RCOM reports significant losses for Q2/H1 FY26; Auditors highlight major going concern issues and non-compliance
RCOM reported significant losses for Q2/H1 FY26. Auditors highlighted major going concern issues, non-compliance with accounting standards, and ongoing CIRP and regulatory disputes, casting doubt on the company's future.
The impact is high due to the company's precarious financial state, including significant losses and negative equity, coupled with critical auditor qualifications that question the very basis of its accounting and future viability. The ongoing CIRP, unresolved regulatory disputes with DoT, and legal challenges further add to the uncertainty and potential adverse effects on the company's operations and stakeholders.
The negative sentiment is driven by substantial financial losses, severe auditor qualifications highlighting non-compliance with accounting standards, material uncertainty about the company's ability to continue as a going concern, and unresolved regulatory and legal challenges stemming from the ongoing corporate insolvency resolution process.
* Reliance Communications Limited (RCOM) approved and took on record its Unaudited Standalone and Consolidated Financial Results for the quarter and half year ended September 30, 2025, during a Board Meeting held on November 14, 2025. The company remains under Corporate Insolvency Resolution Process (CIRP) since June 28, 2019, with the Resolution Professional (RP) overseeing its affairs. * For the half year ended September 30, 2025, the company reported a standalone loss after tax from continuing operations of ₹(137) crore and a loss after tax from discontinued operations (after exceptional items) of ₹(4,427) crore, leading to a total comprehensive loss of ₹(4,554) crore. * The statutory auditors issued a limited review report with significant qualifications, raising material uncertainty about the company's ability to continue as a going concern due to continuous losses, current liabilities exceeding current assets, and defaults in repayments. * Key auditor qualifications include: * Non-compliance with Ind AS 105 regarding the non-determination of fair value for Assets Held for Sale (AHS), including Wireless Spectrum, Towers, Fibre, and Media Convergence Nodes (MCNs). * Non-provision of interest on borrowings amounting to ₹1,462 crore for the quarter and ₹2,625 crore for the half year ended September 30, 2025, and ₹33,478 crore up to the previous financial year, as well as foreign exchange (gain)/loss of ₹612 crore for the quarter and ₹669 crore for the half year, and ₹4,095 crore up to the previous financial year, which is not in compliance with Ind AS 23 and Ind AS 21. Had these been provided, the reported loss would be significantly higher and net worth lower. * Lack of comprehensive review for asset and liability carrying amounts, non-provision for impairment, and unresolved issues from a forensic audit report and communications from banks regarding willful defaulter/fraud, not in compliance with Ind AS 109, Ind AS 36, and Ind AS 37. * Inability to determine the impact of an unauthorized sale of property by an erstwhile director of a subsidiary, Bonn Investment Inc., for USD 8.34 million (approx. ₹69.55 crore). * Uncertainty regarding the financial impact of ongoing investigations by the Directorate of Enforcement (ED) and the Central Bureau of Investigation (CBI), including provisional attachment of subsidiary properties. * Non-adoption of Ind AS 116 "Leases" effective from April 01, 2019. * The CIRP for RCOM and its subsidiary Reliance Telecom Limited (RTL) continues. An application for substitution of a resolution applicant for RTL was dismissed by NCLT, and an appeal by UV Asset Reconstruction Company Limited (UVARCL) is reserved for orders by NCLAT. * The dispute with the Department of Telecommunications (DoT) regarding "current dues" for telecom license migration is ongoing. The NCLT has extended interim protection, restraining DoT from taking coercive action. The next hearing for this matter is scheduled for December 09, 2025. * The RP's application seeking clarification on the way forward in the CIRP of RTL is next listed on December 02, 2025.
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Reliance Communications Limited filed this with the NSE as a statutory disclosure, categorised under quarterly results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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