Accumulation of huge losses by seven out of 15 working State Public Sector Enterprises (SPSEs) in Meghalaya had eroded public wealth.
This was noted by the Comptroller and Auditor General (CAG) of India in its State Finance Audit Report for the year ended March 31, 2023, tabled in the Assembly on Friday.
The erosion of public wealth is a cause of concern due to the burden on the exchequer to support their operations, the CAG said and suggested the State government to analyse the viability of continuing with the SPSEs and review their workings to improve their profitability or close their operations.
According to the report, these SPSEs are the Meghalaya Power Distribution Corporation Limited, Mawmluh Cherra Cements Limited, Meghalaya Government Construction Corporation Limited, Meghalaya Transport Corporation, Meghalaya Infrastructure Development and Financial Corporation Limited, Meghalaya Mineral Development Corporation Limited and Meghalaya Tourism Development Corporation Limited.
During 2022-23, 15 out of 17 working SPSEs had accumulated losses of Rs 4,341.71 crore. Of these, 13 incurred losses amounting to Rs 572.26 crore.
The report said analysis revealed that the equity (Rs 1,164.85 crore) of seven out of the 15 working SPSEs had been completely eroded by their accumulated losses of Rs 3,057.36 crore and their net worth was ‘negative’ as per their latest finalised accounts.
Out of seven SPSEs whose capital had eroded, two SPSEs had earned profit of Rs 1.21 crore during 2022-23. Three out of seven SPSEs whose capital had eroded have received Rs 16.84 crore during 2022-23 for their establishment expenses.
As on March 31, 2023, seven 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).
According to the report, 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.
The 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 per cent was contributed by the Meghalaya Tourism Development Corporation Limited. During the year 2022-23, around 65 per cent (Rs 371.17 crore) of the total loss (Rs 572.28 crore) incurred by 14 working SPSEs was contributed by two Power sector SPSEs, the Meghalaya Power Generation Corporation Limited and Meghalaya Power Distribution Corporation Limited.
However, none of the three SPSEs which earned profits as per the latest finalised accounts had declared dividend, the report said.
The CAG recommended the State government to impress upon the management of SPSEs to ensure timely submission of financial statements. “In the absence of finalised accounts, Government investments in such SPSEs remain outside the oversight of the State Legislature,” the report said.
It suggested that the government may also analyse the reasons for losses in loss making SPSEs and initiate steps to make their operations efficient and profitable.
The CAG pointed out that the Meghalaya Electronics Development Corporation since 1986 and Meghalaya Bamboo Chips Limited since 2021 were neither contributing to the State economy nor meeting the intended objectives. “The State Government needs to expedite the liquidation process to wind up these non working SPSEs,” it said.
Further the report suggested that the SPSEs concerned may take concrete steps to reconcile the differences in a time-bound manner and the government should correct the system of recording the funding provided to them in the State Finance Accounts and the Finance Accounts to be updated.
The CAG in its detailed report said though the overall turnover of SPSEs during last three years had appreciated by 4.44 per cent (Rs 61.58 crore) from Rs 1,386.14 crore (2020-21) to Rs 1,447.72 crore (2022-23), the contribution of SPSE-turnover to GSDP had decreased from 4.10 per cent (2020-21) to 3.39 per cent (2022-23).
“This indicates that the increase in the SPSE-turnover during 2020-21 to 2022-23 was not in commensurate with the growth in GSDP during the same period,” it said.
The major contributors to SPSEs turnover during 2022-23 were three power sector SPSEs, Meghalaya Power Distribution Corporation Limited (Rs 1,099.25 crore), Meghalaya Power Generation Corporation Limited (Rs 144.50 crore) and Meghalaya Power Transmission Corporation Limited (Rs 56.55 crore) and one infrastructure SPSE, the Meghalaya Government Construction Corporation Limited (Rs 87.54 crore).
“However, the contribution of power sector SPSEs to the GSDP during the last three years had shown a diminishing trend and decreased from 3.82 per cent (2020-21) to 3.04 per cent (2022-23).
“As per information furnished by the SPSEs, the State government made an investment of Rs 3,885.07 crore (Equity Rs 3,291.06 crore and long-term loans Rs 594.01 crore) in 21 SPSEs as on March 31, 2023. In addition, the State Government had also provided Grants/subsidies aggregating Rs 797.67 crore to 13 SPSEs during the year 2022-23,” the report noted.
