BSNL loses Rs 229crore on Hind Cable order

Bharat Sanchar Nigam Ltd (BSNL) has taken a Rs 229 crore hit on its balance-sheet after it was forced by communications minister Pramod Mahajan to provide additional advances to Hindustan Cable Ltd (HCL), which had failed to supply the ordered quantity of jelly filled cables.

The BSNL board noted HCL had failed on two purchase orders totalling Rs 487.37 crore. BSNL decided no further orders would be placed on HCL till balance cable against pending purchase orders were supplied and outstanding advance were adjusted or recovered.

"However, minister of communications directed BSNL to provide rolling advance to HCL against supply of cables, worth Rs 317 crore," said a report prepared by the Comptroller & Auditor General of India (CAG).

The report stated the Cabinet approved a policy decision providing supply order placement to the extent of 25 per cent of its requirement for telephone cables to HCL along with 50 per cent advance.

BSNL placed two purchase orders valuing Rs 487.37 crore with delivery schedules of six months. Around Rs 243.68 crore towards 50 per cent of value of two purchase orders was also paid to HCL during the period.

The firm, however, could supply cables worth Rs 170 crore within the due date out of which Rs 95.46 crore was adjusted against the advance and the outstanding advance came down to Rs 148.22 crore.

Despite defaults and non-recovery of old advances, fresh rolling advance to the tune of Rs 218.65 crore was paid to HCL between. This resulted in total outstanding advances against HCL rising to Rs 366.87 crore during 2002-03.

From subsequent supplies BSNL could adjust only Rs 137.69 crore leaving an amount of Rs 229.18 crore unadjusted against the pending supply orders of Rs 77 crore.

CAG pointed out although BSNL charged penal interest on advances from other PSU like ITI under ministry of communications, it however, choose not to charge interest on the rolling advance paid to HCL under ministry of industry.

This resulted in an additional loss of interest to the tune of Rs 23.66 crore for BSNL. This matter according to CAG was referred to the ministry and a reply was awaited.

BSNL has also taken a hit from its counterpart, Mahanagar Telephone Nigam Limited (MTNL) for it failed to recover the cost of equipment supplied to MTNL resulting in non realisation of Rs 12.01 crore from MTNL as of June 2003, according to CAG.