RailEnquiry

The Comptroller and Auditor General (CAG) has questioned the PPP model of Delhi's airport metro link saying the concessionaire Delhi Airport Metro Express Private Limited (DAMEPL) was operating a project worth Rs 5697 crore with an equity of just Rs one lakh

The Comptroller and Auditor General (CAG) has questioned the PPP model of Delhi's airport metro link saying the concessionaire Delhi Airport Metro Express Private Limited (DAMEPL) was operating a project worth Rs 5697 crore with an equity of just Rs one lakh.The auditor's report, tabled in parliament today, also claimed key guidelines were flouted in implementation of the project and accused DMRC of not doing enough to protect financial interests."Audit observed that the concessionaire brought in equity capital of only Rs 1 lakh at the time of incorporation (April 2008) and an amount of Rs 611.95 crore was infused as share application money pending allotment," the CAG report said.

"This share application money was subsequently converted into interest-free unsecured sub-ordinate debt in 2010-11. Thus, although authorised capital was Rs 870 crore, the paid- up capital remained at only Rs 1 lakh, which was the minimum requirement as stipulated by section 3 of the Companies Act, 1956, for a private company," it added.

The CAG report mentioned that the reasons for conversion of share application money into sub-ordinate debt were not on record. It said this conversion aided the concessionaire to operate a project of Rs 5697 crore with an insignificant risk of one lakh rupess.

The audit report said DMRC in its reply said share money pending allotment was to be included in equity while calculating debt equity ratio.

The CAG report said compliance to financing parameters was to be ensured by DMRC and added share application money pending allotment does not form part of equity unless allotted.

"Instead of insisting upon the concessionaire to maintain the defined debt-equity ratio, DMRC merely asked (June, 2012) the concessionaire to clarify on conversion of share application money into subordinate debt, that too after 15 months of the event," the CAG report said.