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CAG slams ITDC for accumulating unpaid dues

The Indian Tourism Development Corporation has accumulated unpaid dues of Rs 6.68 crore while selling air tickets.

business Updated: Apr 15, 2007 16:12 IST

Violating its own credit policy, the Indian Tourism Development Corporation has accumulated unpaid dues of Rs 6.68 crore while selling air tickets, the Comptroller and Auditor General (CAG) has said in a report.

Due to deficient recovery and poor follow-up, Ashok Travels and Tours of ITDC also lost interest to the tune of Rs 2.62 crore on the outstanding amount against 156 government departments, ministries and public sector undertakings (PSUs).

During audit, the company could not furnish details to CAG about tickets amounting to Rs one crore as the bookings were stated to be "made on telephone or verbal requests" from certain departments.

Expressing disapproval at the way the ITDC let go of its debtors, the CAG, in its report for 2006, said: "There was no system in place for timely recovery of debts.

"Thus, the failure of the company to follow its own credit policy for recovery of debts, coupled with ineffective recovery action and weakness in internal control system, resulted in accumulation of debtors."

Significantly, the tickets, purchased from Indian airline and Air India, were sold to private parties on cash and carry basis while the authorised ministries and public sector undertakings were extended credit facility for 15 days and thereafter an interest of 18 per cent was leviable.

The follow up of debtors required giving a first reminder after 30 days and subsequent reminders after every 15 days. The company could also file a legal case after 75 days of the credit being given in case of defaulters.

The CAG observed that in a period of five years, 138 government departments and ministries owed Rs 6.18 crore, 18 PSUs owed Rs 0.46 crore and two other parties accounted for debts of Rs 0.04 crore - totaling unrealised debts of Rs 6.68 crore. Of this, debts to the extent of Rs 3.24 crore were due for over three years, it said.

The audit scrutiny revealed that efforts to recover the debts were not made by the management and there was no system in place for debtors' control.

ITDC also violated its memorandum of understanding with the tourism ministry by not approaching it to assist in the recovery of dues from other ministries and departments.

"The credit facilities in respect of 29 government departments and a PSU were not stopped even after the default for more than three years," the CAG observed, adding that the company did not even file a legal case.

In a belated effort, the management proposed writing off bad and irrecoverable debts of Rs 1.58 crore that were between five and 15 years old and hired a private agency to recover the remaining amount from ministries and departments but without avail.

The tourism ministry drove the last nail in the recovery coffin by stating that most of the outstanding dues had "become time-barred" and thus no legal action could be taken.