Losses wipe out equity investments in 82 PSEs

Equity investments in 82 public sector enterprises have been completely eroded due to accumulated losses, an audit of financial statements conducted by the Comptroller and Auditor General of India revealed.

A regularity audit of PSEs also revealed major irregularities in oil PSEs, Food Corporation of India, Steel Authority of India and two insurance firms.

According to the CAG, the accumulated losses of the 82 PSEs, which include seven units of the National Textile Corporation, as well as Hindustan Antibiotics and Bharat Coking Coal, amounted to Rs 81,617 crore (Rs 816.17 billion), while their negative net worth was Rs 67,036 crore (Rs 670.36 billion).

Outstanding loans in 56 of these 82 PSEs are Rs 39,715 crore (Rs 397.15 billion), the recovery of which according to the CAG is doubtful.

As many as 46 of the 82 companies have been referred to the Board for Industrial and Financial Reconstruction. While the board approved a revival package for 12 of these firms, it recommended closure for 18.

The audit of financial statements also revealed that 175 public sector enterprises earned profits worth Rs 79,427 crore (Rs 794.27 billion), out of which more than 69 per cent was contributed by 38 firms from sectors like petroleum, telecommunications, power, coal and lignite.

The CAG also detected overstatement of assets by Rs 42.14 crore (Rs 421.4 million), liabilities by Rs 213.82 crore (Rs 2.13 billion) and profit by Rs 198.53 crore (Rs 1.98 billion).

According to the CAG, many PSEs understated assets worth Rs 190.59 crore (Rs 1.90 billion), liabilities amounting to Rs 873.45 crore (Rs 8.73 billion), profit of Rs 295.96 crore (Rs 2.95 billion) and losses worth Rs 67.67 crore (Rs 676.7 million).

The regularity audit of 44 PSEs done by the central auditor revealed excess and wasteful expenditure as well as undue favour to contractors, which amounted to Rs 2,724.44 crore (Rs 27.24 billion).

The CAG report said SAIL lost revenue worth Rs 1,507 crore (Rs 15.07 billion) as it did not dispose of 35.04 MMT of iron fines in Gua mines.

The report also pointed out that ONGC incurred wasteful expenditure of Rs 2056.50 crore (Rs 20.56 billion), which included extra expenditure of Rs 235.51 crore (Rs 2.35 billion) due to delay in awarding contract, poor planning in hiring of rigs leading to an additional spend of Rs 357.05 crore (Rs 3.57 billion) and Rs 400 crore (Rs 4 billion) additional expense on account of lack of cost benefit analysis while acquiring new rigs.

The CAG also pulled up the Airports Authority of India for non-levying of royalty on ground handling agencies, which led to a loss of Rs 18.48 crore (Rs 184.8 million).