Reliance probed for alleged misreporting of revenue
Posted on: October 14, 2009 - 5:32am
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Reliance probed for alleged misreporting of revenue
The booksof Reliance Communications, the Indian mobile phone group, have come underscrutiny amid claims that the group misreported annual revenues by as much as23 billion rupees (£315 million) last year, possibly to avoid paying licencefees to the Government.
Reliance,which is controlled by the billionaire Anil Ambani and is India’s second-largest mobile phoneoperator by subscriber numbers, has denied any wrongdoing, suggesting that theallegations have been engineered by business rivals.
Theallegations stem from leaked details from a report prepared by Parakh and Co,the auditor, for the Indian Government. The auditor was ordered by New Delhi to examineapparent discrepancies between the revenue reports Reliance made to theGovernment and to its shareholders.
Parakh andCo said in the leaked document: "Our report reveals that there has beenunder-reporting of revenue for the purpose of payment of revenue share, andunderpayment of licence fee and spectrum fees."
The claimsthreaten to stoke concerns over corporate governance in India.
In January,the corporate world was left reeling when B.Ramalinga Raju, the founder andchairman of Satyam, one of the largest Indian outsourcers, admitted orchestratinga £1 billion fraud over the course of several years.
Theconfession by the disgraced IT mogul that much of the cash he had reportedbeing on Satyam's books was utterly "fictitious" sent the company'sshares into freefall in Mumbai and New York and raised serious questions overstandards of business regulation in India.
RelianceCommunications has denied any "irregularity or discrepancy" in itsaccounts. It described the auditor's comments as biased and "instigated bycorporate rivals".
Parakh andCo’s audit claims that the company reported wireless revenue to the stockmarket of 152 billion rupees for the year ended March 2008 but reported grosswireless revenue of 129 billion rupees to the Government.
The auditorsaid that one-off transactions partly explained the difference between thefigures. Sources close to Reliance said that the auditors had not discoveredanything that the company had not already made public and that it had reportedrevenues correctly.
The booksof Reliance Communications, the Indian mobile phone group, have come underscrutiny amid claims that the group misreported annual revenues by as much as23 billion rupees (£315 million) last year, possibly to avoid paying licencefees to the Government.
Reliance,which is controlled by the billionaire Anil Ambani and isIndia
Theallegations stem from leaked details from a report prepared by Parakh and Co,the auditor, for the Indian Government. The auditor was ordered byNew Delhi
Parakh andCo said in the leaked document: "Our report reveals that there has beenunder-reporting of revenue for the purpose of payment of revenue share, andunderpayment of licence fee and spectrum fees."
The claimsthreaten to stoke concerns over corporate governance inIndia
In January,the corporate world was left reeling when B.Ramalinga Raju, the founder andchairman of Satyam, one of the largest Indian outsourcers, admitted orchestratinga £1 billion fraud over the course of several years.
Theconfession by the disgraced IT mogul that much of the cash he had reportedbeing on Satyam's books was utterly "fictitious" sent the company'sshares into freefall in Mumbai and New York and raised serious questions overstandards of business regulation in India.
RelianceCommunications has denied any "irregularity or discrepancy" in itsaccounts. It described the auditor's comments as biased and "instigated bycorporate rivals".
Parakh andCo’s audit claims that the company reported wireless revenue to the stockmarket of 152 billion rupees for the year ended March 2008 but reported grosswireless revenue of 129 billion rupees to the Government.
The auditorsaid that one-off transactions partly explained the difference between thefigures. Sources close to Reliance said that the auditors had not discoveredanything that the company had not already made public and that it had reportedrevenues correctly.
Source: http://business.timesonline.co.uk/