The CAG report for the period ending March 31, 2009, has observed that the Kerala Government should introduce a performance-based system of accountability for public sector undertakings (PSUs).
The State PSUs have not been functioning efficiently and there is tremendous scope for improvement in their overall performance.
They need to imbibe a greater degree of professionalism to ensure delivery of their products and services efficiently and profitably, the report noted.
The losses of PSUs are mainly attributable to deficiencies in financial management, planning, implementation of projects, running of operations and monitoring.
A review of the latest audit reports shows that the State PSUs incurred losses of Rs 589 crore and infructuous investment of Rs 31.98 crore which where controllable with better management.
During 2008-09, the Government had guaranteed loans aggregating Rs 2,593.10 crore obtained by eight working Government companies and three statutory corporations.
At the end of the year, guarantees of Rs 3,398.65 crore against 22 working Government companies and four statutory corporations were outstanding.
According to the provisions of the Kerala Ceiling on Government Guarantee Act 2003, the Government shall guarantee only loan taken by the PSUs. The guarantee commission payable shall not be less than 0.75 per cent and payable on the actual balance, outstanding interest/penal interest etc as on March 31 of the previous year.
The guarantee commission paid/payable to the Government by Government companies and statutory corporations during 2008-09 was Rs 42.65 crore out of which Rs 24.44 crore had been paid and a balance of Rs 21.81 crore was outstanding on March 31, 2009.
During the year, out of the 95 working PSUs, 46 earned a profit of Rs 420.12 crore and 43 incurred a loss of Rs 526.84 crore as per their latest finalised accounts while two had neither a profit nor loss. The rest four had not commenced commercial activities.
The major contributors to profit were Kerala State Electricity Board (Rs 217.42 crore); Kerala State Beverages Corporation (Rs 41.93 crore); Malabar Cements (Rs 28.20 crore); and The Plantation Corporation of Kerala (Rs 20.78 crore).