RAISING A FLAG: Two proxy advisory firms advise against voting for Adani’s resolutions

Two proxy advisory firms have advised shareholders of four Adani Group companies to vote against a number of resolutions, including the reappointment of Gautam S Adani as Managing Director of Adani Ports & Special Economic Zone (APSEZ).

In addition, the companies have raised flags against the approval of financial statements and the increase in borrowing limits of group companies, and the renewal of the terms of certain directors, among others.

Notices from Stakeholders Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS) come ahead of the Annual General Meetings (AGMs) of APSEZ, Adani Enterprises (AEL), Adani Total Gas (ATGL) and Adani Power (APL). All the companies, except APL, have their general meeting on July 26, while that of APL is on July 27.

“Gautam Adani is the CEO of the company. SES is of the opinion that the combination of the two positions can lead to a concentration of powers in the hands of one person,” SES said when reappointed to APSEZ, this was not in accordance with the law.

In addition, he also asked shareholders to reject the reappointment of Rajesh S Adani as a director, citing excessive full-time positions as executive director at Adani Transmission and managing director at Adani Enterprises. He also asked shareholders to vote against reappointing Deloitte Haskins & Sells as auditors, citing “inadequate disclosure”.

Moreover, he also did not support the reappointment of Rajesh Adani as AEL director and Vinay Prakash as executive director, and the reappointment of Shah Dhandharia & Co as auditors of AEL. ‘ATGL.

In its response to SES, AEL said Rajesh Adani has been associated with the company and the group since its inception. “…it’s worth it for these companies to have him as a director. Among other things, he holds an executive position on the board of directors of Adani Transmission (ATL),” AEL said, adding that he does not receive any compensation from ATL. In an addendum, SES said there were no changes to its recommendations on Rajesh Adani.

For its part, the IiAS advised shareholders to vote against approving AEL’s financial statements for the year ended March 31, 2022, raising borrowing limits to Rs20,000 crore and free reserves to Rs12. 000 crore, among others.

“We have been raising concerns about the quality of the audit performed since FY22 signatory partner – Shubham Rohatgi – became an associate member of ICAI (Institute of Chartered Accountants of India) in 2018. We believe that ‘he doesn’t have the experience required to audit the financial statements of a NIFTY 100 company.
Regarding the increase in borrowing limits, the IiAS said, although AEL needed the funds for the purchase of coal, it did not provide any details on the “actual use” of the funds. “The limit sought is raised to five times his standalone net worth.”

It also asked shareholders not to approve related party transactions between AEL and its subsidiaries with Adani Infra (India) (AIIL) up to Rs 5,700 crore for FY23. AIIL is a wholly owned subsidiary of Adani Properties (APPL), with SSB Adani Family Trust being its ultimate holding company. “There is no clarity as to the size and financial performance of AIIL; therefore, we are unable to determine the rationale for these transactions,” he said.

Previous Millennials: Get rid of your assets and take charge of your financial life
Next Advice on student loan repayment, child tax credit, social security benefits...