The Comptroller and Auditor General has found the previous government lax in taking crucial decisions. This depressed the valuation of the nine companies that the NDA government sold.

For instance, in the case of IPCL, a company that Reliance Industries acquired, the agreement for supply of feedstock was drawn a few days after the financial bids were received. In the case of VSNL, the tax department withdrew its High Court appeal on a tax demand of Rs1,400 crore just two days before the bids were opened.

A N Chatterji, D G, performance audit, says, "The valuation itself was done in a way which was too conservative. This resulted in a low reserve price being fixed."

Not all the assets held by the PSUs seemed to have been fairly valued. For instance, IPCL's investment of Rs25 crore in GE Plastic was not valued, as also its 37-per cent stake in a Gujarat Chemical port terminal company at Dahej.

The CAG has also faulted the valuation of BALCO plant and machinery. And the government does not seem to have covered its flanks either, because of which IPCL has made a claim of over Rs900 crore on the government, post the sale, citing non-disclosure in the financial statements.

The CAG has detected several flaws in the sale of PSUs but these do not indict the disinvestment process itself. If all the parameters had been considered and the loose ends tied up the reserve price would have been higher and that would have influenced the valuation and the sale proceeds that the government realised.

There was only one global adviser for seven of the nine PSUs because of a faulty selection process, says the CAG.