MCAs sector-wise report on cos will help detect fraud

Written by Neha Pal | New Delhi | Updated: Jan 1 2010, 03:04am hrs
The ministry of corporate affairs is set to come out with a comprehensive sector-specific report on the sector-wise performance of companies. First of its kind, this would act as an early warning system and help detect Satyam-like frauds. The ministry would analyse the data available on MCA 21 portal, the database of 9 lakh Indian companies that file their documents via this portal.

The ministry plans to submit a sector-wise report of companies to their respective ministries as well as regulators. The comprehensive report would be based on various parameters such as investment, growth rate of investment, profitability, net worth of sector, share price fluctuation and IPO, said a ministry of corporate affairs official.

As part of the early warning system exercise, the government also plans to scrutinise the quarterly financial reports filed by companies with the stock exchanges. The ministry would also look at the option of seeking information on the initial public offerings to find out whether the funds have been used for purposes declared in the prospectus.

Corporate affairs minister Salman Khurshid had earlier said the early warning system would be one of the major initiatives that would be taken up by the ministry for averting corporate frauds.

The official further said a sector-specific report would be a kind of government data that would also help policymakers analyse how a sector is performing in comparison to the others. Apart form helping regulators, ministries and state governments in tracking the growth of their sectors, it will also help them decide what measures should be taken further in making the sector grow at a faster rate, said the official.

At present, the ministry is not able to make use of the data available on MCA 21 website in its absolute form. MCA 21 is a very useful source for extracting information about any company, said the official.

Talking further about the report, the official said the report could also be prepared on demand of the regulator or the ministries as different sectors have different considerations.

MCA 21, the e-governance mode of companies, has two kinds of datamachinery readable data that is entered by the user and can be read by the computer and scanned form of data which cannot be read by the computer. The report prepared by the ministry would be a comprehensive report which would not depend on just the computer-readable data. MCA plans to prepare a report which would be based on both kinds of data, said the official.