Comptroller and Auditor General has found the previous
government lax in taking crucial decisions. This depressed
the valuation of the nine companies that the NDA government
instance, in the case of IPCL, a company that Reliance
Industries acquired, the agreement for supply of feedstock
was drawn a few days after the financial bids were received.
In the case of VSNL, the tax department withdrew its High
Court appeal on a tax demand of Rs1,400 crore just two
days before the bids were opened.
N Chatterji, D G, performance audit, says, "The valuation
itself was done in a way which was too conservative. This
resulted in a low reserve price being fixed."
all the assets held by the PSUs seemed to have been fairly
valued. For instance, IPCL's investment of Rs25 crore
in GE Plastic was not valued, as also its 37-per cent
stake in a Gujarat Chemical port terminal company at Dahej.
CAG has also faulted the valuation of BALCO plant and
machinery. And the government does not seem to have covered
its flanks either, because of which IPCL has made a claim
of over Rs900 crore on the government, post the sale,
citing non-disclosure in the financial statements.
CAG has detected several flaws in the sale of PSUs but
these do not indict the disinvestment process itself.
If all the parameters had been considered and the loose
ends tied up the reserve
price would have been higher and that would have influenced
the valuation and the sale proceeds that the government
was only one global adviser for seven of the nine PSUs
because of a faulty selection process, says the CAG.