Bhubaneswar: The Comptroller and Auditor General (CAG) of India has brought to light issues of serious mismanagement in Orissa Small Industries Corporation Limited (OSIC). In a recent report, the CAG said, “In violation of Corporate Governance Manual of Government of Orissa, OSIC had not prepared its business plan for 2010-13 and 2013-16.”
The audit further noted that despite recommendations of the Committee on Public Undertakings (CoPU), OSIC didn’t keep any database of all Micro and Small Enterprises (MSEs) of the state indicating the function of various trades, patterns of material consumption and quantum of requirement of raw materials.
According to CAG, against 58,249 registered MSEs in the state as on March 2016, OSIC had registered only 244 firms. Therefore, despite being a syndicate leader, OSIC could not obtain any bulk orders from the state government resulting in a loss of Rs 6.98 crore. In fact, the audit observed that the attempt of the company to market MSE products under brands also failed as it had not made any survey and assessment of demand before launching the product.
CAG also found that OSIC showed undue favour to contractors. “Twenty-six works were delayed for periods ranging from three to 48 months due to delay in finalisation of tender process and delay in issue of work order. But, OSIC had not imposed penalty of Rs 4.92 crore for delay in completion of work leading to extension of undue favour to contractors,” CAG observed.
This apart, the apex auditor of the government has found non-achievement of targets in distribution business of steel bars and packed bitumen, as a result of which OSIC had lost the opportunity to earn distribution margin of Rs 5.33 crore. OSIC also incurred an extra expenditure of Rs 0.92 crore towards transportation charges due to non-attachment of dealers to their nearest raw material depots. The report further claims that OSIC has incurred a loss of Rs 1.12 crore towards purchase of binding materials.
The audit also found cases of serious fund mismanagement. “Due to imprudent fund mismanagement, OSIC had lost interest income of Rs 19.06 lakh. OSIC had not even maintained any separate bank accounts for the grants received from the Government of India and treated Rs 21.61 lakh interest earned on scheme funds as its own income. Further, OSIC didn’t recover Rs 4.95 crore from supplier or contractors,” added CAG.
Interestingly, the audit also noted that OSIC’s monitoring and internal control system were deficient. “During 2011-16, against minimum requirement of 15 meetings, eight meetings of Audit Committee (AC) were held. However, the suggestions of AC for reconciliation of debtors, creditors etc were not carried out by OSIC,” CAG observed. PNN
