The ad firm was hired last year for carrying out an image-building exercise for SCI at a cost of around Rs 2 crore. According to CAG, there was no need to hire an outside agency for this exercise as SCI is an established market leader.

The CAG feels that SCI wasted money in hiring RK Swamy BBDO, as the company already had a full-fledged publicity department. "CAG wants us to focus on our clients only instead of reaching out to the public at large," said a SCI official, while confirming the CAG objections. Justifying SCI's stance, he said an outside agency was selected primarily to approach clients and the public in a more professional manner. "We wanted the common man to know what SCI is all about," he added.

"A sum of Rs 2 crore per annum is not a big ad budget for a company of our size," the officialsaid. It was imperative to strengthen public perception of the company in the wake of the government's proposed disinvestment plan, he added.

Despite the CAG objections, the company plans to renew RK Swamy's contract for another year (fiscal 1998-99) for an enhanced amount of around Rs 3.25 crore.

The decision to hire an outside ad firm has also drawn flak from the employees' union. They have alleged that the company failed to call tenders before renewing the contract for RK Swamy BBDO. The Calcutta branch of the Shipping Corporation Employees Union has even threaten to file a public interest litigation (PIL) if a satisfactory reply is not provided by the management.

The union, in a communique to the SCI chairman and managing director PK Srivastava has sought an explanation in several alleged lapses on the part of the management. It wants to know why SCI engaged Arcadia Shipping in 1994-95 to transport, by road, containers from the Mumbai Docks to JNPT, Nhava Sheva, at an exorbitant rate of $120 for aTEU and $240 for a FEU.

According to the union, the prevailing rate for a TEU was Rs 1,200 and Rs 2,600 for a FEU and the exchange rate then was Rs 30 per US dollar.

In 1992-93, SCI engaged Chokani Shipyard for repairing fireburnt vessel MV Vishva Madhuri at a cost of Rs 4.5 crore. However, the company was billed a higher amount and ended up paying Rs 8.2 crore. A year and half later the ship was sold for a paltry sum of Rs 3.4 crore to Arcadia Shipping, sources added.

SCI engaged Chokhani shipyard for repairing MR Dadabhai Nowroji at Chennai where she was drydocked for more than seven months from July 8, 1997 to February 23, 1998.

The 1977-built ship of 24,469 gross registered tonnage (GRT) was berthed at Chennai for 162 days, but the entire drydocking period was extended to 231 days and the company was billed for Rs 16.61 crore, against an estimate of Rs 6.5 crore. SCI, which had paid Rs 3 crore in advance, is yet to settle the bill.