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Corporate affairs minister Prem Chand Gupta has asked the registrars of companies (RoCs) to inspect the books of accounts of six state-run companies and private sector education software maker Educomp Solutions. The ministry is also planning to order inspections of several other private sector companies where statutory auditors are not satisfied with the way companies have maintained their books.
The financial statements of state run companies Hindustan Copper Ltd, Bengal Chemicals and Pharmaceuticals Ltd, Bihar State Tourism Development Corporation Ltd, Bihar Rajya Pul Nirman Nigam Ltd, Central Coalfield Ltd and Bharat Coking Coal Ltd would be inspected.
"PSUs being public companies, it is important for them to prove to the public and the stake holders that they work transparently. We have received complaints that these companies were not filing their balance sheet, profit and loss account and annual returns for the last several years. We have decided that their accounts should be looked into", Gupta said.
Public limited companies are a class of companies that have to follow higher disclosure and compliance standards than private limited companies. Private limited companies have to convert themselves to public limited companies if they want to get listed. This classification is different from public sector and private sector companies, based on whether the major shareholder is government or private.
The ministry has also ordered an inspection into the books of account of education software maker Educomp, based on media reports that its profits were inflated and that promoters had made big profits by trading their own shares and diverting funds to unlisted subsidiaries. Inspection of the books of many private sector companies are also on the cards, said an official in the ministry, who asked not to be named. Inspection of the books of accounts of more companies will be ordered under section 209A of the Companies Act in cases where statutory documents are not filed on time and in cases where the statutory auditors, who sign the books of companies, give a qualified opinion. "A decision to inspect the books of many such companies is in the process", the official added. An auditor gives a qualified opinion of the audited company's financial statements if he is not satisfied with the explanations given by the company on questionable book entries.
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