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Shut down 23 non-working PSUs in Maharashtra: CAG

Last updated on: May 20, 2011 13:25 IST

Shut down 23 non-working PSUs in Maharashtra: CAG

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Paranjoy Guha Thakurta and Subir Ghosh in New Delhi


The Comptroller and Auditor General of India has recommended the closure of 23 public sector undertakings in Maharashtra.

Describing these as non-working companies, the CAG in its latest report on the state tabled in the Maharashtra Assembly stated that since no purpose may be served by keeping these units in existence, the state government needs to expedite closing down of these non-working PSUs.

Of these 23 PSUs, three have already commenced the liquidation process. In case of ten others, closing orders have been issued but the liquidation process has not yet started.

The CAG suggested the setting up of a cell to expedite the closure of these non-working companies.

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Shut down 23 non-working PSUs in Maharashtra: CAG

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The CAG report also came down heavily on the handling of accounts by the managements of these companies. In as many as 56 working PSUs, 178 accounts were in arrears as on September 2010.

'The arrears need to be cleared by setting targets for PSUs and outsourcing the work relating to the preparation of accounts,' the report suggested.

Five of these non-working PSUs, whose accounts were finalised for the year 2009-10, had incurred an expenditure of Rs 3.26 crore (Rs 32.6 million) towards payment of salaries and establishment charges.

This expenditure was financed through interest from fixed deposit and miscellaneous income of these PSUs, the CAG report said.

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Of the 67 accounts of working companies which were finalised between October 2009 and September 2010, nine accounts received 'unqualified' certificates and three 'adverse' certificates were issued by statutory auditors.

The CAG found that there were 68 instances of non-compliance with accounting standards in 28 accounts.

During year 2009-10, out of 62 working PSUs, 36 earned profits of Rs 741.56 crore (about Rs 7.42 billion) and 21 incurred losses of Rs 2,101.56 crore (about Rs 21.02 billion).

Four PSUs prepared their accounts on a 'no profit no loss' basis, and one was still under construction and had not prepared a profit and loss account.

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Maharashtra has 62 working PSUs (58 companies and four statutory corporations) and 23 non-working PSUs that employed 1.99 lakh (199,000) employees in 2009-10.

The working PSUs registered a total turnover of Rs 40,872.98 crore (about Rs 408.73 billion) in 2009-10 -- this worked out to 4.91 per cent of the state's gross domestic product (GSDP).

Major profit earners were the Maharashtra State Electricity Transmission Company Limited (Rs 368.03 crore); the Maharashtra State Road Transport Corporation (Rs 117.98 crore); and the Maharashtra State Power Generation Company Limited (Rs 72.75 crore).

Heavy losses were incurred by the Maharashtra State Electricity Distribution Company Limited (Rs 1,351.45 crore); and the Maharashtra State Road Development Corporation Limited (Rs 421.58 crore).

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The CAG also carried out performance audits relating to 'operational performance' of the Maharashtra Tourism Development Corporation Limited and 'power generation activities' of the Maharashtra State Power Generation Company Limited.

In both cases, the companies appeared to be guilty of laxity and gross inefficiency, the CAG report contended.

In case of MTDC, as much as Rs 358.66 crore (about Rs 3.57 billion) of grants from the state and central governments were unutilised till March 2010. Not only did the company not spend the money allocated to it, MTDC failed to attract adequate tourists to its resorts despite spending Rs 23.49 crore (Rs 234.9 million) on these resorts between 2005-06 and 2009-10.

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The number of foreign tourists who visited these resorts was negligible. Though the number of domestic tourists had increased from 143.30 lakh (14.33 million) in 2005-06 to 237.39 lakh (23.74 million) in 2009-10, those availing facilities of MTDC facilities declined from 2.30 lakh (230,000) in 2007-08 to 2.07 lakh (207,000) in 2009-10.

MTDC had leased out land and resorts to private operators but failed to recover dues from defaulters. The lease rental could not be recovered in as many 62 cases out of 79 cases and outstanding dues had climbed up to Rs 20.32 crore (Rs 203.2 million) by March 2010.

The company functions without any occupancy norms, including benchmark occupancy standards. The average occupancy in the resorts of MTDC was 37-51 per cent against the all-India average occupancy of 59.66 per cent during the review period.

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The company was faulted on other counts too. The CAG found that MTDC accounts have been pending for finalisation since 2006-07.

It also failed to develop proper mechanism to collect statistics of the tourists in the state as envisaged in the state's Tourism Policy of 2006. In fact, the company did not even prepare any Corporate Plan or Action Plan to meet the requirements of the Tourism Policy.

The CAG called for effective project monitoring systems to be put in place, besides the monitoring of utilisation of grants received from both the state and central governments.

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In case of the power company, MSPGCL, the CAG charged it with gross inefficiency. It found that the plant load factor (PLF) of as many as 27 thermal units were below the target in 2009-10.

The auxiliary consumption too remained higher than the target resulting in a loss of 1,076 MUs (million units) valued at Rs 246.05 crore (Rs 2.46 billion) during the review period.

The excess consumption of 333.33 lakh (33.33 million) metric tonnes of coal (valued at Rs 5,515.85 crore) was mainly on account of low calorific value of coal received during 2005-10.

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MSPGCL had not entered into coal supply agreements with two coal companies up to March 2009 and claims amounting to Rs 76.10 crore (Rs 761 million) on account of supply of stones and shale (instead of coal) and slippage in grade relating to the period 2001-09 were still pending with two coal companies.

It had not even fixed modalities for ensuring timely submission of coal related claims as per new agreements from April 2009 onwards.

The poor performance of the power company acquires significance in the context of the fact that Maharashtra is a power deficient state and has not been able meet peak demand.

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The deficit in supply of power in the state remained between 25 per cent and 34 per cent of the peak demand during the five year period, 2005-10.

One of the reasons for this, the CAG found, was that MSPGCL had not taken up any major renovation and modernisation) programme of its existing nine thermal units that were supposed to have taken place during the Tenth Five-Year Plan period (2002-07).

Moreover, there was no long-term corporate plan for R&M of the old units in a phased manner. The CAG also found that MSPGCL had compromised with technical requirements in this regard.



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