OVERVIEW

I.    Introduction

1.    Important audit findings noticed as a result of test check of transactions entered into by the Central Government Companies / Corporations conducted by the officers of the C&AG of India under Section 619(3)(b) of the Companies Act, 1956 or the statue governing the particular Corporations are included in this Report.

2.    This Report includes 159 paragraphs in respect of 67 PSUs. The draft paragraphs 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 6 weeks. Replies to 97 were not received even as this report was being finalised. In respect of 3 paragraphs, even the Management of the concerned PSU failed to respond despite being repeatedly reminded.

3.    159 paragraphs included in this report relate to the PSUs under the administrative control of the following Ministries/Departments of the Government of India:

The audit observations included in this report bring to light many lacunae in the functioning of PSUs which have serious financial implications. The irregularities pointed out are broadly of the following nature:

• Unproductive expenditure/investment amounting to Rs.341.44 crore in 38 cases due to construction of excess dwelling units, non recovery of inter corporate deposits, investment in joint venture, pay and allowances of idle labour, injudicious import of components, procurement of equipments etc.
• Loss of revenue/ sale proceeds of Rs.330.22 crore in 45 cases due to shortages, belated raising of invoices, delay in realisation/non realisation of debts, sub letting of premises at lower rates, negligence and improper storage of wheat, contamination in finished product, loss of generation of power etc.
• Loss of Rs.291.32 crore suffered in 19 cases on account of undue favour to parties, non-enforcement of terms and conditions of contract, defective agreement terms etc.
• Excess payment of Rs.127.54 crore in 15 cases was made to staff of PSUs on account of ex gratia, bonus, salaries, wages, subsidy etc.
• Avoidable payment of Rs.66.13 crore in 14 cases on account of demurrages, customs duty, excise duty, interest, income tax, etc.
• Loss of Rs.35.84 crore in 11 cases due to adoption of incorrect tariff, excess settlement of claim etc.
• Avoidable loss of Rs.22.60 crore in 12 cases due to delay in finalisation of tenders, overlooking lowest offers and failure to invoke risk clauses etc.
• Avoidable expenditure of Rs.20.37 crore in 5 cases due to use of unproven technology, hiring defective equipments etc.

II    Highlights

Gist of some of the important paragraphs included in the Report is as follows:

Electronics Corporation of India limited failed to plan and execute an order with the extended delivery period resulting in a loss of Rs. 2.59 crore. The unsold material was derated as scrap during 1997-98.

(Para 1.1.1)

Indian Petrochemicals Corporation Limited incurred an extra expenditure of Rs.1.30 crore on procurement of chemical at higher rates in January 1998 due to delay in testing the suitability of chemical from an alternative cheaper source.

(Para 2.1.1)

Air India extended undue favour to its general sales agent appointed for UK by admitting productivity linked incentive claims outside the terms of the agreement that too by working it on the amount of net sales from the first pound rather than at the rates prescribed for each slab. Total amount released on such payment during 1987 - 2000 was equivalent to Rs.57.02 crore.

(Para 3.1.1)

Due to improper planning Air India incurred an avoidable expenditure of Rs. 3.64 crore over a period of five years ending December 1999 on an extravagant lease for their office in London besides recurring liability of more than Rs. 5.66 lakh per month on its retention to accommodate two member booking staff.

(Para 3.1.2)

Deficiency in monitoring over the stock of tickets issued to sales agents and remittances thereagainst coupled with failure to obtain adequate bank guarantee resulted in an avoidable loss of Rs.2.44 crore to Air India as of March 1998.

(Para 3.1.3)

Inadmissible claim for carrying forward the losses in income tax return for the assessment year 1994-95 filed in November 1994 by the Airports Authority of India (AAI) resulted in avoidable payment of interest of Rs.13.51 crore to the Income Tax department on completion of assessment in December 1997.

(Para 3.2.1)

AAI incurred an imprudent capital expenditure of Rs.8.88 crore during 1999-2000 on the development of an airport having no traffic potential.

(Para 3.2.2)

Non-deduction of TDS on canteen subsidy paid in cash to the employees by the AAI during 1995-96 to 1999-2000 resulted in violation of provisions of TDS and avoidable liability of penal interest amounting to Rs.1.71 crore under the Income Tax Act, 1961

(Para 3.2.3)

Hotel Corporation of India Limited (HCIL) incurred an extra expenditure of Rs.1.92 crore between October 1996 and March 2001 on payment of certain allowances to its staff which were outside the scope of periodical wage revision and guidelines issued by the Department of Public Enterprises.

(Para 3.3.1)

HCIL effected in April 1997 and February 1998 incorrect retrospective revision of certain allowances in contravention to the instructions of the Ministry of Civil Aviation/Department of Public Enterprises resulting in overpayment to the tune of Rs.1.74 crore to its officers.

(Para 3.3.2)

Delay in procurement of own equipment by Indian Airlines Limited for ground handling of aircraft at Kathmandu resulted in avoidable loss of saving of Rs.4.21 crore during June 1998 to December 2000.

(Para 3.4.1)

Breach of agreement by IAL with Andhra Bank and affording uncalled for credits by the Company directly to the credit-card issuing banks during February 1997 to March 1999 resulted in non-recovery of Rs.1.83 crore from Andhra Bank.

( Para 3.4.2)

An unaccounted shortage of 5.75 lakh MT of process rejects during 1995-96 caused a loss of Rs.14.24 crore to the Bharat Coking Coal Limited (BCCL).

(Para 4.1.1)

The consumption of Magnetic used in the process of washings the coal was in excess of the envisaged norm in 5 out of 7 washeries of the BCCL resulting in excess consumption of 0.41 lakh MT of Magnetic valued at Rs.5.01 crore for the period from 1995-96 to 1999-2000.

(Para 4.1.2)

Coal India Limited (CIL) failed to ensure availability of sufficient fund in the bank account before issue of credit note cum cheque to Railways towards payment of freight and other charges resulting in avoidable payment of surcharge of Rs.2.43 crore paid during 1999-2000.

(Para 4.2.1)

Mahanadi Coalfields Limited had foregone concessional electricity tariff to the tune of Rs.1.09 crore for the period from 1996-98 on account of delay in making arrangement for separate meeting of colony consumption.

(Para 4.3.1)

Northern Coal fields Limited appointed an Agent for handling consignments inspite of having an in-house C&F department to handle imported consignments resulting in an avoidable expenditure of Rs.2.16 crore towards agency commission between 1992-93 and 2000-01.

(Para 4.5.1)

Due to non-recovery of electricity charges from the employees, Western Coalfields Limited suffered a loss of Rs.105.50 crore over the period of April 1999 to March 2001.

(Para 4.7.1)

Export Credit Guarantee Corporation of India Limited lost Rs.2.43 crore due to decisions of the Management of March 1997 and March 2000 on settlement of an inadmissible claims .

(Para 5.1.1)

MMTC Limited (MMTC) invested Rs.4.75 crore in June 1994 in a joint venture in violation of delegations of powers and lost whole value of the investment by March 2001.

(Para 5.2.1)

Delay and faulty decision-making by MMTC in the sale of Special Import Licences in 1998-99 resulted in a loss of Rs.3.24 crore.

(Para 5.2.2)

Acceptance of post-dated cheques by MMTC instead of bank drafts, in exchange for confirmed cheques and extending unsecured credit to a private party without approval of the Board of Directors during 1995-97 resulted in avoidable loss of Rs.2.47 crore to the Company. In another case of sale of copper rods, non-verification of bank guarantees before acceptance thereof in March 1996/April 1996 and favours extended to another private party by not presenting the cheques for encashment on due dates resulted in a loss of Rs.50.15 lakh to the Company.

(Para 5.2.3)

Subletting of premises by MMTC in October 1999 for 15 years at the rates lower than those indicated by the Government registered valuer resulted in short recovery of Rs.2.85 crore in initial 24 months.

(Para 5.2.4)

Amendments in Memorandum of Understanding signed with a party by MMTC for import of raw material and export of finished product coupled with lapses in custody of the imported raw material and lack of control in realisation of its export proceeds during 1994-95 and 1995-96 resulted in non-recovery of dues of Rs.2.72 crore from the party.

(Para 5.2.5)

An official of MMTC handed over negotiable documents related to import of Chilean copper wire bars to a party between June 1995 and August 1995 without receiving payment. This resulted in a loss of Rs.1.86 crore.

(Para 5.2.6)

Failure of MMTC in regulating foreign travel claims in accordance with the instructions of the Department of Public Enterprises resulted in releasing irregular payment of Rs.1.08 crore to the officials during 1996-97 to 1999-2000.

(Para 5.2.7)

Delay in issue of bi-monthly telephone bills by Bharat Sanchar Nigam Limited (BSNL) resulted in non-realisation of revenue amounting to Rs. 4.44 crore relating to the period August 1999 to October 2000.

Para (6.1.1)

BSNL during October 2000 to March 2001 procured various items of stores valuing Rs 2 crore in violation of departmental instructions for procurement of centralised/ decentralised items of stores and also in excess of the financial powers delegated to them.

Para (6.1.2)

Continuance of telephone facilities by BSNL between October 2000 to March 2001 inspite of default of payment of bills resulted in accumulation of dues of Rs. 1.98 crore.

Para (6.1.3)

Failure of BSNL to demand and collect rent for the period from October 2000 to September 2007 for various telecom facilities led to non/short recovery of revenue of Rs. 1.71 crore.

Para (6.1.4)

Withdrawal of claim in June 1998 raised by ITI Limited (ITI) on Mahanagar Telephone Nigam Limited without the concurrence of Telecom Commission/DoT resulted in a loss of Rs.6.22 crore. Besides failure of the Company to furnish case by case justification for waiver of liquidated damages resulted in blocking of funds of Rs. 15.89 crore since May 1998.

(Para 6.2.1)

Import of equipment for manufacture of Transportable Satellite Terminals (TSTs) by ITI much before the receipt of bulk production clearance from the Ministry of Defence resulted in blocking of funds of Rs.2.48 crore as of March 2001. Moreover, sale proceeds of Rs.4.49 crore for supply of 3 TSTs had also not been received from MOD since April 2000.

(Para 6.2.2)

Mahanagar Telephone Nigam Limited (MTNL) made unrealistic assessment of demand for quarter which rendered the expenditure of Rs.3.50 crore incurred (1996) on acquisition of 96 flats unfruitful. This resulted in avoidable expenditure of Rs.1.50 crore on their maintenance and security during 1998 to 2001 besides causing a loss of Rs.1.45 crore towards payment of HRA and licence fee foregone during 1996 to March 2001.

(Para 6.3.1)

MTNL acquired two plots of land on lease for construction of telephone exchange, which remained unutilised for the last 9 to 13 years as there were no firm plans for their construction. With the result the expenditure of Rs.1.06 crore so far incurred on lease rent for the period from September 1988 to June 2001 was rendered infructuous.

(Para 6.3.2)

Videsh Sanchar Nigam Limited (VSNL) failed to prefer claims on the International Maritime Satellite Organisation subscribers within the stipulated period resulted in rejection of its claims for the period from 1992-93 to 1997-98 to the tune of Rs.10.06 crore and the recovery of which was doubtful as the whereabouts of subscribers were not known.

(Para 6.4.1)

VSNL could not make the payment of its additional share of investment to INTELSAT organisation on due date due to delay in according administrative approval by Ministry resulting in avoidable payment of penal interest of Rs.1.55 crore for the years 1996, 1997 and 2000.

(Para 6.4.2)

Owing to non-compliance with the provisions of Income Tax Act, 1961 for deduction of tax at source on conveyance and medical allowance paid to employees, VSNL had borne a tax liability of Rs.1.35 crore for the years 1992-93 to 1998-99 on behalf of employees.

(Para 6.4.3)

During 1994-95 due to ineffective control by Food Corporation of India (FCI), millers were able to lift paddy stored in their premises unauthorisedly forcing FCI to treat this paddy as sold to the millers. Against the economic cost of this paddy at Rs.141.74 crore FCI received Rs.93.10 crore during 1995-96 resulting in loss of Rs.48.64 crore in addition to Rs.20.52 crore being the economic cost of 36770 MT of paddy remaining unrecovered from the millers.

(Para 7.2.1)

As measure of relief to farmers GOI relaxed the specification for procurement of paddy in October 2000. The out-turn ratio for conversion of such paddy to rice was reduced and the price of milled rice was revised upwards. Application of reduced out turn ratio on normal paddy procured under regular specification prior to the date of relaxation resulted in extra payment of Rs.19 crore by FCI to the State Government of Haryana and its agencies for custom milled rice for kharif marketing season 2000-2001.

(Para 7.2.2)

Failure to take adequate steps by FCI to rebuild the tilting/fallen stacks, carelessness in maintenance of stock and shortage of polythene covers resulted in damage of stock of 19710 MT of wheat stored during 1993-94 to 1996-97 in four hired Cover and Plinth storage depots. Damaged stock was sold through tender sale during 1994-95 to 1997-98 resulting in loss of Rs. 9.05 crore to FCI.

(Para 7.2.4)

FCI contributed excess amount of Rs.7.47 crore for the years 1993-94 to 1997-98 towards Contributory Provident Fund for departmental workers by treating incentive as part of pay.

(Para.7.2.5)

In calculating the custody and maintenance charges, the average storage period of 2.07 months was wrongly reckoned as 67 days instead of 62 days. This resulted in extra payment of Rs.2.71 crore as procurement incidentals to State Government of Haryana by FCI on procurement of wheat during 1997-98.

(Para 7.2.6)

Non compliance of procedure prescribed for issue of moisture meter, recording weight and moisture content in paddy procured by FCI during 1997-98 resulted in procurement of paddy with high moisture content thereby suffering an abnormally high storage loss valuing Rs. 1.53 crore.

(Para 7.2.7)

Violation of own instructions of despatching of foodgrains directly from the standing wagons to different destinations resulted in unnecessary operation on which FCI incurred avoidable expenditure of Rs. 1.02 crore during the period from January 1997 to October 1999.

(Para 7.2.8)

Contrary to the approval of the Board of Directors, embarking upon a project for the manufacture of dumpers with engine other than BEML-Komatsu, resulted in blocking up of funds of Rs.1.60 crore and consequential loss of interest of Rs.61.67 lakh upto June 2001 by Bharat Earth Movers Limited.

(Para 8.1.1)

Incorrect estimation of income and consequential short payment of advance income tax for the years 1997-98 to 1999-2000 by Bharat Electronics Limited resulted in avoidable expenditure of differential interest of Rs.1.20 crore.

(Para 8.2.1)

Garden Reach Shipbuilders & Engineers Limited imported engine-components for two Diesel Generating (DG) sets during 1999-2000 the marketability of which was uncertain. This resulted in a blocking of fund amounting to Rs.4.31 crore and consequential loss of interest of Rs.1.10 crore as the DG sets could not be disposed off for lack of market.

(Para 8.3.1)

Failure of Hindustan Aeronautics Limited (HAL) to foresee the implications of US sanctions imposed on military supplies and payment of advance, despite legal opinion/media report resulted in blocking up of funds of Rs.12.68 crore, loss on interest and bank charges of Rs.1.42 crore from September 1998 to September 1999.

(Para 8.4.1)

HAL failed to deduct Income Tax at source on payment of Rs.6.27 crore towards LTC encashment to its employees during the period from April 1994 to December 1999. This resulted in violation of Section 10 (5) of the Income Tax Act, 1961 and HAL incurred an avoidable liability amounting to Rs.3.24 crore towards Income Tax, interest thereon up to 31 March 2001 and penalty under the Income Tax Act.

(Para 8.4.2)

Failure of HAL to install independent 11 KV network for township and avail benefit of lower tariff schedule resulted in avoidable payment of Rs.1.94 crore from July 1997 to March 2001 besides avoidable payment of Rs.4.30 lakh per month thereafter.

(Para 8.4.3)

HAL Korwa Division extended undue benefit of Rs.1.21 crore to the employees residing in its township during the period from April 1992 to December 2000 by charging concessional rates for electricity consumption while paying higher charges to UPSEB.

(Para 8.4.4)

Mishra Dhatu Nigam Limited suffered loss of Rs. 1.53 crore in unplanned production of MDN 50 grade steel. The unsold material was derated as scrap during 2000-2001.

(Para 8.6.1)

Indian Farmers Fertiliser Co-operative Limited took over the management of a sick sugar factory with a view to diversify it’s activities and to revive the factory knowing fully well that the reasons of the factory’s becoming sick were beyond control and were likely to continue. Besides loss of interest of Rs. 4.84 crore for seven years from April 1994 to March 2001 on the amount of loan of Rs.4 crore, the recovery of the principal amount was also uncertain

(Para 9.1.1)

Non-ceding of proportionate share of premium by National Insurance Company Limited (NICL) to Gujarat Insurance Fund during the period from March 1996 to March 1999 as per terms and conditions of coinsurance arrangement resulted in loss of Rs.1.34 crore.

(Para 10.2.1)

Issue of an unviable and defective policy for the period from June 1999 to May 2000 in circumvention of GIC guidelines by NICL resulted in avoidable loss of Rs.1.31 crore under group Janata Personal Accident Policy.

(Para 10.2.2)

Failure on the part of Bharatiya Reserve Bank Note Mudran Limited to synchronise the requirement of dwelling units for its employees with the changed circumstances resulted in infructuous expenditure of Rs.62.92 crore as of March 2001.

(Para 11.1.1)

Discount and Finance House of India Limited continuously renewed call money lending during the period from April 1998 to March 2001 to Madhavpura Mercantile Co-operative Bank Limited. without inquiring into their financial health and even in excess of the exposure limit fixed by them, which ultimately rendered the recovery of principal amount of Rs. 15 crore and interest due thereon as doubtful of recovery

(Para 11.2.1)

Violation of conditions for sanction of Inter Corporate Deposits (ICD) and deviation from prudent business practices by Indbank Housing limited during the period March 1994 to January 1996 and further ineffective monitoring of these ICD’s resulted in write off of Rs.2.73 crore in one case and non-recovery of overdue amount of Rs.39.37 crore in 9 cases as of 31 March 2001

(Para 11.3.1)

Industrial Investment Bank of India failed to observe normal commercial practices in assessing credibility of a new client in July 1997 and improperly disbursed the loan in August/October 1997 through cash credit account which resulted in non-recovery of the loan of Rs.12 crore and the interest thereon.

(Para 11.4.1)

Due to the selection of an obsolete technology for its blood bag project Hindustan Latex limited incurred a cash loss of Rs.9.88 crore during September 1995 to March 2001.

(Para 12.1.1)

Bharat Heavy Electricals Limited (BHEL) incurred avoidable expenditure of Rs. 4 crore due to rectification of Coal Handling Plants purchased from a supplier, which went into liquidation. For this amount, the Company made provision for bad and doubtful debts during 1999-2000.

(Para 13.1.1)

Due to acceptance of terms of payment for sending despatch documents directly to the firms instead of routing through the bank, there was delay in realisation of value of equipment supplied by BHEL. This resulted into loss of interest of Rs.2.12 crore during the period April 1997 to August 2001, besides undue financial benefit to the private parties.

(Para 13.1.2)

BHEL supplied motors without obtaining the requisite clearance from the customer regarding satisfactory performance of motors supplied earlier. Due to frequent failures of the earlier motors, the customer withheld the amount of Rs.1.52 crore, which resulted in blocking of funds for more than six years, besides avoidable loss of interest of Rs.1.50 crore during the period July 1992 to April 2001.

(Para13.1.3)

BHEL placed (September and December 1998) two separate orders at a total cost of Rs.18.54 crore (Rs.9.27 crore each) on two parties, instead of placing the full order on the lowest poarty at a cost of Rs.17.40 crore. Injudicious splitting of orders resulted in an unavoidable expenditure of Rs.1.14 crore.

(Para 13.1.4)

HEC incurred infructuous expenditure of Rs. 3.36 crore on manufacturing of CNC lathes during 1997-98. These were lying idle with HEC.

(Para 13.2.1)

Failure of HMT (International) limited to obtain adequate securities for Rs. 2.18 crore advanced to three suppliers for exports resulted in blocking of funds of Rs.1.62 crore and loss of interest of Rs.56.30 lakh as of March 2001.

(Para 13.3.1)

Due to non-entering into written agreement, defective collection procedure and ineffective pursuit National Film Development Corporation Limited could not recover advertisement revenue of Rs.5.03 crore from an agent as on March 2001.This also resulted in loss of interest amounting to Rs.2.41 crore as on March 2001.

(Para 14.1.1)

Hindustan Copper Limited (HCL) suffered a loss of revenue of Rs.1.01 crore due to delay in finalisation of tenders and placement of a sale order to highest bidder within the validity period in January 2000.

(Para 15.1.1)

Due to despatch of material to a customer in July 1998 without verifying approval of Indian Bankers Association to the transporter, which was one of the preconditions to the validity of letter of credit, National Aluminium Company Limited failed to recover the dues from the customer and sustained a loss of Rs.1.46 crore.

(Para 15.2.1)

Decision of Bharat Petroleum Corporation Limited (BPCL) to construct product depot at Muzaffarpur in 1995, ignoring parallel developments making the depot economically and operationally unviable, led to idle investment of Rs.7.94 crore by September 1997.

(Para 16.1.1)

Due to delay in surrendering a plot of leasehold land, acquired for its LPG import terminal at Paradeep BPCL incurred avoidable expenditure of Rs.30.60 lakh towards ground rent and loss of interest of Rs.3.60 crore between September 1998 and August 2000.

(Para 16.1.2)

BPCL took more than 7 years in considering alternative use of surplus land at Shakurbasti, taken on lease from Railways and incurred an avoidable expenditure of Rs. 3.24 crore during the period from February 1993 to May 2000 on lease rent before surrendering the same.

(Para 16.1.3)

Due to non-placement of entire purchase order on the firm which has quoted lowest rates, BPCL incurred an extra expenditure of Rs.1.50 crore on the purchase of 1577 dispensing pumps from other firms at higher rates in August 1999.

(Para 16.1.4)

Chennai Petroleum Corporation Limited failed to take effective action to prevent furfural contamination in Naphtha, which resulted in loss of Rs.8.47 crore during December 1996 and April 1999.

(Para 16.2.1)

Hindustan Petroleum Corporation Limited (HPCL) constructed and commissioned in May 1998 three Aviation Turbine Fuel Tanks without ensuring their requirement. This resulted in avoidable expenditure of Rs.3.25 crore.

(Para 16.3.1)

Existing lube oil pipeline at Pirpau Jetty extended by the HPCL in 1996 could not be commissioned, initially due to dispute with Indian Oil Corporation Limited on sharing of capital/operating cost on loading arm and subsequently due to change in proposal to use old facilities. This resulted in an idle investment to the tune of Rs. 2.28 crore besides infructuous expenditure of Rs. 1.13 crore on way leave fee paid on the extended portion to the Mumbai Port Trust as of 31 March 2001.

(Para 16.3.2)

Decision of IBP Co. Limited (IBP) to construct product depot at Muzaffarpur in November 1997 without assessing its economic viability in the then prevailing conditions led to idle investment of Rs.6.31 crore as of March 2000.

(Para 16.4.1)

IBP incurred an infructuous expenditure of Rs.1.28 crore on the acquisition of a Cryocontainer manufacturing plant at Bhiwadi which was closed down within one year of its taking over and was awaiting disposal since 1994.

(Para 16.4.2)

The decision of the Indian Oil Blending Limited to start commercial production of greases on the basis of process conceived in the laboratory, which required further stabilisation resulted in the production of substandard product and the production had to be stopped. Consequently, a plant for the manufacture of greases completed in March 1997 at a cost of Rs.6.40 crore continues to remain idle.

(Para 16.5.1)

Decision of Indian Oil Corporation Limited (IOC) in January 1992 to set up a paraffin wax plant based on Assam Crude as feedstock, the future availability of which in future was uncertain, led to unproductive investment of Rs.38.01 crore as for want of Assam crude the plant could not be run successfully since its commissioning in January 1999.

(Para 16.6.1)

IOC supplied ATF on credit basis to a customer which resulted in avoidable loss of Rs.18.41 crore during June 1996 to April 1998.

(Para 16.6.2)

Wrong classification of Heavy Petroleum Stock as Residual Fuel Oil from October 1984 and February 1988 by IOC resulted in avoidable payment of excise duty during March 1999 amounting to Rs.14.30 crore.

(Para 16.6.3)

IOC’s decision in April 1995 to install untested newly designed burners in all its three boilers at once on vendor’s recommendation, without financial safeguards against unsatisfactory performance of the same, resulted in an infructuous expenditure of Rs.3.71 crore as the new burner did not yield any fruitful results after commissioning in March 1999.

(Para 16.6.4)

IOC failed to estimate the requirement of fuel oil for supply to National Fertilizers Limited even after knowing about the planned shut down of its Mathura refinery. Consequently, while importing fuel oil (January/February 1996), it did not declare intended end use of the fuel oil, to the Customs department. This resulted in avoidable expenditure of Rs. 2.67 crore on custom duty.

(Para 16.6.5)

Due to delay in surrendering outsource contractual power loads after commissioning of captive power plant in September 1997, IOC had to bear avoidable expenditure of Rs.2.42 crore towards minimum demand charges during the period between September 1997 and April 2001.

(Para 16.6.6)

Oil & Natural Gas Corporation Limited (ONGC) created excess handling capacity at a cost of Rs.18.05 crore in December 1999 though its existing facilities at Demulgaon were sufficient for handling even future production.

(Para 16.7.1)

ONGC deployed its drill ship on site GI-AD without adequate weather and other data analysis and drilling work could not be carried out due to adverse weather conditions. Consequently, the drill ship had to be taken to another location and the entire expenditure amounting to Rs.13.78 crore incurred during the period from February 1998 to April 1998 on this site proved to be infructuous.

(Para 16.7.2)

ONGC executed certain civil works by incurring an expenditure of Rs.2.06 crore at drilling location BHB-A without proper investigation of drilling parameters. The drilling plan had to be suspended due to high pore pressure thereby rendering the entire expenditure incurred on these civil works completed by July 1996 wasteful.

(Para 16.7.3)

Failure in finalisation of tenders within the validity period, ONGC had to re-invite tenders at higher rates for hiring of jeeps for its Mehsana Project, which resulted in an extra expenditure of Rs.1.11 crore for the period from June 1999 to May 2001.

(Para 16.7.4)

ONGC failed to initiate timely action to import the explosives required for snubbing operations and the same could not be made available to the contractor in time. Consequently the contractor suspended the work for want of explosives for 15 days in July 1998 and ONGC had to pay standby charges equivalent of Rs.1.06 crore for idling of equipment.

(Para 16.7.5)

Due to failure in ensuring availability of critical spares and equipment in working condition, National Hydroelectric Power Corporation Limited could not operate one of the three units of its Chamera Project, resulting into loss of generation of power during the period April 1996 to May 1996 and March 1999 to June 1999 Thus, the Company incurred a loss of revenue amounting to Rs.14.58 crore, besides loss of incentive amounting to Rs.24.77 crore.

(Para 17.1.1)

Indian Railway Finance Corporation Limited incurred avoidable payment of additional tax and interest of Rs.7.60 crore due to erroneous computation of taxable income and short/deferred payment of advance tax for the assessment year 1997-98.

(Para 18.1.1)

Though the loan funds released to State Channelising Agencies (SCA) during the period 1994-95 to 1999-2000 remained undisbursed with them, National Minorities Development and Finance Corporation did not enforce the punitive clause to ensure the quicker disbursement of funds by the SCAs to the ultimate beneficiaries, thereby foregoing penal interest of Rs.6.43 crore.

(Para 20.1.1)

Capital investment of Rs.1.88 crore made by Indian Iron & Steel Company Limited during 1991-92 for construction of buildings meant for use by experts for modernisation programme was rendered unproductive since the incomplete structures were lying unused and unattended for the last 10 years and there was no likelihood of their completion and use in near future.

(Para 21.2.1)

Failure of Kudremukh Iron Ore Company Limited to include a suitable clause for recovery of consequential losses in the contract and not insisting for using time tested refectory material when defects were noticed in plastic ramming mass resulted in avoidable loss of Rs.3.75 crore in 1996-97.

(Para 21.3.1)

Irregular payment of ex-gratia/additional amount/advance by Maharashtra Elektrosmelt Limited violating Government of India instructions resulted in irregular payment of Rs.2.38 crore during the years 1995-96 to 2000-01 and consequential loss of interest of Rs.99.57 lakh.

(Para 21.4.1)

Lack of proper monitoring system and failure of the MECON (I) Limited to stop the execution of work immediately on non-receipt of its dues from a private firm led to a loss of Rs.7.16 crore during 1994-95 to 1997-98

(Para 21.5.1)

Rashtriya Ispat Nigam Limited (RINL) failed to make use of the Sublance systems, commissioned in March 1994 and March 2000 which resulted in blocking up of funds to the extent of Rs.16.58 crore with consequential loss of interest of Rs.22.29 crore thereon till March 2001.

(Para 21.6.1)

RINL incurred avoidable loss of Rs.1.30 crore in liquidating the foreign deferred credit in May 1998 due to unwarranted negotiations with an unauthorised agent.

(Para 21.6.2)

Failure of Steel Authority of India Limited (SAIL) to take timely decision or action to enforce uniform reasonable revised power tariff throughout its various steel plants resulted in loss of Rs.141.32 crore during 1995-96 to 1999-2000.

(Para 21.7.1)

SAIL sustained a loss of Rs.83.53 crore due to extending undue financial benefits to a private party by way of escalation costs (Rs.58.94 crore) and waiving recovery of liquidated damages (Rs. 24.59 crore) during the period from 1994-95 to 1997-98.

(Para 21.7.2)

Investment of Rs.24.37 crore made by SAIL during 1992-93 to 1994-95 on installation of boiler proved unfruitful due to non-dherence to the contractual provision.

(Para 21.7.3)

SAIL made an infructuous expenditure of Rs.23.69 crore during 1993-94 to 1996-97 due to lack of proper planning, faulty project appraisal mechanism and untimely analysis of the lining of converter with different types of refractories at Rotary Kiln in Rourkela Steel Plant.

(Para 21.7.4)

SAIL incurred an unfruitful expenditure of Rs.17.60 crore during 1999-2000 and 2000-2001 on On-line System under scheme for modification of Finishing End of Section Mill in Durgapur Steel Plant as it failed to achieve the objective.

(Para 21.7.5)

Unfruitful expenditure of Rs.14.98 crore was made by SAIL during the period from July 1997 to March 2001 on Hot Dip Galvanising Line project which become commercially unviable due to delay in implementation, unrealistic financial assessment and selection of a wrong site for the project.

(Para 21.7.6)

Excess payment of Research and Development cess of Rs.11.34 crore for the period March 1992 to March 2000 was made by SAIL due to negligence and lack of proper co-ordination between Corporate Office and the Research and Development Centre for Iron & Steel, one of its unit.

(Para 21.7.7)

Non-charging of firm price by SAIL from the MOU customers during November 1998 to December 1998 resulted in loss of Rs.5.88 crore.

(Para 21.7.8)

Infructuous expenditure of Rs.3.17 crore was made by SAIL during 1996-97 on import of Slag Pot Transporters due to faulty planning in import and lack of timely action to explore the possibility of their use.

(Para 21.7.9)

Failure in taking timely action and absence of foresightedness and negligence on the part of SAIL while importing rolls led to a loss of Rs.2.56 crore during 1995-96 to 1996-97.

(Para 21.7.10)

Non-incorporation of a suitable clause by SAIL in the MOU specifying rate of interest to be charged from private customers led to a loss of Rs.2.79 crore during 1997-98 and 2000-2001.

(Para 21.7.11)

Due to lack of co-ordination between project planning and operation departments of SAIL infructuous expenditure of Rs.1.22 crore was incurred during 1996-97 on Waste Heat Boiler

(Para 21.7.12)

Unsecured credit to a customer by Salem Steel Plant of SAIL during November 1999 to January 2000 resulted in non-realisation of sale proceeds amounting to Rs.1.15 crore.

(Para 21.7.13)

Supply of goods to two customers during November 1997 to January 1998 against post-dated cheques by Visvesvaraya Iron & Steel Limited and late presentation of documents led to non-realisation of sales dues upto Rs.3.52 crore.

(Para 21.8.1)

Central Inland Water Transport Corporation Limited (CIWTC) sustained a loss of Rs.1.29 crore during September 1996 to March 2000 in sub-letting of unutilised godown space, which could have been avoided by surrendering the space back to godown owner.

(Para 22.1.1)

Due to delay in completion of conversion of a vessel to oil tanker and its unawareness of pipeline project for transportation of petroleum products, CIWTC could not put the converted vessel to desired use and entire expenditure of Rs.1.05 crore on the conversion job during January 1995 to March 1999 proved infructuous.

(Para 22.1.2)

Faulty tendering for fetching a contract by National Buildings Construction Corporation Limited for construction of cooling towers for the Thermal Power Plants of Punjab State Electricity Board contributed loss of Rs.3.10 crore to the Company on completion of the project in March 2000.

(Para 24.1.1)