A towering building near Ahmedabad’s Law Garden is in the eye of a storm. Not for all the accounting firms that operate from the structure, but for two rooms on its fifth floor, which house the office of Shah Dhandharia & Co. LLP – the company that audits the accounts of Adani Gas and Adani Enterprises.

This auditor did “not seem capable of conducting a complex audit”, according to the Hindenburg Research report, which sent Adani stocks into a nosedive with its accusations of market fraud and stock manipulation. The report had claimed that the firm’s office rent was Rs 32,000 per month and that it audits “just one more entity whose market cap is Rs 640 million (Rs 68 crore)”.

However, justifying its decision to choose the Shah Dhandharia firm amid the allegations, the Adani Group CFO had pointed to “our responsibility to ensure that domestic, small companies get all the support they need to grow into big companies”. At the same time, it said this auditor was working with several firms in various sectors and had an experience of more than 20 years.

The Adani Group had picked Shah Dhandharia in 2017 to adhere to the Companies Rule, 2013, which mandates rotation of an auditing firm after two five-year terms, according to a letter to the stock exchange. The accounts of these two Adani firms were earlier looked at by another auditor – Dharmesh Parikh and Company. 

But Newslaundry has learnt that many auditors at the new firm had previously been associated with Dharmesh Parikh and Company in various capacities.