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Compliance
Commercial

Report No. 13 of 2013 - Compliance Audit on Observations of Union Government, Commercial

Date on which Report Tabled:
Thu 08 Aug, 2013
Date of sending the report to Government
Government Type
Union
Union Department
Commercial
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Sector Finance

Overview

This Report includes important audit findings noticed as a result of test check of accounts and records of Central Government Companies and Corporations conducted by the Comptroller and Auditor General of India under Section 619(3) (b) of the Companies Act, 1956 or the statutes governing the Corporations.

The Report contains eleven theme based audit and 39 individual observations relating to 38 PSUs under 15 Ministries/Departments. The draft observations were forwarded to the Secretaries of the concerned Ministries/Departments under whose administrative control the PSUs are working to give them an opportunity to furnish their replies/comments in each case within a period of six weeks. Replies to 36 observations were not received even as this report was being finalised in April 2013. Earlier, the draft observations were sent to the Managements of the PSUs concerned, whose replies have been suitably incorporated in the report.Ministry of Defence sanctioned in July 1999, design and development of an Intermediate Jet Trainer (UT) by Hindustan Aeronautics Limited (HAL) at a cost of Rs.180 crore to be completed by July 2004. Though the design and development of IJT was yet to reach the stage of obtaining approval for Initial Operational Clearance (IOC), the Ministry also sanctioned concurrent handling of Limited Series Production (LSP) (March 2006) and Series Production (SP) (March 2010) by HAL.

IOC originally scheduled for March 2007 had not been achieved even after six years of delay. The development was beset with a number of failures at various stages. Set back to the scheduled timelines for different stages was due to non-freezing of engine design, change in weight of engine and experimenting with engine of inadequate thrust.Accidents to both the prototypes after completion of the prescribed number of flights resulted in suspension of flight test activities and modifications for strengthening the structure of the aircraft.

The prescribed procedure for fabrication and testing of the Structural Test Specimen whereby the basic airframe was to be tested to one-and-a-half times the designed load to prove the robustness of the design was not adhered to in respect of the first prototype. This resulted in cracking of specimen fuselage even at less load, leading to fabrication of another wing entailing extra expenditure of Rs.38.78 crore.Since the Company could not achieve refinement of stall characteristics and spin testing,engagement of a consultant at a cost of Rs.23.59 crore was done as late as in December 2012.Adoption of tentative purchase price for equipments /components while quoting for LSP resulted in extra expenditure of Rs.63.59 crore.Against the original sanction for development of Rs.180 crore, the project had already incurred an expenditure of Rs.516 crore.

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