‘Loss making undertakings causing substantial drain on exchequer’
Govt asked to consider measures to improve functioning
JAMMU, Mar 30: The Comptroller and Auditor General (CAG) of India has pointed out that net worth of 13 out of 20 Public Sector Undertakings (PSUs) in the Union Territory of Jammu and Kashmir has been completely eroded by the accumulated losses and all the loss making undertakings are causing substantial drain on public exchequer.
In its report for the year ended March 31, 2022 tabled in the Parliament recently, the supreme audit institution of the country has pointed out that there were 17 PSUs that incurred losses during the year 2021-22 as per their latest finalized accounts but the losses incurred by these PSUs decreased to Rs 186.28 crore in 2021-22 from Rs 1,354.96 crore in 2019-20.
Out of total loss of Rs 186.28 crore incurred by 17 PSUs in 2021-22, loss of Rs 177.70 crore was attributed to seven PSUs, which incurred loss of more than Rs five crore as per their latest information. The majority of the loss for the year 2019-20 is attributable to the loss of Rs 1,139.41 crore reported by Jammu & Kashmir Bank Limited. The bank reported profit in its operations in the year 2020-21 of Rs 428.45 crore and in the year 2021-22 of Rs 501.56 crore.
The PSUs (other than power sector) that incurred losses of more than Rs 5 crore were J&K Road Transport Corporation (Rs 117.62 crore), J&K State Industrial Development Corporation Ltd (Rs 20.54 crore), J&K Horticulture Produce Marketing and Processing Corporation Limited (Rs 10.25 crore), J&K Handicrafts (Sales and Export) Development Corporation Ltd (Rs 8.60 crore), J&K Minerals Ltd (Rs 8.38 crore), J&K Tourism Development Corporation (Rs 6.14 crore) and J&K Schedules Castes, Scheduled Tribes and Backward Classes Development Corporation Ltd (Rs 6.17 crore).
About the erosion of capital in the PSUs, the CAG has pointed out that as on March 31, 2022, there were 20 PSUs with accumulated losses of Rs 3,881.66 crore. Of these 20 PSUs, 16 PSUs incurred losses amounting to Rs 184.26 crore and four PSUs had not incurred loss even though they had accumulated loss of Rs 1,133.63 crore.
“The net worth of 13 out of 20 PSUs had been completely eroded by accumulated losses. The net worth of these 13 PSUs was (-) Rs 3,368.15 crore against equity investment of Rs 505.42 crore as on March 31, 2022. Out of these 13 PSUs, whose capital had been eroded, three PSUs had earned profit of Rs 3.29 crore during 2021-22”, the CAG said.
The PSUs whose net worth has been eroded as per their latest finalized accounts are J&K Agro Industries Development Corporation Ltd, J&K Horticulture Produce Marketing and Processing Corporation, J&K Scheduled Castes, Scheduled Tribes and Backward Classes Development Corporation Ltd, J&K State Industrial Development Corporation, J&K Industries Ltd, J&K Handicrafts (Sales and Export) Development Corporation Ltd, J&K Handloom Development Corporation, J&K Forest Development Corporation, J&K Minerals Ltd, Jammu & Kashmir and Ladakh Financial Corporation, Kashmir Power Distribution Corporation Ltd, Jammu Power Distribution Corporation Ltd and J&K Road Transport Corporation.
The CAG has recommended that Government of Union Territory of Jammu and Kashmir should review the functioning of its loss making Public Sector Undertakings and consider measures to improve them since they are causing substantial drain on the public exchequer.
About the submission of accounts by the PSUs, the supreme audit institution of the country said that Section 96 of the Companies Act, 2013 requires every company to hold Annual General Meeting (AGM) of the shareholders once in every calendar year. It is also stated that not more than 15 months shall elapse between the date of one AGM and that of the next.
Further, Section 129 of the Companies Act, 2013 stipulates that the audited Financial Statement for the financial year has to be placed in the AGM for their consideration. Section 129 (7) of the Companies Act, 2013 also provides for levy of penalty like fine and imprisonment on the persons including directors of the company responsible for non-compliance with the provisions of Section 129 of the Companies Act, 2013.
However, despite this annual accounts of various PSUs were pending as on September 30, 2022, the CAG said, adding as of March 31, 2022, there were 40 Government Companies under the purview of CAG’s audit. Of these, accounts for the year 2021-22 were due from 34 Government Companies. However, only three Government Companies submitted their accounts for the financial year 2021-22 for audit by CAG on or before September 30, 2022 and accounts of 31 Government Companies were in arrears for various reasons.
It has recommended that Government may impress upon those PSUs with arrear in accounts to ensure early finalization of their Financial Statements as in the absence of their finalization, Government investments in such PSUs remain outside the legislative oversight.
“The Government needs to take an early decision regarding commencement of liquidation process in respect of the inactive PSUs as they are neither contributing to economy nor meeting the objectives for which they were set up”, the CAG has further recommended.