Relaince Capital chairman Anil Ambani (Mint file)
Relaince Capital chairman Anil Ambani (Mint file)

PWC's observations baseless, unjustified: Reliance Capital

  • PWC resigned as auditor of Reliance Capital and Reliance Home Finance citing unsatisfactory response to 'certain observations' made by it as a part of the ongoing audit for 2018-19
  • Pathak H.D. & Associates will submit its report on PwC's observations within 15 days, according to Reliance Capital

New Delhi: Anil Ambani-led Reliance Capital on Thursday said its erstwhile statutory auditor Price Waterhouse & Co Chartered Accountants' observations about its accounts were "completely baseless and unjustified".

On Wednesday, Reliance Capital and Reliance Home Finance said that Price Waterhouse & Co Chartered Accountants (PWC) had resigned as auditor of both companies citing unsatisfactory response to "certain observations" made by it as a part of the ongoing audit for 2018-19.

"PWC's observations are completely baseless and unjustified. PWC has acted prematurely without even statutory discussions with the audit committee," Reliance Capital said in a regulatory filing.

Reliance Capital said its continuing auditor Pathak H.D. & Associates has been mandated by the audit committee to submit its independent report on PWC's observations within 15 days. "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 confident the independent report of the continuing auditor will establish that there are no irregularities," the company added.

Reliance Capital said it was by law required to fund only group entities, being a core investment company (CIC). All resources had been utilised purely to support group debt servicing of 35,000 crore in the past 14 months.

Both Reliance Capital and Reliance Home Finance on Wednesday said they did "not agree with the reasons given by PWC" for its resignation.

PWC cited the companies' failure to convene audit committee meetings within the expected time, despite multiple letters of intent sent to them, as one of the reasons for the resignation, the firms had informed stock exchanges.

PWC also stated that the companies said they might initiate appropriate legal proceedings against the firm, according to the filings.

According to PWC, these actions by the companies prevented it from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the company, both companies said, elaborating on the reasons behind the resignation.

The companies, however, stated they duly responded to various queries and letters of PWC and convened meetings of their audit committees on June 12, 2019, to further respond to letters from PwC.

Both companies said they expected PWC to participate in the meetings of the audit committees and not resign on the eve thereof.

The companies said they also furnished all requisite and satisfactory details as required by PWC, especially those including certification and confirmations of the transactions in question on multiple occasions by PWC itself.

With regard to legal proceedings, the firms 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 was hard to see how PWC took exception to the approach," the two companies added.

Shares of Reliance Capital were trading 4.06% on the BSE.

Reliance Group Chairman Anil Ambani on Tuesday said his group was committed to meet all payment obligations in a timely manner and had already serviced debt worth 35,000 crore in the last 14 months.

The 35,000 crore worth of payments made relates to the debt of Reliance Capital, Reliance Power and Reliance Infra, and their respective affiliates.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed

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