PwC Resigns As Statutory Auditor For Eveready
Price Waterhouse & Co Chartered Accountants LLP on Saturday resigned as statutory auditor for Eveready Industries Ltd. citing its inability to analyse the impact of financial support extended by the battery maker to its promoter group entities.
On review of their annual continuance process, PwC has expressed its inability to continue as the auditors of the company for the reasons included in the “Basis of Disclaimer of Opinion” on the financial statements and internal financial controls as given by them in the auditors’ report for the year ended March, Eveready said in an exchange filing.
On May 27, PwC in a report said Eveready had extended inter-corporate deposits and corporate guarantees to promoter group companies. As of March 2019, the amount of inter-corporate deposits and corporate guarantees stood at Rs 230.8 crore and Rs 283.1 crore, respectively. Further, Eveready has given an advance of Rs 62 crore to another company, where details of deed being executed, or a refund claimed have not be ascertained, the audit report said.
PwC said they are unable to obtain sufficient audit evidence regarding the extent of the loss allowance or impairment to be recognised on the aforesaid liabilities and the consequential impact on the standalone financial statements for financial year 2019.
Eveready, in the notes to accounts of the audited report, however, said the aforesaid deposits and guarantees given to companies along with their future interest have been guaranteed by certain promoter directors of the company, in case of a default by said companies to pay dues. Also, the promoter group level restructuring is underway to monetise assets to meet various liabilities of the company, it said, adding the outstanding dues shall be recovered and no provision is required at this stage.
On June 10, India Ratings and Research downgraded the battery maker’s credit rating to IND BBB from IND A+ citing increased leverage and weakened liquidity.
Singhi & Co has been appointed as the new auditor for Eveready with effect from June 29, the filing said.
In a separate filing, Eveready said its board signed a deal with Madhu Jayanti International to sell assets worth Rs 6 crore relating to packed tea product business.
Shares of Eveready have declined 11.8 percent from May 27 to date. That compares with a 1.5 percent drop in the Nifty 500 Index, according to Bloomberg data.