Proxy advisory firm Institutional Investor Advisory Services (IiAS) has raised red flags against resolutions of two Adani Group firms – Adani Transmission (ATL) and Adani Total Gas (ATGL) – including fixing the remuneration of Anil Sardana. The move comes ahead of ATL’s annual general meeting on July 19 and that of ATGL on July 18.
Sardana has been the managing director of ATL, since May 2018 and managing director of Adani Power (APL), another Adani Group company, since July 2018.
“In FY23, he has not received remuneration from either APL or ATL. Sardana is a professional and we expect his remuneration to benchmark market standards. However, there is no clarity on the source of his remuneration and his remuneration structure. We believe the managing director’s remuneration must be paid by the company and must be aligned to the company’s performance,” IiAS said in a note to shareholders, urging them to vote against the motion.
On the risk indicator, IiAS tagged the motion as ‘governance’ issues and advised investors to seek further clarifications from ATL.
IiAS also asked shareholders of the company to vote against the adoption of standalone and consolidated financial statements for FY23. This was on the basis of a ‘qualified opinion’ by the auditor, Deloitte Haskins and Sells, after allegations by US-based short seller Hindenburg Research in January eroded nearly half of its market capitalisation.
In its qualified opinion, the auditor said: “The evaluation performed by the ATL does not constitute sufficient, appropriate audit evidence for the purposes of our audit”. Further, in the absence of an independent external examination, it was unable to comment on whether these transactions may result in possible adjustments or disclosures.
Separately, IiAS has asked shareholders of ATGL to vote against the adoption of standalone and consolidated financial statements for FY23.
“We have relied upon the auditors’ report, which has qualified the financial statements due to their inability to comment on the possible consequential effects of the pending proceedings before the Supreme Court and investigation by regulators,” it said.
There were also concerns over the quality of the audit conducted as the signing partner, Shubham Rohatgi, has just about five years of post-qualification experience (who became an associate member of The Institute of Chartered Accountants of India in 2018).
“We believe he does not have the requisite experience to audit the financial statements of an S&P BSE 100 company,” it added.
However, the proxy advisory firm urged shareholders to support nine other resolutions of ATL including the reappointment of Rajesh Adani, managing director of Adani Enterprises (AEL), as director, and four resolutions of ATGL including reappointment of Pranav V Adani (part of the promoter family and executive director AEL) as non-executive non-independent director.
