Mismanagement, irregularities cost Tamil Nadu PSUs Rs 3,299 crore: CAG

CHENNAI: Widespread financial mismanagement, tender irregularities and governance deficits across Tamil Nadu's State Public Sector Enterprises resulted in compliance-related financial implications of Rs 3,298.75 crore, a CAG report has revealed.

The Comptroller and Auditor General of India, in its Compliance Audit Report on Commercial Enterprises for the year ended March 31, 2023, noted that 22 public sector undertakings had suffered complete erosion of capital.

The report was tabled in the State Legislative Assembly on September 8. The report primarily covers the accounts of SPSEs for the financial year 2022-23. It also includes observations relating to earlier years that could not be reported previously.

According to the report, the combined net worth of the 22 enterprises was negative at Rs 1,93,132.98 crore against an equity capital of Rs 33,263.46 crore. At the same time, the accumulated losses of 36 government companies had crossed Rs 2.26 lakh crore.

The single largest financial irregularity was detected in the Tamil Nadu Civil Supplies Corporation, which incurred a direct revenue loss of Rs 2,518.55 crore and suffered a shortfall in Central subsidy receipts of Rs 218.38 crore, taking the total financial impact to Rs 2,736.93 crore.

Audit scrutiny revealed that TNCSC violated Government of India directives issued in May 2019 on appointing transport contractors for paddy and Custom Milled Rice.

The state power utility, Tamil Nadu Generation and Distribution Corporation Limited, incurred multi-crore losses due to lapses in billing and procurement, it said.

Tangedco incurred an avoidable revenue loss of Rs 385.53 crore between 2020-21 and 2022-23 by short-billing 553 High Tension consumers.

The utility recorded consumption for dedicated feeders at the consumer end instead of at the feeding substations, resulting in 592.34 million units of distribution losses being absorbed by the utility instead of being borne by the consumers.

The power utility incurred avoidable expenditure of Rs 48.94 crore due to delays by its Board-level Tender Committee in finalising a January 2021 tender for AAA Rabbit conductors (distribution cable).

Highlighting unviable capital expenditure, the CAG noted that the Tamil Nadu Salt Corporation Limited incurred an unfruitful expenditure of Rs 2.99 crore on procuring a 100-tonne-per-hour salt washery in 2017 without conducting a feasibility study.

Analysing the overall financial health of 73 functioning SPSEs, the report noted that total state investment stood at Rs 50,131.13 crore.

While 37 enterprises earned a combined profit of Rs 2,060.28 crore, 32 incurred combined losses of Rs 16,045.21 crore.

Tangedco alone reported losses of Rs 9,192.25 crore, followed by eight state transport undertakings with combined losses of Rs 6,077.86 crore. The power utility's long-term borrowings of Rs 1,04,165.16 crore accounted for 67.85 per cent of the total debt liabilities of SPSEs.

IN BAD HEALTH

Rs 1,93,132.98 cr: Combined net worth of the 22 enterprises in negative against equity capital of Rs 33,263.46 crore

Rs 2.26 lakh-cr: Accumulated losses of 36 government companies

Rs 2,518.55 cr: Revenue loss incurred from the single largest financial irregularity detected in TNCSC

Rs 218.38 cr: Shortfall in Central subsidy receipts

Rs 2,736.93 cr: Total financial impact on TNCSC

Rs 385.53 cr: Avoidable revenue loss incurred by Tangedco between 2020-21 and 2022-23 by short-billing 553 high-tension consumers

Rs 9,192.25 cr: Losses reported by Tangedco alone

Rs 6,077.86 cr: Combined losses reported by eight state transport undertakings