The Anil Ambani Group has been subjected to new stress since the auditors of two of its companies – Reliance Power (RPower) and Reliance Infrastructure (RInfra) – have resigned. In doing so, the auditors of four Reliance Group companies have opted out in the last three months.
RInfra informed the exchanges on Friday that BSR & Co had resigned as the company's auditor. "BSR & Co LLP (BSR) sees its letter of August 9, 2019, resigning as one of the company's statutory auditors," the release said. In a statement, RPower has informed the stock exchanges of BSR & Co's resignation as its auditor since August 9.
In its letter of resignation to the two companies, BSR cited the concerns raised in the audit reports for the financial year 19 as a reason for refusal.
"The reason cited by BSR is that for the reasons included in the Disclaimer Basis in their audit report of June 14, 2019 for the financial year 2018-19, they have completed their annual process of they continue to base this assessment, which they have expressed as an inability to continue as statutory auditors of the company, "RInfra says in its statement.
In an audit report dated June 14, RInfra's auditors expressed concern about inter-corporate deposits, including accrued interest, investments, receivables and advances worth 7082.96 kronor. The auditors added that they could not find enough information to establish a connection between these companies and RInfra.
RPower said in its statement: "The reason cited by BSR is that, for the reasons included in the Qualified Opinion Basis in their audit report of June 8, 2019, for the financial year 2018-19, they completed their annual process of continuation and on the basis of this assessment they have expressed their inability to continue as statutory auditors of the company. "
In a report dated June 8, the auditors indicated that during the financial year 19, the company had taken inter-corporate deposits from certain companies worth 403.41 kronor. The auditors said that there was insufficient information to determine the relationship between these companies. "If these companies are considered to be related parties, the company will require the prior approval of the audit committee that has not been received."
In separate statements, the two companies added that the company's other appointed auditor, Pathak HD & Associates, confirmed that it would continue to be the company's sole statutory auditor until March 31, 2020.
RPower and RInfra will report quarterly results on Monday and Tuesday, respectively.
In June, PWC resigned as auditors of Reliance Capital and Reliance Home Finance, citing an unsatisfactory response to "some observations" made by it as part of its ongoing fiscal audit for fiscal year 2018-19. According to sources, Reliance Capital is now seeking legal action against PwC.