stands at 10.44 trillion rupees, roughly translating to 125.9 billion dollars. The major bone of contention between the two parties was a lack of clarity on the transactions allegedly mentioned in the Hindenburg Research report made on January 24th, along with the Adani Group’s hesitation in allowing an independent external evaluation regarding the same.
Deloitte’s resignation letter stated that “The company (Adani Ports) did not have an appropriate internal control system in respect of conducting an external examination of allegations made against the company.” Analysts at Jefferies, a foreign investment bank, believe that switching auditors of a company frequently comes off as a red flag, as was observed in the case of UPL, with KPMG quitting in 2020 while Batliboi stayed on board. However, the replacement with a reputed Top 6 audit firm like MSKA is a comfort to the ruffled feathers of Adani Group’s investors.
Aug. 14 was the final date for the Securities and Exchange Board of India’s (SEBI) investigation of the Adani-Hindenburg report, which came as a result of a 15-day extension granted by the Supreme Court on Monday. As of now, the hearing for the case is scheduled for August 29th.