July 12, 2002 Accounting worries spilled on to the Indian bourses when Rolta India Limited, a company providing CAD Cam and GIS Solutions was hammered and fell by 20 per cent. Reports said that the company had overstated its sales by Rs 76 crore for the financial year 2001. The Rolta management has issued a clarification on this doubtful accounting entry.
According to the company, the Rs 76.03 crore in the balance sheet was on account of an interdivision sale made by the company of specialized computer systems and equipments for its production facilities.
The company booked direct cost of material, labour and overheads as expenses. Therefore, there was no extra profit element involved and hence the profits were not inflated.