The Comptroller and Auditor General (CAG) has found that MMTCs accounts for 1995-96 have overstated profits by more than Rs 48 crore. After deducting this amount, the companys profit before tax stands at Rs 4.60 crore.
The CAG audit has also found that the liabilities and the provision for liabilities have been understated to the tune of Rs 3.7 crore, with a commensurate increase in the companys profits.
The MMTC board of directors had earlier recommended a profit of Rs 50 crore, but this had been shot down by CAG. This means that CAGs findings will have to be appended to the public sector undertakings annual report, which is being finalised.
In response to a questionnaire seeking comments on the CAG report, MMTC spokesperson Preeti Chaturvedi said it was imperative that the replies of MMTC to CAGs comments be published in the annual report which, she said, would be made public shortly.
Declining to provide the replies to Business Standard, the spokesperson said: It is improper for any PSU to send its comments to the CAG report. Initially, the annual report is required to be placed before Parliament.
Reiterating that the company made a net profit of Rs 50.2 crore in 1995-96, Chaturvedi said that since the report had to be presented in Parliament, it is not desirable to send the information desired by you.
CAG has also initiated a review of the gold jewellery operations of the superstar trading house at Seepz and Jhandewalan units where too, according to initial reports, a number of jewellery manufacturers have not met the stipulations of the Reserve Bank of India.
According to CAG sources, the overstatement of profits has resulted from the non-provision for current liabilities (Rs 3.67 crore); overvaluation of inventory of DAP, MoP & CC rods (Rs 6.7 crore); non-provision for bad and doubtful debts (Rs 22.5 crore); non-provision for gold loaned in default (Rs 11.5 crore) and non-provision of customs duty payable on 122 kg of gold loaned to various units (Rs 3.8 crore).
Regarding the current assets and inventories of the company, the objections of CAG relate to non-adoption of realisable value in respect of damaged stock of imported leather by the Madras office and the non-adoption of realisable value in respect of closing stock of DAP.
About the current liabilities of the company, CAG sources said it had been found that the amount payable to the National Mineral Development Corporation (Rs 2.75 crore) had not been provided for. The debtors of MMTC also include overdue bills in respect of exports effected by jewellery manufacturers and the interest accrued on these bills. All these add up to over Rs 8.5 crore, because of which profits have been overstated to that extent.
CAG sources said MMTC had not been able to produce the comprehensive details regarding the gold issued to each of the jewellery manufacturers.
The premier government trading house has been making losses in several of its operations over the last few years.
At present, some alleged irregularities in gold jewellery exports are being investigated by the Central Bureau of Investigation, CID, the Uttar Pradesh Police and the Enforcement Directorate. Several senior MMTC officials, including director Rajesh Khosla and chief general manager Y N Bhargava, have already been interrogated in this connection.
Curiously, the vigilance department has so far chosen to ignore the allegations of irregularities in various departments of the premier trading house.