Shillong, Sept 1: Accumulation of huge losses by State Public Sector Enterprises (SPSEs) had eroded public wealth, which is a cause of concern due to the burden on the exchequer to support their operations.
The state government needs to analyse the viability of continuing with the SPSEs and review the working of these SPSEs to either improve their profitability or close their operations.
The observation and recommendation was made by the Comptroller and Auditor General of India (CAG) in its state finances audit report for the year ended March 31, 2023 tabled in the just concluded Assembly’s autumn session.
There were 21 SPSEs in Meghalaya including two statutory corporations and 19 government companies (including two non-working government companies) under the audit jurisdiction of the CAG.
Audit noticed that the prescribed timelines regarding submission of financial statements were not adhered to by 19 SPSEs whose 40 accounts were in arrears.
Out of the total profit of Rs 1.61 crore earned by three working SPSEs, 73.29% was contributed by one SPSE (Meghalaya Tourism Development Corporation Limited).
During the year 2023-23, around 65% (Rs 371.17 crore) of the total loss (Rs 572.28 crore) incurred by 14 working SPSEs was contributed by two power sector SPSEs (Meghalaya Power Generation Corporation Limited and Meghalaya Power Distribution Corporation Limited).
The CAG said that the state government may impress upon the managements of SPSEs to ensure timely submission of their financial statements.
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In the absence of finalised accounts, government investments in such SPSEs remain outside the oversight of the state legislature.
The state government may also analyse the reasons of losses in loss making SPSEs and initiate steps to make their operations efficient and profitable, it added.
The report revealed that during the year 2022-23, 14 working SPSEs incurred losses of Rs 572.28 crore as compared to the losses of Rs 555.90 crore incurred by 12 SPSEs during the year 2020-21.
The losses of working SPSEs was mainly driven by the losses incurred by the power section SPSEs.
During the last three years, the overall accumulated losses of SPSEs under power and non-power sectors showed an increasing trend, which correspondingly deteriorated their net worth position from Rs 1,397.72 crore (2020-21) to Rs 565.07 crore (2022-23).
Further, during the year 2022-23, around 65% (Rs 371.17 crore) of total SPSE-losses (Rs 572.28 crore) was contributed by two power sector SPSEs.
“During 2022-23, 15 out 17 working SPSEs had the accumulated losses of Rs 4,341.71 crore as per their latest finalised accounts as on September 30, 2023. Of these, 13 SPSEs incurred losses amounting to Rs 572.26 crore as per latest finalised accounts,” the CAG said.
Analysis further revealed that the equity (Rs 1,164.85 crore) of 7 out of the 15 working SPSEs had been completely eroded by their accumulated losses (Rs 3,057.36 crore) and their net worth was ‘negative’ as per their latest finalised accounts as on September 30, 2023.
Out of 7 SPSEs whose capital had eroded, while two SPSEs whose capital had eroded have received Rs 16.84 crore during 2022-23 for their establishment expenses.
As on March 31, 2023, 7 SPSEs had total government investment of Rs 605.04 crore by way of equity (Rs 313.56 crore) and long term loans (Rs 291.48 crore).
“On the basis of return on historical value, the state government investment eroded by 9.96 per cent during 2022-23,” the CAG said.
“On the other hand, the Rate of Real Return where the present value of investment is considered, the state government investment eroded by 6.24 percent,” it added.
Further, the CAG also recommended the state government to expedite the liquidation process to wind up two non-working SPSEs.
According to the report, the two inactive SPSEs under the process of liquidation were neither contributing to state economy nor meeting the intended objectives.
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