PWC resigns as Reliance Capital auditor over certain transactions

Reliance Capital chairman Anil Ambani (Reuters )

New Delhi: Troubles escalated for Reliance Capital Ltd on Wednesday when its auditor Price Waterhouse & Co Chartered Accountants LLP (PWC) resigned before submitting its audit report for the financial year 2019, the company said in a stock exchange filing.

The Anil Dhirubhai Ambani Group (ADAG) company in the disclosure to bourses also said that Pathak H.D. & Associates will be the sole auditor and whose term is valid until the conclusion of the AGM for the year ended March 31, 2021. PWC also resigned as auditor of Reliance Home Finance Ltd.

RCAP’s stocks were down 1.65% at 12:30 pm. Rel Home was down 3.10%.

PWC in its resignation letter stated that as part of the ongoing audit for FY19, it noted certain observations and transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements. PWC also stated that the company threatened to initiate legal action against the firm, which further impaired its ability to complete the audit in a fair manner.

“These actions by the company have prevented it from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the company, and impaired its independence, and hence, it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign,” said RCAP to the bourses, quoting PWC’s resignation letter.

In the letter to the exchanges, RCAP said that it did not agree with the reasons given by PWC for the resignation and that it has furnished all the required documents and details to PWC.

“The company has also duly furnished all requisite and satisfactory details as required by PWC, especially including certification and confirmations of the transactions in question on multiple occasions by PWC themselves. As regards legal proceedings, the company had clearly stated that the same would be initiated only if so legally advised, that too if required to protect the interests of all stakeholders, and it is hard to see how PWC has taken exception to this approach,” said RCAP in the letter to exchanges.

On Tuesday, to assuage investor concern, Anil Ambani, chairman, ADAG, said that the group was fully committed to meeting all future debt servicing obligations in a timely manner, through further asset monetisation plans that are already at various stages of implementation. He maintained that the group has already serviced a debt liability of 35,000 crore to its various lenders in the last 14 months, including24,800 crore as principal payment and 10,600 crore as interest repayment. Going forward, the group will become capital light, with minimum debt and high on equity.