PSUs are not functioning efficiently: CAG
Source: Hueiyen News Service

Imphal, March 27 2011: Even though there is tremendous scope for improvement in Public Sector Undertakings in their overall performance in Manipur, they are not functioning efficiently, the Audit report of the Comptroller General of India in respect of Manipur for the year ended March 31 pointed out.

During the year 2008-09, out of eight working PSUs, three PSUs earned a combined profit of ' 1.35 crore and three PSUs incurred a combined loss of ' 0.54 crore.

Two working PSUs have not started commercial activities, the report said.

The major contributors to profit were Manipur Industrial Development Corporation Ltd.

(' 1.00 crore) and Manipur Police Housing Corporation Ltd.

(' 0.24 crore).

The loss was incurred by Manipur Handloom & Handicrafts Development Corporation Ltd.

(' 0.52 crore), it added.

The losses of PSUs are mainly attributable to deficiencies in financial management, planning, and inefficient running of their operations and lack of proper monitoring.

A review of three latest Audit Reports of CAG shows that the State PSUs incurred losses to the tune of ' 2.85 crore and infructuous investment of ' 0.19 crore which were controllable with better management.

The Audit Reports indicated at total net of loss of ' 3 crore (' 1.35 crore in 2006-07, ' 1.43 crore in 2007-08 and ' 0.22 crore in 2008-09) observing that the controllable losses as per CAG's Audit Report were ' 2.85 crore (' 2.29 crore in 2006-07, ' 0.56 crore in 2007-08) .

The above losses pointed out by Audit Reports of CAG are based on test check of records of PSUs.

The actual controllable losses would be much more, the report observed observing that with better management, the losses can be minimised.

The PSUs can discharge their role efficiently only if they are financially self-reliant.

The analysis on the functioning of the PSUs points towards a need for professionalism and accountability in their functioning.

As per latest finalised accounts of eight working companies, the capital employed worked out to ' 26.27 crore and total return thereon amounted to ' 1.71 crore in 2008-09 as compared to capital employed of ' 19.94 crore and total return on capital employed of ' 1.54 crore in 2003-04 .

The investment in working PSUs and their turnover together aggregated to ' 49.85 crore during 2008-09.Out of eight working PSUs, four PSUs accounted for individual investment plus turnover of more than five per cent of aggregate investment plus turnover.

These four PSUs together accounted for 95.95 per cent of aggregate investment plus turnover, the CAG pointed out.

Lack of required control over the companies by Government, abnormal delay in compilation/approval of the accounts and delayed submission of the same to the statuary auditor by the management and delay in adoption of accounts in the Annual General Meeting are detected in all the PSUs in Manipur, it says.

The profit of the eight working companies has risen in past three years from ' 0.77 crore in 2005-06 to ' 0.81 crore in 2008-09 .

Similarly, the turnover too has risen from ' 6.42 crore to ' 6.77 crore during this period.

However, the return on capital employed has declined from 9.02 per cent to 6.52 per cent.

Due to the non-initiation of any action to dispose/safeguard assets, the Manipur Cement Ltd.

resulted in loss of plants, machineries, building and inventories valued at ' 56.47 lakh, the audit report finds.

Advance loan of ' 19.50 lakh (September 2006) to a subsidiary company by the Manipur Industrial Development Corporation Ltd was under liquidation.

The company also incurred a loss of ' 24.18 lakh due to delay in payment of outstanding dues of Subsidiary Company.

Further the company paid a contractor an advance of ' 2.10 crore in violation of specific provision of the work order.

Audit report further suspects misappropriation of ' 70 lakh in the Manipur Tribal Development Corporation Ltd.

due to non adjustment of advance drawn for repair and renovation of office building.

Non-deposit of Sales Tax/VAT amounting to ' 45.36 lakh deducted from the bills of contractors also pointed out by the report.

Manipur Film Development Corporation Ltd., work on a theatre complex, on which the company had already incurred an expenditure of ' 51.03 lakh, remained suspended for over 10 years.

The Audit observed that the differences occurred in respect of 12 PSUs and some of the differences were pending reconciliation after more than 18 years.

The matter has been taken up with the Administrative Department of the respective PSUs and the Managing Directors of PSUs periodically to reconcile figures.

The Government and the PSUs should take concrete steps to reconcile the differences in a time-bound manner, the CAG suggested.

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