The loss-making state public sector undertakings (PSUs) reduced their losses during financial year 2010-11. As many as 22 state PSUs have together reported a loss of Rs 439.50 crore for the year, which is 49 per cent less over the loss of Rs 865 crore they reported during the previous year.
According to a report of the Comptroller and Auditor General of India (CAG) for year-ended March 2011, of the 75 working PSUs, as many as 46 PSUs earned profit of Rs 1,632.42 crore.
“The losses of PSUs are mainly attributable to deficiencies in financial management, planning, implementation of project, running their operations and monitoring,” the report said.
A review of the latest three years’ audit reports of the CAG shows that the PSUs incurred losses to the tune of Rs 1,320.47 crore and had made infructuous investment of Rs 333.27 crore, which were controllable with better management. “The actual losses would be much more. With better management, the losses can be minimised. The PSUs can discharge their role efficiently only if they are financially self-reliant. This situation points towards a need for greater professionalism and accountability in the functioning of the PSUs,” the CAG said.
The report also pointed out that there were 14 non-working PSUs during the year. The CAG has recommended for the closure of these PSUs. Of these, seven PSUs have commenced liquidation process. During 2010-11, two non-working PSUs incurred an expenditure of Rs 49 lakh towards establishment costs. This expenditure was met through rent, interest and other sources by these PSUs, the CAG report said.
The companies, which have taken the route of winding up by Court order, are under liquidation process for the last three to eight years. The process of voluntary winding up under the Companies Act is much faster and needs to be adopted / pursued vigorously. “The government may take a decision regarding winding up of the seven non-working PSUs where no decision about their continuation or otherwise has been taken after they became non-working,” the CAG report said.
The major contributors to the profits during the year were Karnataka Power Corporation Ltd (Rs 686.19 crore), Mysore Minerals Limited (Rs 422.87 crore) and the Hutti Gold Mines company Limited (Rs 124.71 crore). The loss making companies includes the Mysore Paper Mills Limited (Rs 84.87 crore), The Mysore Sugar Company Limited (Rs 70.21 crore) and Hubli Electricity Supply Company Limited (Rs 64.71 crore).
The state government had invested Rs 3,235.24 crore (equity of Rs 2,106.66 crore, loans of Rs 39.57 crore, grants of Rs 165.02 crore and subsidy of Rs 923.99 crore) in 24 PSUs during the years for which accounts had not been finalised as on September 30, 2011.
The CAG has also noted that two working PSUs (Karnataka Thanda Development Corporation Limited and Karnataka EMTA Collieries Limited) incorporated in February 2009 and March 2011 respectively had not finalised their first accounts. Three companies such as Karnataka Neeravari Nigam Limited, Cauvery Neeravari Nigama Limited and Raichur Power Corporation Limited did not prepare profit and loss account and had only pre-operative expenditure.
As on March 2011, the investment (capital and long-term loans) in 89 public sector undertakings amounted to Rs 58,137.26 crore. Of this, 98.99 per cent was in working PSUs and the remaining 1.01 per cent in non-working PSUs. The total investment consisted of 56.37 per cent towards capital and 43.63 per cent in long-term loans.
