PWC resigns as statutory auditor of Reliance Capital, Reliance Home Finance

While the board of directors of Reliance Capital has accepted the resignation, Reliance Home Finance said its audit committee and board would meet on Thursday and decide upon a new statutory auditor

Anil Ambani-led Reliance Capital and Reliance Home Finance Wednesday said Price Waterhouse & Co Chartered Accountants (PWC) has resigned as statutory auditor of both the companies.

PWC has put in its resignation, with effect from June 11, 2019, citing unsatisfactory response to "certain observations" made by it as a part of the ongoing audit for fiscal 2018-19, the two companies said in their respective regulatory filings to stock exchanges.

Both Reliance Capital and Reliance Home Finance said they do "not agree with the reasons given by PWC".

While the board of directors of Reliance Capital has noted and accepted the resignation, Reliance Home Finance said its audit committee and board will meet on Thursday and will decide upon the new statutory auditor.

Reliance Capital and Reliance Home Finance said that 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.

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 "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," both the companies said, elaborating on the reasons behind the resignation.

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

Both companies said they expected PWC to have participated in the meetings of the audit committees and not resigned on the eve thereof.

The companies said they have 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.

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 is hard to see how PWC has taken exception to this approach," the two companies added.

Shares of Reliance Home Finance were trading 0.85 per cent lower at Rs 17.60 apiece on BSE. Shares of Reliance Capital were trading 2.24 per cent lower at Rs 91.80 apiece on BSE.

Meanwhile, seeking to allay investor concerns after stocks of his group firms took a beating on the bourses, Reliance Group Chairman Anil Ambani Tuesday said his group was committed to meet all payment obligations in a timely manner and has already serviced debt worth Rs 35,000 crore in last 14 months.

In a conference call with reporters, he said, despite challenging conditions and no financial support from financiers, the group has repaid the principal of Rs 24,800 crore and made interest payments of Rs 10,600 crore between April 1, 2018, and May 31, 2019.

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