Adani Group auditor SR Batliboi faces regulatory probe amid accounting concerns

The National Financial Reporting Authority (NFRA), the regulatory body overseeing accounting practices in India, has initiated an inquiry into one of the member firms of Ernst & Young (EY), SR Batliboi. This move comes in the wake of the scrutiny of SR Batliboi's role as statutory auditor for five listed companies within the Adani Group.

The Adani Group, a prominent conglomerate in India, has recently come under the regulatory scanner owing to concerns surrounding its accounting and disclosure practices. The NFRA's inquiry focuses on SR Batliboi's audit of several Adani Group firms, including Adani Ports & Special Economic Zone, Adani Power, Adani Green Energy, Adani Wilmar, and two cement manufacturers acquired from Holcim Ltd.

It remains unclear whether the NFRA is extending its investigation to other auditors working with the Adani Group. Additionally, the duration of the audit completion is shrouded in uncertainty, with no official information available on the timeline of the inquiry.

The Adani Group is currently under a court-mandated probe by the Securities and Exchange Board of India (SEBI), the market regulator. This underscores the heightened scrutiny of the conglomerate's financial and accounting practices. EY and the NFRA have not provided official statements or responses regarding the ongoing investigation.

Foreign accounting firms like EY operate in India through independent affiliates, a practice necessitated by legal restrictions. The Adani Group faced a significant challenge earlier this year when Hindenburg Research released a report casting doubts on its accounting and audit procedures, leading to a decline in its market value. In response, the Adani Group asserted that their audits are conducted by certified professionals and in full compliance with applicable laws and regulations.

The Adani Group issued a statement reaffirming their commitment to regulatory compliance. “We reject any suggestion that Adani Group and its businesses have not acted as per the regulations and accounting standards of the jurisdictions in which we operate. Adani Group has always conducted its business in compliance with all applicable laws and regulations and is confident about its practices, governance, and disclosures,” media reports quoting it said.

As the NFRA's inquiry progresses and regulatory oversight intensifies, the Adani Group's financial practices are scrutinised, raising questions about the broader implications for corporate governance and transparency in India's business landscape.