Reliance Communications share price fell sharply on Tuesday after Canadian investment research firm Veritas raised questions on RComs accounting policies,book equity and its fixed asset base.
Veritas in its report A House of Cards dated June 8,2012 and released on Tuesday said,We believe that the companys accounting policies are whimsical and do not provide a clear picture of the underlying operating and business trends. We neither believe in the reported book equity of the company nor in its reported fixed asset base.
Veritas maintained a sell call stating that there is an additional downside in the companys stock price. After the release of the report,RComs share price fell by 7.9 per cent during the day at the BSE before it recovered to close at Rs 63.6 witnessing a fall of 2.5 per cent.
The telecom firm trashed the report saying Veritas report lacks any credibility and is malafide in intent and approach.
The report said RCom is in a challenging situation given its high financial leverage,debt obligations,stagnating operating profits in its core business,falling capital expenditure and weak competitive position.
The report is full of factual inaccuracies,and baseless allegations masquerading as research, said RCom in a statement.