New trouble for Gautam Adani! The noose of investigation tightened on the audit firms of five companies

An auditor company associated with the Adani Group for a long time is under investigation. According to a Bloomberg report, accounting regulator National Financial Reporting Authority (NFRA) in India has banned EY member firm S.R. Investigation has been initiated against Batliboi. The report, quoting sources, has claimed that the regulator has asked the firm for files and communications related to the audit of some Adani Group companies. Information has been sought from the firm from 2014 till now. It is not clear how much time the NFRA investigation will take and what its impact will be. NFRA and Adani Group did not respond to emails in this regard. EY and S.R. Batliboi’s representative also declined to comment.

S.R. Batliboi is the auditor of five listed companies of Adani Group. Half of the group’s revenue comes from these five companies. American short selling firm Hindenburg Research had released a report against Adani Group in January. In this, questions were raised on the accounting of the group. Adani Group had denied these allegations. But on the orders of the Supreme Court, market regulator SEBI is also investigating Hindenburg’s allegations. S.R. Batliboi is the auditor of Adani Power, Adani Green Energy, Adani Wilmar and ACC and Ambuja Cements. He also audited Adani Ports and Special Economic Zone for a decade. According to Indian laws, foreign accounting companies cannot be registered as auditors in the country. This is why foreign companies operate in India through independently operating companies.

Questions on accounting
Questions were raised on the accounting and audit of Adani Group in the Hindenburg report. Due to this, there was a huge fall in the shares of Adani Group and its total market cap was reduced by $ 150 billion. The group had denied these allegations and said that the auditing of its companies is done by certified and qualified professionals. In May, Adani Total Gas acquired Shah Dhandharia & Co. Walker Chandiok & Co was appointed as the auditor instead. In the same month, Deloitte Haskins & Sells had raised questions on some transactions of Adani Ports and then resigned in August.

NFRA was formed in 2018. The authority also has the power to impose fines and ban audit firms and individual auditors for 10 years. It has banned more than 40 people in the last five years. S.R. Batliboi had earlier faced NFRA in 2018. There was a tussle between the two over the accounting scam in Infrastructure Leasing and Financial Services Limited. The auditing of this company is done by S.R. It was Batliboi who did it. Last year the regulator had said that S.R. Batliboi did not meet basic audit requirements and did not qualify for the role because EY simultaneously provided non-audit services to the company.