PwC Raises Concerns Over ‘Fairness’ Of Eveready’s Financial Statement

The statutory auditor to Eveready Industries (India) Ltd. cited its inability to analyse the impact of battery maker’s financial support to promoters as a reason for its resignation. Price Waterhouse & Co. Chartered Accountants LLP pointed to a more serious implication of this lack of clarity.

PwC said it was “unable to opine on the truth and fairness of the financial statements” of Eveready, according to its resignation letter filed with the Ministry of Corporate Affairs—BloombergQuint has reviewed a copy. The point on “fairness” of financial statement wasn’t disclosed in the exchange filing by Eveready on Saturday.

BloombergQuint awaits Eveready’s response to its emailed queries on PwC’s resignation letter.

PwC’s resignation letter also reiterated its May 27 audit report that said the auditor couldn’t analyse the extent of loss allowance or impairment that was required on the inter-corporate deposits and liability to be recognised on corporate guarantees given to promoter entities, as it was unable to obtain sufficient appropriate audit evidence from the company. In its audit report, PwC had raised a red flag over inter-corporate deposits of Rs 230.8 crore and corporate guarantees or post-dated cheque of Rs 283.1 crore as of March 2019 from promoter group companies.

Recognition of impairment or liability decreases a company’s profits. Eveready reported a 10 percent decline in its consolidated profit at Rs 47.83 crore for the year ended March.

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.