BHEL overstated its profit for the year ended Mar 31, 2005

New Delhi, May 21: Bharat Heavy Electricals Ltd (BHEL), which is under the administrative control of the Ministry of Heavy Industries, has overstated its profit for the year ended March 2005 by Rs 12.76 crores, according to the findings of the Comptroller and Auditor General of India (CAG).

The CAG in its report for the year ended March 2005 has pulled up BHEL on several counts.

The report found that the overstating of the profit was due to less provision of contractual obligations for renovation and modernisation work done in Kothgodam project by Rs 2.64 crore, non-provision of contractual obligation of Rs 0.86 crore towards spares supplied to various customers during the year 2003-04 and non-provision of liability of Rs 9.26 crore towards liquidated damages levied by Pragati Power Corporation Ltd.

While the management of BHEL accepted two of its provisions, in the case of Rs 0.86 crore contractual obligation, it stated that it had been consistently providing for contractual obligations at the rate of 2.5 per cent of the total turnover and the same was adequate to meet such obligations.

The reply was not tenable as the spares supplied were under warranty on the date of balance sheet, the CAG report added.

UNI