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Hyderabad April 1 The functioning of Hitvel (Hyderabad Information Technology Venture Enterprises Ltd) a venture capital, has come under close scrutiny of the Comptroller and Auditor General of India (CAG), which faulted some of its investments.

Hitvel is promoted by the Andhra Pradesh Industrial Development Corporation and SIDBI with a corpus of Rs 15 crore with the objective of providing venture funding to technology companies.

As per investment guidelines, the company was to conduct investigations and undertake due diligence with regard to the risks involved in the investments before investing through the fund.

`JUDGMENT ERRORS'

The CAG in its report for 2005-2006 tabled in the State Assembly, found that there were errors in judgment in investments made in some of the companies. The CAG reviewed five of the seven investments made by the fund.

These include investments in Catalytic Software Private Ltd, DSR Solutions Private Ltd, Net India Private Ltd, Indosoft Investment International Ltd, and Siva Consulting Technologies Ltd.

In the case of Catalytic, CAG said that the investment was unjustified since it was at a premium, DSR was described as injudicious, Net India as undue favour, Indosoft as loss of investment and in the case of Siva as unfruitful investment.

The funds were invested in Catalytic even though the company was making losses and its net worth had become negative. The investment was without any return. In the case of DSR Solutions, the fund had to incur avoidable loss.

Hitvel, according to CAG findings, made investment of Rs 7.80 crore in venture capital undertakings without following the investment guidelines, thereby resulting in investments remaining dormant without any return.

More Stories on : Venture Capital | Software | Regulatory Bodies & Rulings | Andhra Pradesh

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