CAG slams 15 CPSEs for defaulting issue of bonus shares

Comptroller and Auditor General of India today slammed 15 central public sector enterprises for defaulting in issue of bonus shares including Gas Authority of India Limited, Oil India, National Thermal Power Corporation and Steel Authority of India Limited among others.

The audit report of the CPSEs also revealed that none of the 481 companes audited had a specific dividend policy.

Antrix Corporation, for instance had a paid up capital of Rs 1 crore and reserves of Rs 780 crore but it had not issued bonus shares. The reason cited by the company for the same was, since it operated in a strategically sensitive area and a number of its projects were implemented using the facilities of Isro, government did not take any decision on the matter of bonus shares.

The national auditor found that out of the audited companies, had even the seven companies including Gail, Sail, ONGC Videsh, Mangalore Refinery and Petrochemicals, paid the dividend stipulated in the department of public enterprises (DPE) guidelines, government and shareholders would have received additional dividend payment of Rs 4,243.08 crore during 2007-12.  

CAG recommended that DPE may like to monitor implementation of DPE guidelines on buy back of shares in consultation with administrative ministries and also consider revising its dividend payment guidelines to address the deficiencies in the system.  

The audit report also found that representation of independent directors in some of the companies was not adequate, including Bharat Heavy Electricals Limited, Cement Corporation of India among others.

There was no independent director in the board of 21 companies. In terms of clause 49 (I) (A) (iii) of listing agreement, when the chairman of the board is a non-executive director at least one third of the board should comprise of independent directors and if he is an executive.

The CAG report also stated that the market value of 40 listed government companies had decreased by 20% to Rs 2,56,484 crore as on March 31, 2012 as compared to previous year. During the period the BSE sensex decreased by 10%. The top three companies as per market capitalization were Oil and Natural Gas Corporation, Coal India and NTPC.