CAG for early call on 14 dormant PSUs

The Comptroller and Auditor General of India (CAG) has asked the government of Karnataka to take a decision on winding up 14 non-working public sector companies, including seven companies which are under liquidation.

The CAG, in its report on state PSUs for 2011-12 has pointed out that there were 14 non-working companies as on March 31, 2012. Of these, seven PSUs have commenced liquidation process. During 2011-12, three non-working PSUs incurred an expenditure of Rs 1.08 crore towards establishment costs. This expenditure was met through rent, interest and other sources by these PSUs.

The companies which have taken the route of winding up by court order have been under liquidation process for the last four to nine years, the report said.

“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,” CAG said.

As per the latest finalised accounts, of the 76 working PSUs in Karnataka, 53 PSUs earned profit of Rs 1,125.74 crore and 18 PSUs incurred loss of Rs 527.16 crore.

The public sector undertakings registered a turnover of Rs 34,490.58 crore for 2011-12 against Rs 41,493.51 crore in 2010-11, a decline of 16.87 per cent. The turnover of all PSUs was 7.94 per cent of state GDP.

The major contributors to profit were The Hutti Gold Mines Company Ltd (Rs 294.95 crore), Karnataka Power Corporation Ltd (Rs 162.27 crore) and Mysore Minerals Ltd (Rs 122.84 crore). Karnataka Neeravari Nigam Ltd (Rs 264.40 crore), The Mysore Paper Mills Ltd (Rs 84.78 crore) and The Mysore Sugar Company Ltd (Rs 70.21 crore) incurred heavy losses.

The CAG noticed various deficiencies in the functioning of PSUs. A review of the latest Audit Report of the CAG shows that there were controllable losses of Rs 1,890.63 crore and infructuous investments of Rs 112.95 crore were controllable with better management.

“There was tremendous scope to improve the functioning and enhance the profits. 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.

One working PSU — Karnataka State Mango Development and Marketing Corporation Limited — incorporated in March 2012 had not finalised their first accounts.

The losses of PSUs are mainly attributable to deficiencies in financial management, planning, implementation of project, running their operations and monitoring. The PSUs can discharge their role efficiently only if they are financially self-reliant, the report added.

As on March 31, 2012, the investment (capital and long-term loans) in 90 PSUs was Rs 66,712.87 crore. Infrastructure sector accounted for about 52.41 per cent of total investment and power sector about 35.55 per cent in 2011-12. The government contributed Rs 11,853.81 crore towards equity, loans and grants / subsidies in 2011-12.