Religare Enterprises auditors flag write-off concerns

The auditors of Religare Enterprises have flagged off concerns that the company may have to write off a portion of its investments in its major subsidiary Religare Finvest. A study is currently on to determine the value of the impairment, the auditors added. This was part of a limited review report by the auditors as part of Religare Enterprises unaudited financial results for the nine months ending December 31, 2017. Their opinion is based on a recent inspection report issued by the RBI on the financial position of Religare Finvest — between March 31, 2016 and March 31, 2017 - that highlights additional provisions on account of Non Performing Assets (~7.98 billion) and diminution in value of investments (~ 150 million). Coupled with other lapses in internal controls and irregularities, the auditors noted that this could invite penal sanction from the RBI. Accordingly, this will result in a reduction in the overall value of Religare Finvest as carried on the balance sheet of Religare Enterprises, the auditors said. Religare Finvest accounts for 75 per of total investment by Religare Enterprises (as of December, 31, 2017), amounting to ~20.90 billion, the auditors noted. The management is yet to complete the study to determine the value of the impairment, they added. In Janaury this year some foreign investors in Religare Finvest had approached the Delhi High Court alleging that the group’s promoters, Malvinder Singh and Shivinder Singh, had siphoned off funds worth ~5.25 billion from the company. This matter is currently under investigation. “As per the auditors Religare seems to be paying the price thanks to weak internal controls,” said Pallav Pradyumn Narang, partner in chartered accountancy firm CNK-RK.