Financial Daily from THE HINDU group of publications
Wednesday, Mar 13, 2002
UTI undertakes audit of its investments in Essar group
NEW DELHI, March 12
THE Unit Trust of India has commissioned detailed audit of investments made by it in Essar Oil, Essar Steel Ltd and other group companies, to RBI approved audit firms.
A high-level committee headed by Mr S.S. Tarapore after undertaking a detailed examination of the investment decisions, had recommended individual examination of these decisions.
An audit of the investment decisions and submitting the cases subsequently for examination by an appropriate pre-investigative body was also recommended by the com- mittee.
The commissioning of the audit by UTI was disclosed in Parliament by the Minister of State for Finance, Mr Balasaheb Vikhe Patil in reply to a question raised by Mr Amar Singh of the Samajwadi Party. The question was raised by the MP specifically on the investment decisions of UTI in companies belonging to the Essar group.
Incidentally, the Tarapore committee had also recommended that other major investment decisions of UTI involving big corporates, for instance the private placement aggregating over Rs 1,000 crore in Reliance Industries Ltd (RIL) be examined by a pre-investigative body.
According to the answer furnished in Parliament, since July 1990, UTI had disbursed a total of Rs 1520.13 crore to various Essar group companies such as Essar Steel Ltd, Essar Shipping, High Grade Palets Ltd, South India Shipping Corporation Ltd, Essar Power Ltd and Essar Oil Ltd.
UTI has informed the Government that all investments made by the trust in these companies were based on commercial requirements, appraised by the lead institutions or decisions taken at inter-institutional meetings.
At the time of initial investment in the companies, the scenario of core infrastructure sectors were quite promising, it has said.
The investments were made as a part of consortium financing. Subsequently, restructuring of the debt was undertaken and additional financial support amounting to Rs 164.52 crore was provided to Essar Steel Ltd and Essar Oil in line with the consortium's decision, the UTI said.
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