Not only banks, but Accounting Standard Regulators, Auditors, CDR Empowered Group, Independent Directors, Stock Exchanges and SEBI etc all work for these looters (called businessmen. They advice on how to make loss and also to make profit out of entries made in the book of account from thin air. Look at the inefficiency and the inability of the stock exchanges and SEBI that they have asked companies to fill in a form while filing their balance sheet and profit and loss account. The form must say whether the auditor has qualified the accounts or not. What a joke. Why can’t stock exchange and SEBI read for themselves to find out audit qualification? The companies and auditors have also now tied up as to how to not qualify the accounts. Don’t qualify accounts but write everything under the heading “Emphasis of Matter”. So, the company can say that there is no qualification and thus no need to recast the accounts. My experience that all those points for which the auditors would have qualified their opinion about five years back, are now done through this dubious “Emphasis of Matter”. The ICAI, SEBI and all other regulators including Stock Exchanges should consider “Emphasis of Matter” as good as qualification by auditors and the authorities must mandate companies to recast the accounts as per law made applicable in case of audit qualification.

This is what is happening in this country.Wealthy people acquired their riches at the cost of common people who deposit their hard earned money in banks.People like Mittal swallow that money and there is no mechanism in this country to rcover.people lost money because of exploiters specially in the last decade since we did not have any leader worth the name at the top.Let us hope we will get better leadership which has concern for common people who have no saviour at any level.

And in case you wanted to read up more on Global, inputs from another source are here:-

http://reyadel.wordpress.com/2009/07/27/...

Typically, the way most of such companies fiddle is they report losses. (And then use the skim/loot/scoot for weddings?)

This is how they do it:-

Under report sales: Companies show less production than actual production and as such show lower sales. The actual production is sold without accounting for it in the number one books. In this manner they additionally avoid paying excise duty on the production / sales which is not accounted for in the books. However, full cost of raw materials and other costs of production is taken and the company reports losses.

One way to check for this is things they cannot hide. For example, in electric arc furnace there is a clear ratio of electricity consumption and steel production.

The relevant questions to ask here is, what has been the electricity consumption (month wise) and steel production over last 10 years and see if there is consistency. It should also be compared with other companies operating in the same industry.

Similarly, if they were producing speciality alloy steels, they would be mixing fixed amounts of tungsten / titanium / molybdenum / magnesium etc. If these records are compared (monthly consumption of any of these inputs with production and sales of steel) one can get an idea if they have been cooking on production / sales figures.

Since these are high value speciality metals / minerals with limited suppliers proper records of their purchase / consumption has to be maintained. And if a certain consumption of these inputs is accounted for, there would be a certain amount of steel actually produced. If the actual steel produced is less, they have major reasons to answer.


Under invoice sales:- Companies sometimes under invoice sales to shell companies, who then onward sell to end users. In this manner the actual producer shows losses and so can declare themselves sick and get all kinds of reliefs and concessions.

H____Co & B____r C______c followed this route. B___r C_____c was a group company of the A____a Bxxxa Group and captive producer of caustic soda for H_____co.

They sold their production to H_____co at much lower prices as compared to market prices and reported large losses and went to BIFR and took all eligible reliefs and concessions. M.....i companies in general and Bxxxa group in particular had mastered the art of legally milking GOI and the Indian public at large in this manner. That is why they can afford to have so many temples built!

The relevant questions to ask here are:

(i) Did the banks and other authorities compare selling prices - actual charged by the company with what similar products have been sold during the same period?

(ii) Did they check if sales are directly to customers or through selling agents (generally owned by close relatives or promoters). What price sold to the intermediary and at what price the intermediary sold to end user.

+++

Another one:- Over invoice capital costs: The cost of plant and machinery can be over invoiced. Say the actual cost is Rs.60/-. First they get quotation from sellers for Rs.100/-, then apply for Term Loan from banks for Rs. 80/- and claim that they would meet their commitment (margin) of Rs.40/- evidencing their financial stake in the business. Since the actual cost is Rs. 60, once the seller has been paid Rs.80 (direct disbursement by the bank / FI), the difference in cost of Rs.20/- is shared between the seller and the promoters (also the middleman). Second, such over capitalised businesses typically would find it difficult to service their interest costs / repay principal dues since profitability and cash flow projections are massively optimistic. And the promoter had no intention of serving his debts to start with!

The relevant questions to ask is check for project cost of similar projects. Technical experts from consultancies like MECON / Engineers India Ltd. / Dasturco used to give pretty good estimates.

And then:-

Over invoice operating costs: Purchases are made through middle men at higher than market prices, and from whom promoters get a cut. Personal expenses are charged to company. Fictitious expenses are charged to P&L like market development expenses etc. Careful sieving through audited financials over a number of years often give out clues.

But then, should we be doing it, or the authorities at BIFR, CLB and others?

Time will tell as technology starts making it easier to find out - and track stolen money.

How could his daughter be happy being married off with such money ? Doesn't it hurt her conscience to have that much money spent away ?

the bankers who financed to this beleagured company should be blamed. this is very very horrible that public monies has been looted by the defaulters/companies whereas the small amounts of personal loan given to small and ordinary citizens pressurized vehemently by the bankers.