NEW DELHI: Adani Group has appointed accountancy firm Grant Thornton for an independent audit of some of its companies in a bid to come clean of the allegations levelled by the US short-seller Hindenburg Research and to assure investors and regulators.
The appointment follows recent reports that Adani Group is planning to appoint one of the ‘big four’ global firms to conduct a general audit of its business. Grant Thornton is considered among the top ‘big six’ global auditing firms.
The audit is primarily to show to regulators like the Reserve Bank of India (RBI) that the group has nothing to hide and it is in compliance with relevant laws. The audit will specifically look into if there was any misappropriation or repatriation of funds and if loans were used for any purpose other than the one they were intended for.
Meanwhile, S&P Global Ratings said on Tuesday that while there may not be any significant financial stability risks from the Adani crisis, Indian banks may now conduct extra due diligence before making corporate loans and even charge higher risk premia.
S&P Senior Director (Infrastructure & Utilities Ratings), Abhishek Dangra said as per external estimates, the exposure of the banking sector to Adani group companies is less than 1 per cent and also the credit ratings of the firms are not at ‘distress level’.
However, he added the risk premium to certain Indian companies and those within the Adani umbrella may rise and if banks have governance concerns, they put in more due diligence which may result in delay in sanctioning credit.
“So, there are no significant financial spillover risks directly. But there might be some secondary aspects. More so, when the dollar bond market is not necessarily open given high dollar rates, and domestic banking system is the one where many of the companies have started to look for funds, there some of the banks may do extra due diligence which might impact either the cost or timelines,” Dangra said in a webinar.
S&P Global Ratings, earlier this month, had revised outlook on Adani Ports and Adani Electricity to negative from stable while affirming the rating. The ratings agency cited the deterioration in the credit profile of Adani Ports and Adani Electricity Mumbai due to governance risks and funding challenges for the larger Adani Group.