CAG indicts former HSCL CMD for causing over Rs 16 crore loss

"The Chairman-cum-Managing Director, HSCL, approved (September, 2004) formation of a JV with SIPL for the purpose of a job of the value of Rs 105 crore, which was beyond his power," Comptroller and Auditor General (CAG) said in a report, without giving the CMD's name.

"The specific approval of the board of directors of the company was not obtained for forming the JV," it added.

However, quoting an official letter dated July 28, 2004, HSCL Company Secretary Vineeta Bacchawat said Parthasarathy K was appointed company CMD with effect from August 1 for a period of three months initially, following incumbent B K Jha's retirement in July 31 the same year.

The ministry later gave Parthasarathy K the mandate for another five years with effect from October, 2004. HSCL had inked the 51:49 JV with SIPL in September, 2004.

The joint venture firm was awarded a job for four-laning of the Nagpur-Hyderabad section of the National Highway-7 from KM 94 to KM 123 by the National Highway Authority of India at a work price of Rs 105.27 crore.

The job was to be completed by April, 2008. HSCL had deposited a Rs 8 crore bank guarantee with the NHAI.

"The physical progress of the work was very slow as the JV achieved only 13.87 per cent work till April, 2008, being the scheduled date of completion of the work," CAG noted, adding that the delay was due to a fund shortage, improper planning and frequent changes of project manager, among other factors.

"As the JV could not complete the work and left the work site, NHAI terminated (February, 2009) the contract and forfeited the bank guarantee of Rs 8 crore. HSCL further incurred a loss of Rs 8.64 crore, being the funds provided to the JV from time to time," the CAG added.

The apex auditor also said there was no record available with the company on method and criteria for selection of the JV partner. Further, the company did not evaluate the credentials of the the partner.

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