|
| Sebi to probe RCom on audit controversy |
| BS Reporters / New Delhi/Mumbai Oct 15, 2009, 00:22 IST |
|
ICAI also seeks details, ADAG scrip plunges 1-7%.
 ADAG-controlled Reliance Communications (RCom) stock fell nearly 7 per cent today in a market that rose following reports that the Securities and Exchange Board of India (Sebi) has asked for details of the special audit ordered by the Department of Telecommunications ahead of launching an independent investigation on the issue.
The audit report had found that RCom, which offers CDMA mobile services and recently launched GSM services, had under-reported revenues that, in turn, impacted licence and spectrum fees it pays the government.
The special auditors Parakh & Company noted that the company under-reported wireless revenues of Rs 2,799.19 crore to the Telecom Regulatory Authority of India (Trai) for the financial years 2006-7 and 2007-8, costing the government Rs 315.9 crore in fees that are charged as a percentage of revenue.
The audit report also said during 2007-08, RCom's actual wireless revenue was Rs 12,298 crore, but it inflated the figure by 23 per cent to Rs 15,213 crore in the shareholder’s report, leaving a gap of Rs 2,915 crore.
 Top Sebi sources told Business Standard that the regulator has already asked for the audit report.
“Once we get the report we will verify how the company has failed to comply with various disclosure norms and issue a show-cause notice to the firm. Also, both Bombay Stock Exchange and the National Stock Exchange, which have separate listing agreements with the firm, will look into the matter to see if the company violates clause 40 of the agreement,” said the source.
Meanwhile, ADAG chief Anil Ambani, who was in Delhi today, met Finance Secretary Ashok Chawla. An RCom spokesperson said corporate rivals were sensationalising the report. “The difference between revenue according to the Trai figures and as per our financial accounts has been reported by RCom from quarter to quarter, and has not been 'discovered' by the special auditors,” the spokesperson added.
“An appropriate response will be provided as and when DoT provides a copy of the report to RCOM and seeks its explanation in that regard.” he added.
The Institute of Chartered Accountants of India (ICAI) has also asked RCom to provide financial details.
Make all reports public: Mittal
Sunil Mittal, chairman of Bharti Airtel Ltd, India's largest telecom company by number of subscribers, said that the Deaprtment of Telecommunications' special audit report on telecom companies should be made public.
Responding to a question on NDTV on the leak of the report, Mittal said: “I don't know what the government policies are but in my opinion everything in the public domain is better that not being in the public domain. So sure, open all the findings of all the reports. In any case, all of you will publish, write and talk about it in any way.”
Mittal also welcomed DoT's decision to go in for special audits of all telecom companies. “The government already has audited most of the leading companies and the audit reports are awaited. I think it is good thing from time to time because large government revenues are involved here,” he said.
"We have not asked for any inquiry on the RCom audit issue. I have just asked our disciplinary committee members to verify the information that is coming out in the media. Since it involves our members, we want to be aware of the situation. Beyond that there no ICAI inquiry,” ICAI President Uttam Prakash Agarwal told Business Standard.
Apart from RCom, other ADAG stocks such as Reliance Power, Reliance Natural Recourses, Reliance Capital and Reliance Infrastructure too declined between 1.5 and 3 per cent though the Sensex managed to gain 1.20 per cent.
"Anil Ambani's long-drawn legal battle over gas sharing contract with elder brother Mukesh Ambani, from the country's largest oil fields in Krishna Godavari basin, has already had a negative impact on investor sentiment," said a top south-Mumbai based stock broker.
The special auditor was appointed by DoT a few months ago to examine allegations of licence fee evasion by the Cellular Operators Association of India (COAI), the association of GSM players.
The audit was later extended to all other incumbent telecom players, including Bharti Airtel, Vodafone, Idea Cellular, and Tata Teleservices. Those reports are awaited.
Also read: OCT 13: RCom under-reported revenues, says Trai audit
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
