Proxy advisory firm Institutional Investors Advisory Services (IiAS) has recommended shareholders of Reliance Power (RPower) to vote against adoption of financial statements for the year ended March 31, 2022, citing auditors’ concerns.
The advisory comes ahead of the company’s annual general meeting (AGM) scheduled on July 2, with e-voting slated to start on June 28 and end on July 1. “The auditors have qualified their opinion on the consolidated financials of the company. They have raised concerns over the non-provision of interest of `360 crore for FY22 on the borrowings of wholly-owned subsidiary company, Vidarbha Industries Power (VIPL),” IiAS said in its note, asking for votes against the adoption of standalone and consolidated financial statements for the fiscal.
VIPL had incurred losses during FY22 and during the previous years, its current liabilities exceed current assets; its plant has not been operational since 2019. One of the lenders has also filed an application under the Insolvency and Bankruptcy Code.
The auditors have raised concerns over the difference in the method of depreciation adopted by the company from that of its subsidiaries, which is a departure from the requirements of the Indian Accounting Standard 6 (Ind AS), it added.
The auditors of certain subsidiaries have also highlighted material uncertainty related to going concern due to erosion of net worth. They have also drawn attention on the company’s ability to continue as a going concern being dependent on certain events such as restructuring of loans, time-bound monetisation of assets and realisation of regulatory and arbitration claims. Reliance Power did not did not respond to an e-mail seeking its comments.
Reliance Infrastructure and Anil Ambani & family are the promoters of Reliance Power, which is into generation, transmission and distribution of electricity. IiAS, on its part, has asked investors to vote for re-appointment of Sateesh Seth as non-executive non-independent director, approve remuneration to cost auditors for FY23 and empower the board to sell, transfer or dispose of assets or invest in subsidiaries.