A shareholder today sought contempt action in the Bombay high court against Anil Ambani promoted Reliance Infratel Ltd (RITL) and its directors for allegedly committing a breach of accounting standards and presenting inflated balance sheet.
RITL, however, refuted allegations saying it had neither violated accounting standards nor inflated profits for financial year 2008-09 in draft red herring prospectus for the proposed IPO.
Justice SJ Kathawalla, after hearing the petitioner, kept the matter for further arguments on February 18. The petitioner, SS Ananthraman, said the company had sought sanction from the high court to the scheme of arrangement between Reliance Communications Ltd (demerged) and Reliance Infratel ltd (resulting company) wherein the optic fibre undertaking of the demerged company was transferred to and vested in the resulting company.
He alleged that RITL had flouted its undertaking given to the court on complying with accounting standards prescribed under law by overstating its profits in audited financial statements for financial year 2008-09 by Rs804.29 crores which is immediate result of withdrawal from general reserves to set off foreign exchange loss on loans and liabilities.
The petitioner alleged that auditors who had certified the correctness of financial statements forming part of draft red herring prospectus had connived with RITL management and failed in their duty to bring to notice of all concerned that the company had not complied with accounting standards.
He alleged that RITL is thus undertaking undue advantage by overstating its profits by Rs 804.29 crores for FY 2008-09 to lure gullible investor public to invest in the proposed IPO in gross contempt to the order of High Court.
Counsel for RITL, Iqbal Chhagla contended that the company has not violated any accounting standards and losses have been set off as per the rules. He said there was total transparency in reporting profits and losses. Chhagla said the petitioner had no locus standi to make the grievance.
A company spokesman said in a statement here that out of a shareholder base of over 22 lakh in Reliance Communications, the petitioner was just one shareholder holding 305 equity shares. He does not hold any shares in Reliance Infratel Ltd.
The spokesman said, "allegations levied by the solitary shareholder, propped up by our corporate rivals, are totally baseless and factually incorrect. The company is in full compliance with all applicable Statutes, Standards and Guidelines. The allegations levied are devoid of any merit."
The annual accounts of the Company are audited by two eminent Audit Firms of international repute, he added.
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