Reliance Capital dips 7% in early trade as statutory auditor PwC resigns

PwC stated that it noted certain observations/transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements of the company.

Shares of Reliance Capital dipped 7 per cent to Rs 87.55 on the BSE in the early morning trade on Wednesday after the company’s statutory auditor Price Waterhouse & Co Chartered Accountants LLP (PwC) resigned with effect from June 11, 2019.

PwC stated that as part of the ongoing audit for FY18-19, it noted certain observations/transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements, and that it did not receive satisfactory response to its queries. CLICK HERE TO READ THE PRESS RELEASE

The board of directors of Reliance Capital is scheduled to meet on June 28, 2019 to consider and approve the audited financial results (both standalone and consolidated) for the quarter and financial year ended March 31, 2019.

PwC stated that, in a letter dated April 24, Reliance Capital disputed the observations highlighted by it and did not convene an audit committee meeting within the expected time. The company also stated that it might initiate appropriate legal proceedings against the firm, as per PwC.

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, 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.

Reliance Capital; however, said the company has 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.

The other duly appointed auditor, Pathak H.D. & Associates, whose term is valid until conclusion of the AGM for the year ended March 31, 2021, has confirmed that it will continue as the sole statutory auditor, it added.

At 09:32 am, the stock of Reliance Capital was trading 4 per cent lower at Rs 90 on the BSE, as compared to a 0.39 per cent decline in the S&P BSE Sensex. A combined 6 million shares changed hands on the counter on the NSE and BSE till the time of writing this report.