Price Waterhouse & Co Chartered Accountants quit as one of the statutory auditors of Reliance Capital Ltd. and its unit Reliance Home Finance Ltd., saying that it didn’t receive satisfactory response to certain observations and transactions, the Reliance Group companies said in exchange filings.
The auditor said that those issues "might be significant or material to the financial statements” if not resolved satisfactorily. PWC also said that the companies didn’t convene an audit committee meeting within the expected time.
The development adds to the mounting list of woes faced by Anil Ambani as he struggles to meet the companies’ loan repayments. The group has been on an asset sale spree to pare debt and pay obligations including more than 10 billion rupees ($144 million) for Reliance Capital and its two lending units by the end of June.
"According to PWC, 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,” the companies said in the filings.
"It is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign.”
Reliance Capital and Reliance Home Finance disagreed with the reasons given by PWC for the resignation, saying they had responded to the various queries and letters, and also convened a meeting of the audit committees on June 12 to further respond to a letter from the auditor.
The tycoon’s woes came to the fore in March when his elder brother Mukesh Ambani stepped in just in time to settle an overdue payment and save him the embarrassment of a stint in jail. His businesses have been straining since a government crackdown on bad loans.
His group has repaid 350 billion rupees in debt the past 14 months, an amount entirely raised through disposal of assets, Anil Ambani said in a rare conference call Tuesday.
"Reliance Group is committed to meeting all future debt obligations” and becoming "capital light, with bare minimal debt,” he said, while not taking questions from reporters.
In the latest string of credit rating cuts, Reliance Capital was downgraded to BBB from A in May by CARE Ratings, while Reliance Home Finance was cut to C in April from BBB+. - Bloomberg
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