Report of 2009 - Financial Audit on Commercial of Government of Kerala

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Audit of Government companies is governed by Section 619 of the Companies Act, 1956. The accounts of Government companies are audited by Statutory Auditors appointed by CAG. These accounts are also subject to supplementary audit conducted by CAG. Audit of Statutory corporations is governed by their respective legislations. As on 31 March 2009, the State of Kerala had 95 working PSUs (90 companies and 5 Statutory corporations) and 28 non-working PSUs (all companies), which employed 1.17 lakh employees. The working PSUs registered a turnover of Rs. 10,877.80 crore for 2008-09 as per their latest finalised accounts. This turnover was equal to 6.03 per cent of State GDP indicating an important role played by State PSUs in the economy. The PSUs had accumulated loss of Rs. 1,738.46 crore as per their latest finalised accounts.

As on 31 March 2009, the investment (Capital and long term loans) in 123 PSUs was Rs. 7,731.81 crore. Power Sector accounted for nearly 34.66 per cent of total investment in 2008- 09. The Government contributed Rs. 771.89  crore towards equity, loans and grants / subsidies during 2008-09.

As per the latest finalised accounts, out of 95 working PSUs, 46 PSUs earned profit of Rs. 420.12 crore and 43 PSUs incurred loss of Rs. 526.84 crore. The major contributors to profit were Kerala State Electricity Board (Rs. 217.42 crore), Kerala State Beverages (Manufacturing & Marketing)  Corporation Limited (Rs. 41.93 crore), Malabar Cements Limited (Rs. 28.20 crore) and The Plantation Corporation of Kerala Limited (Rs. 20.78 crore). The heavy losses were incurred by Kerala State Road Transport Corporation (Rs. 191.90 crore), The Kerala State Cashew Development Corporation Limited (Rs. 125.41 crore), Kerala Financial Corporation (Rs. 76.36 crore) and The Kerala State Civil Supplies Corporation Limited (Rs. 36.06 crore).

Audit noticed various deficiencies in the functioning of PSUs. A review of three years Audit Reports of CAG shows that the State PSUs losses of Rs. 589 crore and infructuous investments of Rs. 31.98 crore were controllable with better management. Thus, there is tremendous scope to improve the functioning and enhance profits. The PSUs can discharge their role efficiently only if they are financially self-reliant. There is a need for greater professionalism and accountability in the functioning of PSUs.

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