Price Waterhouse quits as auditor of Eveready over inter-company deposits

Price Waterhouse & Co Chartered Accountants LLP has quit as Eveready Industries’ auditor, saying it has been unable to obtain sufficient audit evidence of inter-company deposits and its recovery. In its place, Singhi & Co Chartered Accountants has been appointed.
“Price Waterhouse & Co has expressed its inability to continue as the auditors of the company,” said Eveready in a notice to the bourses.

While approving the company’s annual financial report, Price Waterhouse & Co had said the holding company had given advances to the tune of Rs 62 crore to a company to get the leasehold rights of a property. The deal had to be executed by the end of the last financial year; and Eveready had the right to claim refund and cancel the agreement if it failed.
“However, neither the deed has been executed nor the refund claimed,” Price Waterhouse & Co said in its auditor’s report.
Sources said the difference of opinion between Price Waterhouse & Co and Eveready was on the recoverability of inter-corporate deposits given to group companies and corporate guarantees given on behalf of group entities. These amount to Rs 512.26 crore.
“We were able to get a good auditor on board immediately,” a company source said.
Future of tea biz
In a separate filing with the bourses, Eveready said its board has proposed to enter into an asset-transfer or licence agreement with Madhu Jayanti International for transfer of the packet tea licence and other related trademarks for Rs 6 crore.
Earlier, Eveready had entered into an agreement with another WMG entity, McLeod Russel, to boost the packet tea business. However, the latter has been selling its estates to pare debt and lenders have been invoking company shares pledged with them.
Company sources said the proceeds from this sale will be used to boost the faster-growing categories such as appliances and lighting. It will also help improve the earnings before income tax deduction and amortisation (Ebidta) margin and reduce working capital needs of the company.
In the last financial year, the packet tea business of Eveready stood at Rs 68.3 crore but it incurred an Ebidta loss of Rs 11.3 crore. Eveready reasoned that it was not able to pump in money to promote the tea brands and it stood at an uneconomical scale.
Eveready has also been scouting for a strategic partner for its batteries business. Sources said some developments are expected on this front in the next 45 days.

Satyam scam: Setback for Price Waterhouse as SAT refuses stay on Sebi order

The Securities Appellate Tribunal (SAT) on Friday refused to grant a stay on market regulator Securities and Exchange Board of India (Sebi’s) order against global audit firm Price Waterhouse (PW), for its alleged involvement in the Satyam fraud case.
PW and its network firms "shall not take new assignments and new clients", SAT said during the first hearing in the matter. Further, the audit firm was asked to submit a list of its existing clients before the tribunal and furnish a copy to Sebi as well, SAT said during the first hearing in the matter.
The market regulator had, on January 10, banned the audit firm under the audit brand PW from providing audit services to listed companies and market intermediaries for two years for its alleged involvement in the Satyam fraud case. Two PW partners have been banned for three years.
PW had challenged the matter at the appellate tribunal and sought a blanket stay on the regulator's order.
ALSO READ: 9 years after Satyam scam, Price Waterhouse banned from audit for 2 years
The tribunal has, however, provided relaxation to PW, allowing it to continue its relationship with its existing clients. It said that the Sebi order will not affect the existing clients in the following calendar year. “The said order shall not come in the way of audit assignments undertaken by PW and it network firms for fiscal 2017-18," SAT said.
The next hearing in the matter is scheduled for February 13.
Meanwhile, Sebi has been asked to furnish its response on February 8.
Further, the audit assignments that have already been undertaken by PW for clients who follow the financial year beginning on January 1, 2018 would not be impacted either, noted SAT. It said that PW has the liberty to complete any other work of certification other than audit," SAT said.
The regulator in the order had also imposed a disgorgement of Rs 130.9 million on PW and two of its chartered accountants, S Gopalakrishnan and Srinivas Talluri. The three entities also have to pay 12 per cent interest on the disgorgement amount starting January 7, 2009, within 45 days from the date of the order.
The case dates back to 2009, when the then chairman of Satyam Computer Services (Satyam) B Ramalinga Raju admitted and confessed to large scale financial manipulations in the company's book of accounts to the tune of Rs 50.4 billion. Soon after this, Sebi initiated investigations and later on issued showcause notices to PW and its associates in February 2009. Further notices were issued to PW in 2012 under FUTP (Fraudulent and Unfair Trade Practices) regulations.

No intentional wrongdoing in Satyam fraud case, says Price Waterhouse

Price Waterhouse on Thursday said there has been no intentional wrongdoing by its firms in the Satyam case and expressed confidence of getting a stay on the Sebi order.
The audit major also said it has learnt the lessons from Satyam case and invested heavily over the last nine years in building a robust and high quality audit practice.
Finding Price Waterhouse guilty in the multi-crore Satyam scam, Sebi has barred its network entities from issuing audit certificates to any listed company in India for two years.
Besides, the watchdog has ordered disgorgement of over Rs 13 crore wrongful gains by the audit major and its two erstwhile partners who worked on the IT major's accounts.
"As we have said since 2009, there has been no intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary.
"We believe that the order is also not in line with the directions of the Bombay High Court order of 2010 and so we are confident of getting a stay," Price Waterhouse said in a statement.
While noting that the Sebi order relates to a fraud that took place nearly a decade ago in which it played no part and had no knowledge of, Price Waterhouse said, "We are disappointed with the findings of the Sebi investigations and the adjudication order."
The scam came to light in January 2009 after Satyam Computer's then chairman B Ramalinga Raju admitted to large scale financial manipulations in the company's books of accounts.
"We have however learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice, as also confirmed in 2015 by an independent monitor appointed by the US SEC (Securities and Exchange Commission) and PCAOB (Public Company Accounting Oversight Board)," the statement said.
Shares of Satyam were also listed in the US.