In your interest.
Online Personal Finance Magazine
No beating about the bush.
The Finance Ministry has finally appointed Arundhati Bhattacharya as the new chairperson of SBI. As per the norms, the candidate has to have at least two years of service left before retirement which seems to have ruled out the other three MDs of SBI
State Bank of India (SBI), the country's largest lender has appointed Arundhati Bhattacharya as its new chairperson. Earlier, she was managing director and chief financial officer of SBI.
Ms Bhattacharya replaces Pratip Chaudhuri who retired on 30th September. Chaudhuri was appointed chairman in April 2011.
Earlier, the government interviewed all the four managing directors, A Krishna Kumar, H Contractor, S Viswanathan and Arundhati Bhattacharya for the top post at SBI. Among these candidates, Ms Bhattacharya has the longest tenure left - two and half years.
According to a report from Business Standard, the Finance Ministry had sought an exemption from the current regulatory guidelines because only one of the four SBI managing directors, i.e. Arundhati Bhattacharya was eligible for the chairman’s position. As per the norms, the candidate has to have at least two years of service left before retirement which ruled out the other three MDs.
About Arundhati Bhattacharya
Born on 18 March 1956, Arundhati Bhattacharya joined SBI as a Probationary Officer in 1977. During her tenure of 36 years in SBI, she has held a number of important positions including those of deputy managing director and corporate development officer, chief general manager (Bangaluru Circle) and chief general manager (New Businesses). She also headed SBI Capital Markets Ltd, a Subsidiary of SBI.
She has also had a stint in the Bank's New York office where she was in charge of monitoring branch performance, overseeing external audit and correspondent relations. She has handled retail and corporate finance as well as treasury. She has also played a pivotal role in setting up three of the latest subsidiaries of the Bank, the general insurance subsidiary, the custodial subsidiary and the SBI Macquarie Infrastructure Fund.
The director general of hydrocarbons-DGH and the government nominee on the Reliance-operated east coast block, after the technical presentation felt that a quick decision can not be made in such a short space of time
The steep fall in gas production in KG-D6 has caused a lot of worry and heartburn to one and all when a technical presentation by the Reliance Industries Ltd (RIL) team suggested that the government could consider appointing a third party international consultant to review the matter.
The DGH (director general of hydrocarbons) and the government nominee on the Reliance-operated East coast block, after the technical presentation felt that a quick decision can not be made in such a short space of time.
It may be mentioned that the Reliance-BP-Niko group suggested names of four leading international Reservoir Consultants, such as: Ryder Scott (Houston/Calgary), DeGoyer & MacNaughton (Dallas), Gaffney, Cline & Associates (London/Calgary) and Netherland Sewell & Associates (Dallas).
The management committee that oversees the operation of the block has nominees of contractors, DGH as well as the ministry. After reviewing the presentation, they may take further action, such as appointing an international reservoir consultant to investigate the reason for the fall.
This will only prove whether the claims made by Reliance that the fall in output is due to a geographical surprise and not due to exaggerated estimates made earlier. This will take us back to March 2011, when DGH issued a report that Reliance gas production from KG would go upto 67 mmscmd by April 2011, ie a month later! According to the web site visited, "How can an autonomous and independent agency like DGH give such a misleading report?" In fact, as the records will show, production began to fall soon afterwards.
According to Reliance, because of the water ingress, there has been a pressure drop in wells leading to lower production. Consultants hired by DGH, names not known, it appears, had recommended that drilling more wells could increase the production. Such a move is easier said than done, because extensive studies and surveys have to be made before planning a drill at a new site. This would be a time consuming process. However, the fact remains, that there is no information available if Reliance, did in fact do anything if at all, to source new wells because of the falling production of gas.
It is interesting to note that DGH was established in 1993 under the administrative control of ministry of petroleum and natural gas, primarily responsible for implementation of New Exploration Licensing Policy (NELP); also to study new unexplored coal bed methane, gas hydrates, oil shale etc. Reservoir engineers from DGH are also involved in evaluation of initial testing; commerciality from reservoir point of view; mid-course correction of producing oil and gas fields; annual review of work progress of PSC's related to reservoir activities. Their responsibilities include appraisal and advice government on the adequacy of plans. It is simply a huge responsibility that DGH shoulders for development of hydrocarbons in the country.
As a matter of interest, it may be noted that in the KG basin itself, in 2002, Reliance discovered 14 tcf (trillion cubic feet) of gas; Gujarat State Petroleum found 20 tcf in 2005; in 2009 Reliance found 20 tcf of gas in D-3/09 and ONGC found 10 tcf in 2009. The work in these fields is reasonably satisfactory and one may expect some further discovery in the months ahead. The revision in gas price to $8.4 per mmbtu has been in debate as also the issue of non-supply of committed gas in the last couple of years, due to fall in production. All these have to be handled with care, just as the fixation of price in rupee terms and not in dollars, and even if this is done to draw a parallel to the international market situation, then the exchange rate needs to be fixed so as to avoid any dispute later.
In the event the government does not want to consider the recommended Reservoir consultants made by Reliance, for whatever reasons, there are so many others that are available. Web sites indicate names such as Belltree Group of UK, SiteLark of USA and Knowledge Reserve, Houston, Texas, USA. In fact, DGH may also have an approved list of Reservoir Consultants whose services could be utilized to resolve the Reliance issue.
But, as a matter of precaution, it may be wise to have the other reserves mentioned above, for the discoveries made by Reliance, Gujarat State Petroleum and ONGC, be also verified by seeking a second opinion.
Instead of dragging this issue further in appointing committees, a time frame needs to be set to complete the whole process. And, if the DGH do not have an in-house consultant of international reputation and track record, it is time they gone one in place, urgently.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
Gujarat NRE Coke, a listed company, is telling shareholders that in its consolidated financial statements, 91% of its assets and 64% of its revenues, which are in Australian subsidiaries, are unaudited! Can the auditor wash his hands off?
The potentially massive audit failure in Gujarat NRE Coke, where the audit committee is headed by Institute of Chartered Accountants of India (ICAI) president Subodh Agrawal, has raised many larger questions. Should an audit committee recommend unaudited financials of a major subsidiary to the Board? Can an auditor wash his hands off by claiming that he relied on "management approved financial statements" of a subsidiary company? Should an auditor, in the first place, even express an opinion on consolidated financial statements where a major subsidiary is unaudited?
To answer some of these questions, I spoke to Amarjit Chopra, who is former president of ICAI (during 2010-11) and a respected independent director.
Arun Giri (AG): In a case where accounts of a subsidiary company (forming large part of consolidated financials) are unaudited, should audit committee of that company recommend such financial statements to the board of directors?
Amarjit Chopra (AC): Under normal circumstances, if the financial year is the same, my answer would be NO, unless the audit of those accounts has been delayed by extraordinary circumstances. Even the auditor must be kept informed so as to enable him to evaluate the risk.
AG: Where accounts of a subsidiary company (forming over 80% of consolidated assets and 66% of consolidated revenues) are unaudited, what should the auditor of the consolidated financial statements ideally do?
AC: In such a case, auditor is expected to give a "disclaimer" and a "matter of emphasis" would not be enough.
AG: Should the audit committee inform the principal auditor and regulators if the auditor of a subsidiary company subsequently issues a disclaimer of opinion and the same has not been considered in the audit of the consolidated financials?
AC: The audit committee should take cognizance of such opinion issued by the auditor of the subsidiary company and must take appropriate steps including, informing the auditor of holding company with regard to this development, informing any regulatory authority, if the earlier accounts were filed with any regulatory authority, informing the stock exchange in case of a listed entity as it tantamounts to price-sensitive information and revising the accounts depending on the gravity of the matter.
(Arun Giri is a freelance journalist. He was former Associate Editor of Bloomberg UTV and former Special Correspondent of CNBC TV18)