A Parliamentary panel on Monday called for a forensic audit of state-run BHEL to identify instances of deficiencies

A Parliamentary panel on Monday called for a forensic audit of state-run BHEL to identify instances of deficiencies, saying that performance of the Maharatna PSE slackened in the last two to three years due to “poor risk analysis and business foresight”.

The Parliamentary Standing Committee on Industry in its report on Department of Heavy Industries and Public Enterprises noted that BHEL has been classified as weak under the departments classification of CPSEs based on new guidelines despite being a Maharatna.

BHELs performance has slackened over the past two to three years owing to a slew of reasons by the company such as retarded demand, delayed environmental clearances and stranded orders, the report said.

“The reasons put forward by BHEL portrays an impression that these are beyond the control of the company. Even while considering that BHEL might have taken steps to check the slide in its performance, the fact remains that their performance seems to have dipped despite these efforts,” it added.

Calling for corrective measure, the panel said: “It is further recommended that a forensic audit for BHEL shall be ordered with a view to identify instances of deficiencies in business decisions and take suitable measure so that those are not repeated.”

The committee said the department should have pressed BHEL firmly for implementation of timely corrective measures. While noting that reasons cited by BHEL are not completely discounted, the panel said there has been a delay on the part of the company in responding to the challenges due to market and other factors.

“It is the committees firm belief that BHEL’s current situation is the outcome of their own poor performance in the area of risk analysis and business foresight, both of which would have allowed the company to anticipate rough business weather and for effective and commensurate course correction.”

The committee also pulled up the public sector enterprise for diversification efforts that “does not seem to be of the quality of the top most companies in India to which BHEL belongs”.

“Efficient and timely diversification could have acted as a buffer to absorb the shocks in the core business,” it said. The state-run power equipment maker had reported standalone net loss of Rs 1,101.99 crore for the quarter ended December 31, 2015. For 2014-15 fiscal, its standalone net profit nosedived 59 per cent to Rs 1,419.29 crore from Rs 3,460.78 crore. Standalone net sales fell by 23 per cent to Rs 29,541.97 crore from Rs 38,388.82 crore during the same period.