Ahme­dabad-based chartered accountancy firm Shah Dhandharia & Co, which was mentioned in the scathing report by Hindenburg Research on Adani Group, has resigned, citing ‘professional preoccupation’ as the reason, Adani Total Gas Ltd said. “We wish to inform that Shah Dhandharia & Co. LLP, Chartered Accountants have resigned as the Statutory Auditors of the Company i.e., Adani Total Gas Limited (ATGL) with effect from 2nd May, 2023,” the company said in a regulatory filing. ATGL also added that the company has appointed Walker Chandiok & Co LLP as the statutory auditors of the company.

Hindenburg had, in its report, questioned the ability of the firm to audit the books of a large conglomerate like Adani and had called it a ‘tiny firm’. “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 Rs 32,000 (US $435 in 2021) in monthly office rent. The only other listed entity we found that it audits has a market capitalization of about Rs 640 million (US $7.8 million),” the Hindenburg report had said.

Adani Group had, however, justified its selection of Shah Dhandharia. Its CFO Jugeshinder Singh had said that as a large corporation it is “our responsibility to develop Indian vendors”. “So, if we support the development of a small firm to become a proper, good, accounting firm, how is that a bad thing?” he had asked.

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In its resignation letter, the auditor said it was given a second term of 5 years on July 26, 2022, and has completed the audit of the company for the financial year ended March 31, 2023. “We have carefully evaluated and due to increased professional pre-occupation in other assignment, we regrettably propose our resignation. Our resignation does not result from an inability to obtain sufficient appropriate audit evidence,” the letter added. 

“There are no other circumstances connected with our resignation which we consider should be brought to the notice of the Board,” it said. Shah Dhandharia & Co is also the auditor of Adani Enterprises, which houses the airports and data centre business. Adani Enterprises is scheduled to announce its financial results on May 4. It is still not known whether the chartered accountancy firm would also resign from Adani Enterprises.

Adani Group has been under investigation since the allegations of fraud, corruption, stock manipulation and money laundering by Hindenburg. The conglomerate has denied all allegations.