The Anil Ambani group is under fresh stress, as auditors of two of its companies — Reliance Power (RPower) and Reliance Infrastructure (RInfra) — have resigned. With this, auditors of four of the Reliance Group companies have quit in the past three months.
RInfra informed the stock exchanges on Friday that BSR & Co had resigned as the company's auditor. “BSR & Co LLP (BSR) vide its letter dated August 9, 2019, has resigned as one of the statutory auditors of the company,” it said. In a similar statement, RPower informed the exchanges about BSR & Co resigning as its auditor with effect from August 9.
In its resignation letter to the two companies, BSR cited concerns raised in the FY19 audit reports as the reason for quitting.
“The reason cited by BSR is that for the reasons included in Basis of Disclaimer in their audit report dated June 14, 2019, for the financial year 2018-19, they have carried out their annual continuance process and basis that assessment they has expressed their inability to continue as statutory auditors to the company,” RInfra said in its statement.
In the June 14 audit report, auditors of RInfra raised concerns over inter-corporate deposits, including accrued interest, investments, receivables and advances worth Rs 7082.96 crore. The auditors added they could not find sufficient information to establish a relation between these companies and RInfra.
RPower in its statement said, “The reason cited by BSR is that for the reasons included in Basis for Qualified Opinion in their audit report dated June 8, 2019, for the financial year 2018-19, they have carried out their annual continuance process and basis that assessment they has expressed their inability to continue as statutory auditors to the company.”
In the June 8 report, auditors stated that during FY19, the company took inter-corporate deposits from certain companies worth Rs 403.41 crore. The auditors said there was not enough information available to determine the related party relationship of these companies. “Had these companies been considered to be related parties, the company would require prior approval of the audit committee which has not been obtained.”
In separate statements the two companies added that the other appointed auditor for the company, Pathak HD & Associates, had confirmed it would continue as the sole statutory auditor for the company till March 31, 2020.
RPower and RInfra will report the June quarter results on Monday and Tuesday, respectively.
In June, PWC had resigned as auditors of Reliance Capital and Reliance Home Finance, citing unsatisfactory response to “certain observations” made by it as part of the then ongoing audit for fiscal 2018-19. According to sources, Reliance Capital is now looking at taking legal action against PwC.