The working public sector undertakings (PSUs) owned by Karnataka government have incurred an aggregate loss of Rs 865.12 crore for the year 2009-10, according to an audit report of the Comptroller and Auditor General of India (CAG).
Out of the 75 working PSUs, 43 PSUs earned profits of Rs 1,410.90 crore and 26 PSUs incurred losses.
The audit has noticed various deficiencies in the functioning of the PSUs. The losses were mainly attributable to deficiencies in financial management, planning, implementation of project, running their operations and monitoring.
A review of the latest three years’ Audit Reports of the CAG, tabled in the state assembly on Monday, shows that the PSUs incurred losses to the tune of Rs 417.48 crore and had made infructuous investments of Rs 302.40 crore, which could have been controlled with better management.
The above losses pointed out by audit reports of the CAG are based on test checks of records of PSUs. The actual controllable losses would be much more. However, with better management, the losses can be minimised (or eliminated of the profits can be enhanced substantially).
“The PSUs can discharge their role efficiently only if they are financially self-reliant. There is a need for greater professionalism and accountability in the functioning of PSUs,” the CAG report said.
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As on March 31, 2010, the state had 75 working PSUs and 15 non-working PSUs which employed 177,000 employees. The state PSUs registered a turnover of Rs 36,369.87 crore for 2009-10 as per their latest finalised accounts.
The turnover was equal to 12.19 per cent of the State Gross Domestic Product. The PSUs had accumulated losses to the tune of Rs 197.93 crore as per their latest finalised accounts.
As on March 31, 2010, the investment (capital and long-term loans) in 90 PSUs was Rs 54,231.30 crore. Infrastructure sector accounted for about 58.23 per cent of total investment and power sector about 27.97 per cent in 2009-10. The government contributed Rs 8,113.61 crore towards equity, loans and grants ô subsidies in 2009-10.
Among the loss making PSUs, heavy losses were incurred by Chamundeshwari Electricity Supply Corporation Limited (Rs 217.15 crore), Gulbarga Electricity Supply Company Limited (Rs 216.25 crore) and Hubli Electricity Supply Company Ltd (Rs 173.64 crore).
The major contributors to profit were Karnataka Power Corporation Ltd (Rs 711.05 crore), Mysore Minerals Limited (Rs 200.54 crore) and the Hutti Gold Mines Company Limited (Rs 124.71 crore).
The CAG has found that the quality of accounts of working companies needs improvement. During the year, out of 70 accounts finalised, the statutory auditors had given unqualified reports for ten accounts, qualified reports for 51 accounts, adverse reports (which means that accounts do not reflect a true and fair position) for seven accounts and disclaimers (meaning the auditors are unable to form an opinion on accounts) for two accounts.
There were 106 instances of non-compliance with Accounting Standards in 35 accounts during the year.
Twenty working PSUs had arrears of accounts of twenty accounts as of September 2010. The arrears pertain only to the current year (2009-10).
There were 15 non-working PSUs including seven under liquidation. The government may consider winding up these non-working companies, the CAG report stated.