State undertakings' return on capital slumps to 3.73%

CAG raps Maharashtra government for not finalising accounts on time

Seventy one state undertakings have witnessed a sharp reduction in return on capital employed.

As per the finalised accounts (up to September 2003), 40 working companies, employing capital of Rs 5,336.15 crore, registered a return of Rs 198.79 crore or 3.73 per cent.

This compares badly with the corresponding period in the previous fiscal (up to September 2002) when the return on capital invested was 5.22 per cent.

According to a report of the Comptroller and Auditor General of India (for fiscal 2002-2003) which was tabled before the state legislature recently, capital employed and returns thereon in the case of statutory corporations worked out to Rs 16,843.12 crore and Rs 622.55 crore (3.70 per cent), respectively.

In comparison, the previous fiscal witnessed a total return of Rs 688.50 crore (4.11 per cent) up to September 2002.

In another indictment of state-run companies and statutory corporations, the CAG report notes: "The accounts of the companies for every financial year are required to be finalised within six months from the end of the year and laid before the state legislature within nine months. However, only eight of 48 working government companies and four out of five statutory corporations finalised their accounts for the year 2002-2003 within the stipulated period."

The report further states: "The accounts of 40 working state government companies were in arrears for periods ranging from one to 14 years as on 30 September 2003."

The CAG has recommended that the state government either improve or close down 35 companies considering their poor turnover and continuous losses.

"Even after completion of five years of their existence, the annual turnover of 32 state companies (16 working, 16 non-working) has been less than Rs 5 crore in each of the preceding five years of their latest finalised accounts. In addition three state companies (two working and one non-working) have been incurring losses for five consecutive years leading to a negative net worth," the report says while recommending the closures.