Lenders replace Lovelock with Ferguson in Spectrum Power

Mumbai, Nov 21 | Updated: Nov 22 2005, 05:30am hrs
IDBI-led lenders have taken a decision to appoint AF Ferguson as statutory auditors, replacing Lovelock & Lewes in the troubled Spectrum Power Generation Ltd (SPGL). Lenders, which are controlling and managing SPGL since September 2003, have also decided to appoint Brahmaiah & Co as internal auditors replacing AF Ferguson.

The decision has been taken at a time when Lovelock & Lewes was reluctant to blindly sign SPGL's accounts for 2004-05 as it had sought clarifications on various points from the lenders. SPGL's current shareholding includes IDBI-led lenders (32%), Rolls Royce (32%), STUSA (17%) and Bambino Group & Associates (19%).

IDBI-led lenders would seek a formal approval from the SPGL's shareholders at the annual general meeting scheduled for December 22 on their decision to appoint new statutory and internal auditors for the company.

"SPGL board at its meeting held on November 19 has recommended these appointments on the grounds of corporate governance. In any case, Lovelock & Lewes was the company's statutory auditors for six years. There was no need to seek any consent from Lovelock & Lewes for appointing new statutory auditors. In fact, the company should have replaced them three years ago," sources from the financial institutions told FE.

When contacted, Lovelock & Lewes sources said they had not received any communication in this regard so far. SPGL sources said that the company chief operating officer B Ramachandra Rao was out of station and thus it was not possible to share information in this regard.

Sources said that the decision is crucial when SPGL's debt has increased to Rs 1,038 crore as on March 31, 2005, compared to Rs 968 crore in 2003-04. The rise in debt is against the provision of SPGL's power purchase agreement (PPA) with APTRANSCO. According to the provisions of PPA the debt should have been at Rs 270 crore.

The debt has been increased despite rise in sales at Rs 340 crore in 2004-05 compared to Rs 301 crore in 2003-04.