CAG: 64 CPSEs completely eroded by accumulated loss

The list includes five listed companies with outstanding government loan

GN Bureau | May 5, 2016


#CPSE   #CAG  

The net worth of 64 central public sector enterprises (CPSEs) has been completely eroded by accumulated loss with their net worth turning out to be negative during 2014-15. This was noted in a financial audit report of the Comptroller and Auditor General (CAG) on CPSEs, reported Business Standard on May 5.

The government loans outstanding in 28 of the 64 CPSEs, as on March 31, 2015, amounted to Rs 16,221 crore. The list includes five listed companies with outstanding government loan of Rs 2,769 crore.

The 157 CPSEs audited by the CAG have accumulated losses of Rs 1,10,285 crore. Of these, 64 CPSEs witnessed capital erosion to the tune of Rs 74,000 crore during 2014-15.

The report said that while 205 CPSEs earned profits in FY15, the profit earned has reduced from the previous year. “The profit earned reduced to Rs 1,37,338 crore in 2014-15 from Rs 1,54,484 crore in 2013-14,” the report said.

It also highlighted potential sickness in some of the CPSEs with positive net worth. It said that out of the 301 CPSEs whose net worth was positive, 24 of them had a net worth of less than half their paid-up capital of Rs 14,815 crore at the end of financial year 2015.

The CAG audit also observed that nine out of 36 CPSEs were not required to issue bonus shares as their paid-up capital was less than three times their reserves. The audit, which also covered composition of the board in major CPSEs, noted that 29 companies did not have the requisite number of independent directors on their boards. Out of this, 16 firms did not have any independent director on their boards. These include Maharatna PSU Coal India Limited, Shipping Corporation, Neyveli Lignite Corporation, GAIL India, Rural Electrification and Sutlej Jal Vidyut Nigam.

The CPSEs which suffered losses of more than Rs 1,000 crore in 2014-15:

BSNL: Rs 8,234 crore
MTNL: Rs 2,833 crore
Hindustan Photofilms Mfg. company limited : Rs 2,163 crore
Mangalore Refinery and petrochemicals limited: Rs 1,712 crore
Damodar Valley Corporation: Rs 1,334 crore
 

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