 "64 central PSUs' net worth eroded in FY15: CAG")
As many as 64 central public sector enterprises (CPSEs) witnessed capital erosion to the tune of Rs 74,000 crore during 2014-15, according to a financial audit report by the Comptroller and Auditor General (CAG) of India on CPSEs.
The CAG audited 157 CPSEs, which have accumulated losses of Rs 1,10,285 crore, while 113 incurred losses during 2014-15 amounting to Rs 15,397 crore. “The net worth of 64 government companies (out of 157) had been completely eroded by accumulated loss and their net worth was negative,” said the report.
Read more from our special coverage on "CPSES"
The report noted that the number of CPSEs that earned profit in FY15 was 205. “However, the profit earned reduced to Rs 1,37,338 crore in 2014-15, from Rs 1,54,484 crore in 2013-14.”
It also said that out of the 301 CPSEs whose net worth was positive, the net worth of 24 was less than half their paid-up capital of Rs 14,815 crore at the end of March 31, 2015, indicating potential sickness.
In 28 out of 64 CPSEs whose capital eroded, government loans outstanding as on March 31, 2015 amounted to Rs 16,221 crore. The firms included five listed companies with outstanding government loan of Rs 2,769 crore, the CAG noted.
The CAG audit also observed that nine out of 36 CPSEs were not required to issue bonus shares as their paid-up capital was less than three times their reserves. The CAG noted that no directives were issued regarding bonus shares to 11 CPSEs — Balmer Lawrie & Co, Bharat Petroleum Corporation, BEML, Coal India, NMDC, National Buildings Construction Corporation, Power Finance Corporation, Power Grid Corporation of India, Rashtriya Chemicals and Fertilizers, Rural Electrification Corporation, and Oil and Natural Gas Corporation.
BEML did not issue bonus shares though its board had given its in-principle approval in May 2012. The audit, which also covered composition of the board in major CPSEs, noted that 29 companies did not have the requisite number of independent directors on their boards. Out of this, 16 firms did not have any independent director on their boards. These include Maharatna PSU Coal India Limited, Shipping Corporation, Neyveli Lignite Corporation, GAIL India, Rural Electrification and Sutlej Jal Vidyut Nigam.
