SME Times News Bureau | 30 Apr, 2016
The cash-strapped Himachal Pradesh State Forest Development
Corp Ltd had accumulated losses of Rs.52.75 crore till the end of fiscal
2014-15 due to cartelisation by purchasers, the Comptroller Auditor General of
India (CAG) has said.
The CAG said the cartels resulted in the loss of Rs.18 crore on sale of deodar
alone in the timber surplus state.
The corporation incurred continuous losses during the last four years ended
March 2015 and its accumulated loss increased from Rs.31.66 crore in 2010-11 to
Rs.52.75 crore in 2014-15, according to a CAG report.
Commenting on the scale of the losses in the sale of timer, the auditor said
the comparison of rates of timber obtained in auction vis-a-vis market rates
during 2010-2015 showed differences ranging between 60 and 105 percent which
indicated that the corporation is not receiving competitive rates in auctions.
Directing the government to go for e-auction to attract more bidders and to
counter cartel formations, it said the bidders are currently getting huge
margins either due to limited competition or a cartel formation.
"Had the attempts been made to realise better sale rates through wide
publicity the corporation could have earned additional revenue of around Rs.18
crore on sale of deodar timber only (which constitutes 8.62 per cent of total
volume) after allowing a margin of 50 per cent to cover the selling expenses
and profit."
It said against constant increase in retail sale rates (during 2013-14 the
rates were not revised by the corporation) the rates obtained during auction
decreased during 2014-15 as compared to the 2013-14.
Taking over of uneconomical lots of trees which were in difficult areas in
contravention to the guidelines resulted in avoidable loss of Rs.1.52 crore on
account of interest on royalty, extension fees and royalty paid on rotten
trees, the auditor pointed out.
Picking holes in the timber grading, it said only 0.5 per cent was graded 'A'.
"There were no checks on the process of classification and potential
revenue loss assuming 25 percent wrong classification works out to Rs.71.64
crore."
The corporation, which enjoys monopoly in extraction and sale of timber, in its
reply to the auditor in October last year said its suggestions and
recommendations would be incorporated in the new policy on timber marketing.
Himachal Pradesh is a storehouse of biodiversity and is most vulnerable to
climate change as the Himalayan glaciers have been retreating due to global
warming.
According to a Forest Survey of India report of 2011, out of the state's
geographical area of 55,673 sq.km, 3,224 sq.km is under very dense forests,
6,381 sq.km under moderately dense forests and 5,074 sq.km under open forests.