Two proxy advisory firms have advised shareholders of four Adani group companies to vote against a number of resolutions, including the reappointment of Gautam S Adani as managing director of Adani Ports & Special Economic Zone (APSEZ).
Further, the firms raised flags against approving financial statements and raising of borrowing limits of group firms, and reappointments of certain directors, among others.
The advisories by Stakeholders Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS) come ahead of the annual general meetings (AGM) of APSEZ, Adani Enterprises (AEL), Adani Total Gas (ATGL) and Adani Power (APL). All the companies, except APL, have their AGMs on July 26, while that of APL is on July 27.
“Gautam Adani is the chairman and managing director of the company. SES is of view that combining both the positions may lead to concentration of powers in the hands of a single person,” SES said on his reappointment at APSEZ, it was not in compliance with the law.
Further, it also asked shareholders to reject the reappointment of Rajesh S Adani as a director, citing excessive full-time positions as executive director at Adani Transmission and managing director at Adani Enterprises. It also asked shareholders to vote against the reappointment of Deloitte Haskins & Sells as statutory auditors, citing “inadequate disclosure”.
Further, it also did not support Rajesh Adani’s re-appointment as a director at AEL and that of Vinay Prakash as executive director, and reappointment of Shah Dhandharia & Co as statutory auditors of ATGL.
In its response to SES, AEL said Rajesh Adani has been associated with the company and group since inception. “…it is worthwhile for these businesses to have him as director. Among others, he holds an executive position on the board of Adani Transmission (ATL),” AEL said, adding, he is not drawing any remuneration from ATL. In an addendum, SES said there was no change in its recommendations on Rajesh Adani.
On its part, IiAS advised shareholders to vote against approval of AEL’s financial statements for the year ended March 31, 2022, raising of borrowing limits to Rs20,000 crore and free reserves from Rs12,000 crore, among others.
“We raise concerns over the quality of the audit conducted since the signing partner of FY22 — Shubham Rohatgi — became an associate member of ICAI (Institute of Chartered Accountants of India) in 2018. We believe he does not have the requisite experience to audit the financial statements of a NIFTY 100 company.”
On increasing of borrowing limits, IiAS said, while AEL requires funds for coal purchase, it has not provided any clarity on the “actual utilisation” of the funds. “The limit sought is high at five times its standalone networth”.
It also asked shareholders not to approve related-party transactions between AEL and its subsidiaries with Adani Infra (India) (AIIL) for up to Rs5,700 crore for FY23. AIIL is a wholly-owned subsidiary of Adani Properties (APPL), with SSB Adani Family Trust being its ultimate holding company. “There is no clarity with respect to AIIL’s size and financial performance; therefore we are unable to ascertain the rationale for these transactions,” it said.