Business Today

Reliance Capital share price trading lower for second session after PwC resigns as auditor of Reliance Group firms

PwC said the firms prevented it from performing its duties as statutory auditor and exercising independent judgment in making a report to the members of the firm.

twitter-logo BusinessToday.In        Last Updated: June 13, 2019  | 10:34 IST
Reliance Capital share price trading lower for second session after PwC resigns as auditor
Reliance Group chairman Anil Ambani

Reliance Capital share price was trading lower for the second straight session after Price Waterhouse & Co (PwC) resigned as the statutory auditor from Reliance Capital and its subsidiary Reliance Home Finance citing irregularities in their books of accounts and declared the firm prevented it from performing its duties as statutory auditor and exercising independent judgment in making a report to the members of the firm. However, Reliance Capital in a response said,  "PWC's observations are completely baseless and unjustified and the audit firm has acted prematurely without even statutory discussions with the Audit Committee."

Reliance Capital share price has fallen 8.84% during the two sessions. The Reliance Capital stock opened at a loss of 2.29 % at 85.50 and fell up to 3.77% to 84.20 in morning trade.

The resignation comes on a day when Reliance Group chairman Anil Ambani sought to pacify investors' concerns by announcing the group had serviced debt of over Rs 35,000 crore in the past 14 months from April 1, 2018 till May 31, 2019. These comprised principal repayments of Rs 24,800 crore and interest payments of Rs 10,600 crore.

PwC said it communicated to Reliance Capital certain observations during the ongoing audit for FY 2018-19 and did not receive satisfactory response to its queries.

Reliance Group has serviced debt of over Rs 35,000 crore in 14 months, says Anil Ambani

The auditor sent a letter dated April 24, 2019 under relevant provisions of the Companies Act to which the company disputed the same to be in accordance with the provisions of law. PwC issued another letter on May 14, 2019 to reiterate the intent of letter issued on April 24, 2019, and discuss the irregularities of the financials in an audit committee meeting.

However, Reliance Capital did not convene an audit committee meeting within the expected time, PwC said.  In response to the auditor's queries, the company stated that it might initiate appropriate legal proceedings against PwC.

The auditor noted that such inadequate responses impaired its independence, and hence, it was no longer in a position to complete the audit and instead felt compelled to withdraw from the audit engagement and resign.  

It further said Reliance Capital's continuing auditor has been mandated by the Audit Committee to submit its independent report on PWC's observations within 15 days

A Reliance Capital spokesperson said, "There is no question of 'diversion'; zero loans and /or liquidity have been provided by any lender in the PWC audit period. Reliance Capital is by law required to fund only group entities, being a Core Investment Company (CIC). All resources have been utilised purely to support group debt servicing of Rs 35,000 crore in past 14 months. Reliance Capital is confident the independent report of the continuing auditor will establish that there are no irregularities."

"The company has duly responded to the various queries and letters of PWC and has also duly and validly convened a meeting of the Audit Committee on June 12, 2019 to further respond to the letter dated May 14, 2019 from PWC. The company expected PWC to have participated in the meeting of the Audit Committee and not resigned on the eve thereof."

The Reliance Group firm said it will ensure that PWC's observations are fully examined by the continuing Statutory Auditor, M/s Pathak HD & Associates before finalization of the audit for the accounting year ended March 31 , 2019.

Edited by Aseem Thapliyal

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close