Anil Ambani-led Reliance Capital, in a notice to stock exchanges, informed that Price Waterhouse and Co. Chartered Accountants LLP (PwC) have resigned as one of the statutory auditors of Reliance Capital and Reliance Home Finance with effect from 11 June 2019.
Reliance Capital said PwC has ceased to be the statutory auditor citing ‘certain observations’ during its ongoing assessment of FY18-19 which, if not resolved, could be significant to the financial statements.
Shares of Reliance Capital fell as much as 6.7% in early trade on Wednesday, while those of Reliance Home Finance plunged nearly 10% after the announcement.
The Board of Directors has noted and accepted the resignation. “The other duly appointed auditor, Pathak H.D. and Associates, whose term is valid until conclusion of the AGM for the year ended 31 March 2021 has confirmed that it will continue as the sole statutory auditor,” Reliance Capital said in a press note released after markets hours to the exchanges on Tuesday.
PwC stated that Reliance Capital disputed the observations highlighted by the firm and did not convene an audit committee meeting within the expected time. Moreover, Reliance Capital also stated that it might initiate appropriate legal proceedings against the firm, added PwC.
“These actions by the company (Reliance Capital) 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 PwC.
Reliance Capital and Reliance Home Finance have, however, denied the reasons stated by the auditor and claimed they provided all the details.
“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 12 June 2019, to further “The company expected PWC to have participated in the meeting of the Audit Committee and not resigned on the eve thereof. 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,” added Reliance Capital.
On the matter of threats of legal proceedings, Reliance Capital responded by saying: “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.”