The Hindu Business Line : `5 Navaratna PSUs overstated assets'

THE Comptroller and Auditor General of India (CAG) has said that aggregate value of assets of five public sector undertaking has been overstated by a hefty Rs 546.70 crore as on end-March 2003. The detection was made during a test check on the accounts of all the nine `Navratna' PSUs.

In his report of Comments on Accounts of select PSUs, tabled in Parliament, the CAG said similarly liabilities were also understated by Rs 152.95 crore in four of the Navratna PSUs. What is particularly important is that the comments of CAG on the PSUs brought out an overstatement of profit by Rs 461.80 crore in four PSUs and understatement of loss by Rs 237.85 crore in one public sector undertaking, i.e., Steel Authority of India Ltd (SAIL). The overall variance arising in the profit of 8 Navratna (SAIL excluded) as a result of the CAG's comments was 1.24 per cent. In the case of SAIL percentage variation in loss as a result of CAG's comments was 78.82 per cent.

According to the CAG report, aggregate value of assets as on March 31, 2003 was overstated by Rs 812.77 crore in 22 PSUs and understated by Rs 42.95 crore in five PSUs. Similarly liabilities were understated by Rs 369.73 crore in 17 PSUs and overstated by Rs 1.14 crore in one PSU excluding Navratna PSUs.

"Had all the 30 PSUs whose accounts were test checked and were reflected in this report revised their accounts on the basis of comments made by the CAG, aggregate profit for 2002-03 would have decreased by Rs 470.78 crore in 17 PSUs and would have increased by Rs 1.14 crore in one PSU (excluding Navratna PSUs).

"Similarly, loss for 2002-03 would have been increased by Rs 668.77 crore in 12 PSUs", the report said adding that these PSUs include Food Corporation of India (-) Rs 378.11 crore for 1999-2000 and 2000-01, Heavy Engineering Corporation Ltd (-) Rs 250.46 crore, Cement Corporation of India Ltd (-) Rs 7.94 crore and STC (-) Rs 7.13 crore.

The report said in the case of six PSUs — Bharat Refractories Ltd, Hindustan Photo Films Manufacturing Company Ltd, Hindustan Steel Works Construction Ltd, Hoogly Dock & Port Engineers Ltd, Indian Iron Steel Company Ltd and Konkan Railway Corporation Ltd, the accounts of which were also test checked, the paid-up capital was fully eroded by the accumulated losses.

In seven PSUs — Andrew Yule and Company Ltd, Bharat Coking Coal Ltd, Burn Standard Company Ltd, Eastern Coalfields Ltd, Hindustan Cables Ltd, National Fertilisers Ltd and National Textiles Corporation (South Mumbai) Ltd, the net worth as on March 31, 2003 showed a declining trend as compared to the previous year.

The report observed that some of the salient points raised by the statutory auditors encompass inadequacy or ineffectiveness in the system of financial control and accounts, non-reconciliation of books and deficiencies in the maintenance of asset registers, deficiencies in cost control system, inadequate internal audit system particularly with the size and nature of business of PSUs and excess inventory, surplus or obsolete stores and spares, non-fixation of maximum and minimum levels of stock holdings and non-fixation of economic order quantity.

There were also instances of non-payment of loan instalments, interest and penal interest by PSUs due on Government loans and debts were outstanding for three years or more and there was an increase in sundry debtors and doubtful debts.

More Stories on : PSU | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page