CAG recommends closure of 38 Maharashtra PSUs

It may be a strange coincidence that during the last budget session, the state legislature passed a bill to scrap the board constituted for restructuring, privatising and liquidation of state-owned PSUs.

The Comptroller and Auditor General of India?s (CAG) audit has brought a report which recommends the closure of 38 such entities as they are serving no purpose.

The CAG report, tabled on the last day of the budget session on the floor of both the houses of state legislature highlights the apalling condition of the state-owned PSUs. Many corporations have not been able to finalise their annual accounts for period ranging between one to 20 years.

The report points out that of the 72 government-companies, 52 were working while 20 existed only on paper. However, of the 52 working companies, only four and two statutory corporations could finalise their accounts till the end of the last fiscal.

The accounts of 48 working companies and two statutory corporations had arrears for periods ranging from one to 15 years as on September 30. The accounts of 13 non-working PSUs were incomplete for the period ranging from one year to 20 years, the report observes.

As per the latest finalised accounts of 20 working PSUs, they declared a moderate profit of Rs 47.75 crore and two statutory corporation of Rs 10.76 crore. Against this, 25 working companies and two statutory corporation's latest account figure shows that they incurred losses of Rs 380.29 crore and Rs 66.49 crore respectively.

Meanwhile, the state government's capital locked in these companies stood at Rs 18,701 crore at the end of '06' fiscal. And during the same period, the state government extended budgetary support of Rs 2,243.16 crore by the way of loans, grants, share capital, grants and subsidies.

However, the only welcome trend is that both government capital amount locked in these PSUs and budgetary support has declined as compared to 2004-05. This stood at Rs 19,906.78 crore and Rs 3,3925 crore respectively.

The report points out that of the 25 loss-making PSUs, the accumulated losses of the eight companies stood at Rs 1,265.94 crore which was nearly 40 times over their paid-up capital of Rs 32.41 crore.

Similarly, the two loss-making statutory corporations had accumulated losses aggregating to Rs 1,736.34 crore which was almost double their paid up capital of Rs 986.48 crore.

The report recommends the closure of 38 PSUs whose turnover has not crossed even Rs 5 crore even after they have been in existence for over five years who are incurring losses for the last five consecutive financial years.