IIAS asks investors to vote against Reliance Power’s resolution
Proxy advisory firm Institutional Investors Advisory Services (IiAS) has recommended Reliance Power (RPower) shareholders vote against adopting the financial statements for the year ended March 31, 2022, citing auditor concerns.
The notice comes ahead of the company’s annual general meeting (AGM) scheduled for July 2, with electronic voting due to begin June 28 and end July 1. “The auditors qualified their opinion on the company’s consolidated financial statements. They raised concerns over the non-payment of interest of `360 crore for FY22 on borrowings of the wholly owned subsidiary, Vidarbha Industries Power (VIPL),” the IiAS said in its note, requesting votes against the adoption of a stand-alone and consolidated financial statements for the year.
VIPL suffered losses in FY22 and in previous years its current liabilities exceed current assets; its plant has not been operational since 2019. One of the lenders has also filed under the Insolvency and Bankruptcy Code.
Auditors have raised concerns about the difference in depreciation method adopted by the company compared to that of its subsidiaries, which deviates from the requirements of Indian Accounting Standard 6 (Ind AS), he added. .
Auditors of some subsidiaries have also identified material going concern uncertainty due to erosion of net worth. They also drew attention to the company’s ability to continue in business depending on certain events such as loan restructuring, asset monetization over time, and the realization of regulatory and arbitration claims. Reliance Power did not respond to an email seeking comment.
Reliance Infrastructure and Anil Ambani & family are the promoters of Reliance Power, which is in the generation, transmission and distribution of electricity. The IIAS, for its part, asked investors to vote for the reappointment of Sateesh Seth as non-executive non-independent director, to approve the remuneration of cost auditors for FY23 and to empower the board of directors to sell, transfer or dispose of assets or to invest in subsidiaries .