44 state firm losses at Rs 1148 cr in FY04

The combined losses of the Maharashtra government's 44 undertakings stood at Rs 1,148 crore in 2003-04. This was revealed by the Comptroller and Auditor General of India's (CAG) report which was tabled in the assembly during the last session.

Out of 81 corporations of the state government, only 11 are in the black with a cumulative profit of Rs 45 crore.

It will be interesting to see whether the state government has enough courage to close down six corporations, privatise two and divest one as announced by it in the previous week.

The loss making units include three big corporations - State Transport Corporation with accumulated losses of Rs 964 crore, the erstwhile Maharashtra State Electricity Board (MSEB) with Rs 555.35 crore losses and Maharashtra State Financial Corporation (MSFC) with losses of Rs 570.69 crore.

Nearly Rs 21,773 crore of state fund has been locked up in these corporations. Out of the 81 entities, 21 exist only on paper, notes the report. Around Rs 265.29 crore has been locked in these corporations. Then, there are 14 others whose losses are more than their paid-up capital. As many as 47 corporations have not finalised their accounts for many years ranging between one to 14 years.

The bulk of Rs 45 crore profit was earned by the Forest Development Corporation. It earned Rs 35.45 crore profit in 2003-04.

Other major corporations which have shown profit include the City and Industrial Development Corporation (Cidco) at Rs 2.44 crore, Maharashtra State Warehousing Corporation at Rs 1.5 crore and Maharashtra Industrial Development Corporation (MIDC), which has earned Rs 10.30 lakh in profit.

Despite getting minimal returns on its investment, the government is supporting these corporations generously by way of buying equity, giving fresh loans, or standing guarantee for loans or converting old loans into equity.

Between 2002-03 and 2003-04, the government's capital infusion into these corporation increased from Rs 17,808.73 crore to Rs 21,733.38 crore.

The CAG report suggests that the government should consider closure of 22 corporations with turnover less than Rs 5 crore for the last five years, or which have been incurring losses for the last five years.

The report also recommends that the government should appoint internal auditors to look into the working of the corporations, including internal control and internal audits and for improving recoveries.

It also suggests the government to monitor recoveries, staffing patterns and the extravagant expenses incurred by these corporations.