NTPC ‘inflated’ revenue by Rs 938cr
JAYANTA ROY CHOWDHURY & R.SURYAMURTHY
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| NUMBER DEBATE |
New Delhi, Jan. 16: National Thermal Power Corporation (NTPC) has overstated its revenue by Rs 938.30 crore during 2007-08, according to the Comptroller and Auditor General of India.
The CAG said the sum was a disputed one generated between 2004 and 2008 and yet to be realised.
The sum overstated the company’s top line and bottom line and should not have been shown as revenue.
The audit watchdog was commenting on NTPC’s turnover of Rs 40,017 crore in 2007-08.
“Sales of Rs 30,701.30 crore comprise a sum of Rs 938.30 crore (including Rs 621.80 crore pertaining to 2004-05 to 2006-07) which have been disputed by the Central Electricity Regulatory Commission. As the case is sub judice, the income recognition should have been postponed as required by accounting standard-9 prescribed under Section 211(3C) of the Companies Act,” the CAG said.
Sources in the CAG said they were surprised the comments did not create any ripples either among investors or other watchdogs, including the government that has a substantial stake in NTPC.
“Hopefully, with Satyam on everybody’s mind, we will start being more careful in our accounting and companies will not try to inflate figures to look good,” officials said.
The Central Electricity Regulatory Commission (CERC) had disallowed NTPC from charging the disputed sum from customers. The regulator said NTPC was seeking more than what it allowed under its tariff regulations.
NTPC had appealed against the order before the appellate tribunal for electricity, which ruled in favour of the PSU power utility. The CERC, however, challenged the verdict in the Supreme Court, which is yet to pass a final judgment.
According to CAG officers, the accounting standards are very clear in such cases. Taking into account notional revenues, including those of the previous years, amounts to padding.
In a clarification to the CAG, NTPC said that in the note on its accounts it had mentioned that the figure pertained to a disputed income. “In the opinion of the management, duly supported by legal advice, the ATE' s order is entirely in conformity with tariff regulations, 2004 and it is reasonable to expect ultimate collection,” it said.
NTPC spokesperson Y.S. Rajput said, “The case is still pending in the Supreme Court and there is no change in the position of the company. Status quo prevails and we would not like to comment further on the issue.”
If the amount had not been taken into account, NTPC’s profit before tax for 2007-08, which stood at Rs 7,414.8 crore, would have been lower than the net profit of the previous year.
Deflated by Rs 938.30 crore, the net profit for 2007-08 would have been Rs 6,476.5 crore against Rs 6,864.7 crore in the previous year.
NTPC shares are favoured by pension funds and long-term investors. The scrip with a face value of Rs 10 each, traded at a high of Rs 291 and a low of Rs 113 during the last 12 months.
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