Auditors’ report indicates Essar Steel’s overstated profits

Auditors have qualified its balance sheet (2002-03) on several counts. “… the debit balance in the profit and loss account would have been Rs 1,430.33 crore (as against the reported figure of Rs 1,324.54 crore, loans & advances would have been Rs 938.30 crore (as against the reported figure of Rs 1,026.26 crore) and investments would have been Rs 758.60 crore (as against the reported figure of Rs 776.43 crore),” the auditors said.

However, the company said these are statutory observations. “The qualifications of auditors have arisen because of incomplete transaction as approved by the CDR (Corporate Debt Restructuring) and are interim. The same will get automatically addressed on complete implementation,” the company stated in a faxed response to The Indian Express.

According to auditors, in accordance with CDR approval, the company is in negotiation with a customer for one-time settlement from whom an export advance of $128.34 million is outstanding in foreign currency. They said the company should have written off the same in profit and loss account. The company has subsequent to the year ending has settled the oustanding amount of $128.34 million at 33 per cent, which is pending CDR approval. “On receipt of aforesaid approval, the company proposes to adjust appropriate the above said exchange difference of Rs 87.96 crore,” it said.