Out Of 42 PSEs In J&K, 26 Reported Losses Or Inactive As Of March 31, 2023: CAG

The Comptroller and Auditor General (CAG) has noted that six of the 42 PSEs in Jammu & Kashmir under its audit jurisdiction were inactive as of March 31, 2023 while 20 enterprises reported losses and 14 had their net worth completely eroded by accumulated losses.

According to the CAG's Composite Audit Report for the period ended March 2023, the 42 PSEs comprised 39 government companies, two statutory corporations and one government-controlled other company.

The six inactive companies included four under liquidation, with the government and others having an investment of Rs 58.40 crore in them, comprising Rs 57.57 crore in capital and Rs 0.83 crore in long-term loans, according to the CAG report, which was tabled in the J&K assembly recently.

The CAG report said the government may take an early decision to wind up the inactive PSEs as they were not contributing to economic growth.

The report said the turnover of J&K PSEs increased from Rs 10,590.68 crore in 2020-21 to Rs 12,084.74 crore in 2022-23. However, their contribution to the gross state domestic product (GSDP) declined to 5.30 per cent from 6.32 per cent during the period, it added.

Jammu and Kashmir Bank Ltd was the largest contributor to PSE turnover in 2022-23 at Rs 9,355.11 crore, followed by Jammu and Kashmir Power Development Corporation Ltd at Rs 1,037.85 crore and Jammu and Kashmir Small Scale Industries Development Corporation Ltd at Rs 629.36 crore, it said.

The CAG said the total investment in the 42 PSEs stood at Rs 38,516.67 crore, of which Rs 29,879.63 crore, or 77.58 per cent, was in the power sector.

The government of J&K's total investment stood at Rs 5,536.96 crore, including Rs 3,703.02 crore in equity and Rs 1,833.94 crore in long-term loans. Of this, Rs 2,593.54 crore, or 46.84 per cent, was invested in power sector PSEs, it added.

The report said the UT government provided total budgetary support of Rs 2,169.73 crore to PSEs in 2022-23, comprising Rs 151.20 crore in equity capital, Rs 23.05 crore in loans and Rs 1,995.48 crore in grants and subsidies.

"Outstanding guarantee commitments rose sharply to Rs 25,086.73 crore at the end of 2022-23 from Rs 12,522.72 crore a year earlier", it said.

The major outstanding guarantee commitments included Rs 21,613.62 crore in respect of Jammu and Kashmir Power Corporation Ltd, Rs 2,297.90 crore for Jammu and Kashmir Infrastructure Development Finance Corporation and Rs 899.99 crore for Jammu and Kashmir Power Development Corporation Ltd, it said.

The CAG also pointed to discrepancies between the Finance Accounts and records maintained by PSEs. "As of March 31, 2023, the difference in outstanding loans was Rs 1,104.74 crore, with the finance accounts showing Rs 891.74 crore against Rs 1,996.48 crore in PSE records."

Major differences were reported in Jammu and Kashmir Power Development Corporation (Rs 646.85 crore), Jammu and Kashmir Minerals Limited (Rs 167.92 crore) and Jammu and Kashmir Road Transport Corporation (Rs 302.09 crore), it added.

The audit recommended that the UT government and PSEs concerned reconcile the differences in a time-bound manner.

The report said long-term loans of PSEs increased from Rs 12,290.18 crore in 2020-21 to Rs 30,709.73 crore in 2022-23, mainly due to increased borrowings by Jammu and Kashmir Power Corporation Ltd and other power-sector entities, it said.

"As of March 31, 2023, interest amounting to Rs 3,126.84 crore was outstanding on long-term loans provided by the J&K government to nine PSEs. Of this, Rs 2,742.79 crore related to interest outstanding for more than three years".

On profitability, the CAG said 11 PSEs reported profits in their latest available financial statements, with aggregate profit rising to Rs 1,286.79 crore in 2022-23 from Rs 566.10 crore in 2021-22. Jammu and Kashmir Bank contributed Rs 1,197.38 crore, accounting for 93.05 per cent of the total reported profit.

However, the audit noted that only three of the 11 profit-making PSEs had accounts for 2022-23, while the remaining eight had accounts pertaining to earlier financial years, some dating back to 2013-14, 2015-16, and 2016-17.

On the other hand, 20 PSEs reported losses totalling Rs 252.53 crore in their latest finalised accounts for 2022-23, up from Rs 186.28 crore in 2021-22, the CAG report said.

The Jammu and Kashmir State Road Transport Corporation recorded the highest loss at Rs 117.62 crore, followed by J&K Cements Ltd at Rs 25.46 crore, J&K State Industrial Development Corporation at Rs 20.54 crore and J&K Minerals Ltd at Rs 18.08 crore.

The CAG said 19 PSEs had accumulated losses of Rs 4,241.34 crore as of March 31, 2023. "The net worth of 14 of these enterprises had been completely eroded, with their combined negative net worth standing at Rs 3,699.38 crore against an equity investment of Rs 537.12 crore".

The 14 PSEs had total income of Rs 728.19 crore against expenditure of Rs 976.93 crore, resulting in a gap of Rs 248.74 crore, while their total borrowings stood at Rs 2,560.26 crore, it said.

The audit concluded that six of the 42 PSEs were inactive, while 36 were active, 11 reported profits and 20 reported losses. It also noted that only one PSE, J&K Bank, had declared or paid a dividend.

The CAG recommended that the UT government initiate liquidation of inactive PSEs and take remedial measures to improve the performance of loss-making enterprises.