Even as the government termed the forgery of about Rs 10,000 crore in private technology services provider Satyam Computer Services as ‘an aberration’ on Thursday, a report by the Comptroller Auditor General of India points to significant irregularities in the accounts of its own companies, including NTPC, Bharat Heavy Electricals Ltd (Bhel), Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL).
“Satyam scam is an aberration and the events are specific to the company in question. No other scam of this nature has come to notice since then,” Corporate affairs minister Salman Khurshid told the Lok Sabha in written reply to a question.
However, three reports tabled in Parliament by the Comptroller & Auditor General of India (CAG) pointed out that the public sector enterprises are routinely understating liabilities, overstating assets to window-dress their accounts, apart from other misdemeanours in their financial reporting.
The CAG found several PSUs operating with “managerial inefficiencies” anomalies like undue payment to employees, wasteful expenditure, non-compliance to law, idle investment and blocking of funds irregularities which added up to a whopping Rs 1,847 crore in just their 2007-08 accounts.
The report called ‘Financial Reporting by Public Sector Undertakings’ pointed out that thermal power producer NTPC had overstated profits by Rs 938.3 crore during 2007-08 while the assets were understated by Rs 26 crore. There was an understatement of liabilities to the tune of Rs 34 crore in the case of MTNL, while BSNL had overstated its assets by Rs 213 crore. Sick companies like HMT Watches and National Textiles Corporation (NTC), which depend on regular government assistance, were also found to have understated their losses. While HMT Watches understated its loss by around Rs 10 crore, NTC did it to the tune of Rs 203 crore. “These are indicative figures. We looked at 85 instances and have accordingly produced these figures. We are highlighting these cases not as the cases of losses but managerial inefficiencies. All efficient companies would preserve their revenues so that the overall turnover goes up,” CAG’s principal director Pramode K Mishra told reporters.
Among the key lacunae in operations, the CAG pointed out Oil & Natural Gas Corporation had made an extra expenditure of Rs 194 crore in 2004 by ignoring the prevailing crude oil price for evaluation of an offer that led rejection of that offer and consequent re-tendering in 2005. Neyveli Lignite Corporation procured unnecessary equipment for Rs 26 crore. Bhel awarded a contract worth more than Rs 26 crore to a firm that was banned in 2006 by Heavy Power Equipment Plant, a unit of Bhel, for all business dealings. The heavy engineering behemoth also could not adhere to the delivery schedule and incurred an avoidable expenditure of Rs 27 crore from January 2003 to February 2006.
Ailing National Aviation Company of India Limited (Nacil), which is better known as Air India, also made avoidable expenses of about Rs 13 crore on account of expensive catering services and buying additional electricity load. “Such expenses were needless for the company which is in huge losses,” Mishra said. Nacil is expected to have suffered a loss of Rs 4,000 crore in 2008-09, almost double of that in the previous year.
The CAG also pointed out that the equity of 72 out of 413 audited PSEs has been completely eroded as they accumulated losses of Rs 94,428 crore by the end of 2007-08. The report stated the 72 companies had a negative net worth ofRs 78,665 crore.
Meanwhile, the government has proposed to introduce the new Companies Bill having stringent provision against frauds by companies, their directors or auditors in the ongoing session of Parliament, Khurshid said. The Companies Bill 2008 was introduced in October 2008, but with the re-constitution of Lok Sabha the government has to bring a new bill, Companies Bill 2009.
Managerial laxity
Managerial inefficiencies in PSUs added up to a whopping Rs 1,847 crore in just their 2007-08 accounts Thermal power producer NTPC had overstated profits by Rs 938.3 crore during 2007-08 while the assets were understated by Rs 26 crore There was an understatement of liabilities to the tune of Rs 34 crore in the case of MTNL, while BSNL had overstated its assets by Rs 213 crore.
Sick companies HMT Watches understated its loss by around Rs 10 crore while NTC did it to the tune of Rs 203 crore ONGC had made an extra expenditure of Rs 194 crore in 2004 by ignoring the prevailing crude oil prices. Neyveli Lignite Corporation procured unnecessary equipment for Rs 26 crore Nacil made avoidable expenses of about Rs 13 crore on account of expensive catering services and buying additional electricity load Equity of 72 out of 413 audited PSEs has been completely eroded as they accumulated losses of Rs 94,428 crore by the end of 2007-08. 72 companies had a negative net worth of Rs 78,665 crore.
