Adani Group used auditors as young as 23 to sign off on accounts, Hindenburg said.
The industrial giant used Shah Dhandharia, which had 11 employees, to audit companies worth $100 billion, per Hindenburg.
Adani said all its auditors had been certified and qualified by the appropriate statutory bodies.
India's Adani Group used a firm with just 11 employees, some in their early twenties, to audit the accounts of two of its biggest companies, according to Hindenburg Research's scathing report on the industrial giant.
Hindenburg's 32,000 word report, published January 24, accused Adani of market manipulation, insecure debt, and accounting fraud.
One of the company's "key accounting red flags," it said, was Adani's use of auditor Shah Dhandharia to manage the accounts of Adani Total Gas and Adani Enterprises, which last month were valued at a combined $100 billion. They're now worth an estimated $45 billion after the short seller's report triggered a huge selloff.
The research group was citing the auditor's website, which is now defunct. It took screenshots of the site and archived old versions.
The only other entity Hindenburg could identify that Dhandharia has audited had a relatively meager market cap of 640 million rupees ($7.8 million).
Hindenburg said Dhandharia had just four partners and 11 employees. Some employees were as young as 23 or 24 years old, while the audit partners who signed off on the companies' financials were 28.
Shubham Rohatgi, an audit partner named on Adani Total Gas's financial statements, was just 23 when he started signing off on its accounts, per Hindenburg's research.
"Given the complexity of Adani Total Gas and, particularly, Adani Enterprises, with 156 subsidiaries and many more affiliates and joint ventures, one would expect a large, highly experienced team to be monitoring its labyrinthian corporate structure," the short seller said in its report.
"But Adani Group has apparently shunned this approach, choosing a tiny auditor named Shah Dhandharia to oversee the audits for these two public companies."
The auditor paid just 32,000 rupees (around $390) in rent for its office where it audited Adani, per Hindenburg.
In its 413-page rebuttal to Hindenburg, Adani said its auditors had been duly certified and qualified by all the relevant statutory bodies. It added that Hindenburg displayed a "brazen disregard of personal privacy and safety" by naming auditors and attacking their competence.
"The claims of seeking "transparency" and fairness ring hollow when taken in this context," the group said.
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