PwC Resigns as Auditor of Paytm Payments Services 2023
According to a regulatory filing from One 97 Communications Limited, the business that controls Paytm, PwC has resigned as the statutory auditor of Paytm Payments Services (PPSL) and has been replaced by SR Batliboi & Associates.
With effect from August 7, One 97 Communications Limited, the company that controls Paytm, announced that Price Waterhouse (PwC) has resigned as the auditor of Paytm Payments Services (PPSL). The corporation has chosen SR Batliboi & Associates as PPSL’s statutory auditors.
Before the end of PwC’s five-year tenure as its auditors, the business had earlier in March told its shareholders that it would recommend SRB as the replacement auditors for approval at the approaching AGM.
After five years, it is advised for a listed company to rotate auditors, according to Section 139 (2) of the Companies Act 2013. PwC, whose tenure as the firm’s statutory auditor was set to end in 2026, stated in its resignation letter to the Paytm Payment Services board, “We understand that there has been a change of auditors at the holding company level.
As a result of this tender, our resignation as the Statutory Auditors of PPSL in consideration of your understandable practice of aligning the auditor of PPSL, being a material subsidiary, with the auditor of the holding company to create synergies and maintain consistency in the audit process of the Group.
PwC said that it has finished and released its results for the statutory audit for the year ending March 2023. The business also stated that it had completed its restricted evaluation of the particular purpose interim financial statements not audited for the quarter ending in June 2023.
In a separate exchange filing, Paytm revealed that its founder and CEO, Vijay Shekhar Sharma, will purchase a 10.3% interest in the business from its largest shareholder for $628 million to streamline its ownership structure. The $628 million stake that Sharma acquired from Antfin (Netherlands) Holding BV is valued. Due to the acquisition, Sharma and the promoter companies would become Paytm’s most significant shareholders.
According to the filing, resilient Asset Management BV, a foreign company that Sharma owns 100% of, would buy Antfin’s share in Paytm through an off-market transfer. At the time of the transaction’s conclusion, Sharma’s ownership of Paytm will rise to 19.42%, while Antfin’s ownership will fall to 13.5%.
In a significant development during 2023, PricewaterhouseCoopers (PwC), one of the Big Four accounting firms globally, has tendered its resignation as the statutory auditor for Paytm Payments Services. This article dives deep into the nuances of this development, providing an analytical perspective with the backdrop of the situation.
Paytm, formally known as One97 Communications Ltd., is one of India’s leading financial technology companies. Its subsidiary, Paytm Payments Services, is central to its operations, facilitating millions of transactions daily.
Although the reasons for PwC’s resignation were not made public initially, such moves by significant accounting firms typically arise from disagreements or concerns related to financial statements, reporting, or governance issues.
The resignation of an auditor can raise eyebrows among stakeholders. Investors, in particular, may see this as a red flag, potentially leading to decreased trust and reduced stock prices.
Such events often attract the attention of regulatory bodies, leading to potential inquiries or investigations into the company’s financial affairs. The public perception of Paytm might be affected, as potential clients and partners may view this as a sign of internal management or operational issues.
This is not the first instance where a significant company and its auditor have parted ways. In the past, disagreements between auditors and companies worldwide have arisen due to differences in the interpretation of financial statements, internal control concerns, or governance issues.
For PwC, preserving its reputation and adhering to the highest auditing standards are paramount. If PwC felt any potential misrepresentation or issue could not be resolved collaboratively with Paytm, it might have seen the resignation as a necessary step.
The onus remains on Paytm to clarify the situation to its stakeholders. Ensuring transparent communication is critical, as is appointing a new auditor promptly.
Given Paytm’s and PwC’s prominence in their respective industries, the market was quick to respond. Following the announcement, there was a noticeable fluctuation in Paytm’s stock prices. Analysts and market watchers closely followed the unfolding events, with many offering varied predictions on the long-term implications of this development.
While the precise reasons for PwC’s resignation as Paytm Payment Services’ auditor in 2023 are not entirely clear, the implications of such a decision reverberate through the financial and tech industries. Both companies are likely to navigate this transition cautiously, given the high stakes in their reputations and stakeholder trust.
