New Delhi, Feb. 8: The government may soon issue instructions to the department of company affairs to scrutinise balance sheets of all firms which came out with public issues or raised public deposits worth more than Rs 50 crore in recent times.

The move comes close on the heels of the recent IPO scams unearthed by Sebi. With the BSE sensex scaling the 10000-mark, the government has become cautious and has asked the market regulator to be on guard against possible manipulations.

Top officials said company affairs minister P. C. Gupta wanted his officials to specifically check out how funds raised through public or debt issues have actually been deployed.

“We have a past history of corporations siphoning off funds, using funds to play the stock market or even spending the funds on projects other than that for which the money was raised,” officials said.

The government wants to check the deployment of funds with reference to what was stated in the prospectus as the end use of funds being raised.

While DCA officials said the aim of the exercise is to “protect investors and shareholders”, sources said it was also aimed at targeting wilful stock manipulations using IPO funds.

Sebi has already referred Bharat Overseas Bank, Vijaya Bank, HDFC Bank, Indian Overseas Bank and ING Vysya Bank to the Reserve Bank of India to examine their roles in opening accounts for the entities and funding share purchases.

It has also ordered the inspection of Karvy Computershare, the registrar to the IDFC issue, and merchant bankers Kotak Mahindra Capital, DSP Merrill Lynch and SBI Capital Markets to ascertain reasons for any systemic failure.

The current move by the government will, however, be wider in its sweep and focus on a larger number of companies. “We have already suffered once in the 1990s from a systemic failure when hundreds of companies simply vanished after raising funds ... we have also witnessed several stock market manipulations. All that we want to do is be more vigilant now, it is not in any way directed against any corporate houses,” officials said, explaining the move.

The exercise will, however, be limited, as it will only be able to cover only those public stock and debt offerings which happened some time back and whose balance sheets have been submitted to the DCA. Current IPOs will only be checked later.

Last year, nearly Rs 20,000 crore was raised through public offerings. This year, analysts expect, nearly Rs 45,000 crore will be raised with Reliance Infocomm, Hutchison, Air-India, Indian Airlines and Kingfisher gearing up to tap the market.