RComm inflated revenues: Govt auditor
fe Bureaus
Posted: Tuesday, Oct 13, 2009 at 0917 hrs IST
Updated: Tuesday, Oct 13, 2009 at 0917 hrs IST
New Delhi: Anil Ambani-led Reliance Communications Ltd (RComm), the country’s second-largest mobile operator, inflated its 2007-08 wireless revenues by Rs 2,915 crore to shareholders to hike its valuation, while simultaneously under-reporting the figures to telecom regulator Trai, a special audit commissioned by the department of telecom has found.
As a result, RComm made an “under-payment of licence fee” of Rs 315.9 crore in 2006-07 and 2007-08, notes the audit report, a copy of which is in FE’s possession. The reason given by RComm to explain the discrepancy between the wireless revenue reported to shareholders and that disclosed to Trai “is not correct or complete”, the audit by Parakh & Company states.
For its part, RComm has denied any wrongdoing and described the contents of the audit report as the handiwork of “corporate rivals”. DoT officials confirmed receipt of the report, but said they are yet to examine it.
RComm could get away with just a fine if found guilty, but the more severe implication could be on its shares. Under Sebi’s issue of capital & disclosure requirements that replaced earlier softer guidelines, such accounting differences might be considered material.
RComm’s shares closed 0.62% lower at Rs 247.80 on the BSE on Monday, though analysts said investors had already factored in the matter. KR Choksey Securities managing director Deven Choksey said, “I think this is basically because of two different sets of reporting standards. This issue might not have any major negative impact on the stock.” The report claims that RComm kept its licence fees and spectrum charges “largely unchanged” for the past three quarters at a time when every other operator showed meaningful increases. In September 2007, it disclosed a net decline of gross revenue to Trai of 7.4%, but reported a 10.4% increase in its consolidated financial statement to shareholders.
Since telecom firms pay licence and spectrum charges to the government as a share of adjusted gross revenue, or AGR, the lower figures reported to Trai meant lower charges. The fee is paid at different rates. For instance, the licence fee for a unified access service licence is 6-10%, depending on the circle. Similarly, the long-distance licence fee is 6%, while there is no licence fee on a non-Internet telephony licence. To even out such variations, a DoT committee recently recommended a flat licence fee of 8.5% for all services.
While denying any under-reporting of revenue, RComm says it...
Comments
» Why no other newspaper dare to publish this news ?
Posted by Indian on 2009-10-14 13:39:36.192891+05:30
It is simple.Corporates like ADAG lnfluence media a lot..They can keep away these types of news get published.This is the democratic india.
» Let us see if the government will lock up Anil AAmbani like they did Raju
Posted by Ash on 2009-10-13 13:46:47.717399+05:30
If the government treats Ambani like they did Raju, they we know they are being fair to all across India. If government fails to act and imprison Ambani, that shows we have a miscarriage of justice.
» how many reliance subscribers do u see?
Posted by observer on 2009-10-13 10:54:35.315062+05:30
the actual number could be even lower! But they inflate the numbers to get higher valuation in the stock market and borrow money against their she holding.. something like satyam, but at a much higher scale. they claim to be the number two mobile company with over 80 million users. But just look around, how many reliance users do u see? just step into any reliance outlet and you will see hardly anyone and employees chatting with themselves. At the same time visit smaller operators like idea or vodaphone's offices.. you will have to wait 10-15 mins before you could actually talk with a service representative.. the actual reliance number would be around 10-20 million. but if the real number is known, anil ambani's supposed wealth will 'melt' to 1/10 of what it is now and will find it dificult for him to raise debt or even service his existing debt!
» N o More Satyams
Posted by M.V.Muthu on 2009-10-13 07:37:39.369522+05:30
The country could do without any more 'Satyams' and the auditors' report should be dealt with, with all seriousness, in a pro-active league by the concerned central ministry. Incidentally, comments of Sanjay truely reflect the bitter out pouring of many an unfortunate lot about the abysmal attitude of the service providers.
» fraud company
Posted by jain_bond on 2009-10-13 06:23:21.289062+05:30
there is no doubt about their fraudulent behaviour. their sister electric co bought capital equipment from another sister co at a much higher (padded)rates and then tried to pass these higher costs to the unsuspecting consumers. this is also what the ADAG company is accusing RIL also of padding up exploration costs. it was only the delhi electric regulatory that prevented them from doing so. The Appellate Tribunal of Electricity on oct 9 ruled that power distribution company (discom) BSES cannot pass on Rs 535 crore it had paid extra to its sister concern to buy capital goods to the consumer. This Tribunal has upheld a Delhi Electricity Regulatory Commission (DERC) ruling saying, “BSES bought these goods from its sister concern Reliance Energy Limited (REL) — for 68 per cent more than what they would have cost if bought from the manufacturer,” the official said. So much for this ADAG group making noises about probity.
» Government is responsible for companies showing inflated profits.
Posted by SC Aggarwal on 2009-10-12 21:27:45.314259+05:30
According tothis news RCom has shown inflated profits perhaps like the one shown by B.Ramalinga Raju in the case of the company Satyam Computer services Ltd where assets worth Rs.8000 crore were non existent. The question is why these boys are inflating their income or profit? These guys know that there is no income-tax on the income of the company and hence do whatever you like. Here the Government is at fault. The Government should have two slabs in the case of the companies. A company should be taxed at the rate of 30% and in the case of a company enjoying tax free income, there should be minimum tax @ 10%. There should be no tax free income completely.
» Another Satyam type scam
Posted by Amit on 2009-10-12 19:31:17.677574+05:30
Immediate CBI inquiry on such company should be slapped. This person must be playing using Public Money.
» Fraud Company
Posted by Conrad Vincent on 2009-10-12 16:51:43.526566+05:30
I am not surprised. I urge users to beware of Reliance Broadband connection. The company takes Rs 3500 upfront and then rejects customers on grouds their address proof is inadequate despite providing all requisite documents and personal verification having been done. The company refuses to refund the Rs 3500 despite not providing any service.
» re : Fraud Company
Posted by Sanjay on 2009-10-12 18:36:53.833502+05:30
This is the worst company I have seen providing broadband connection. My experience is so bad that even if they give me free, I would refuse them. With slap on their face
