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The Comptroller and Auditor General’s Compliance Commercial Audit report on General Purpose Financial Reports of Central Public Sector Enterprises (CPSEs) has found that 188 government companies and corporations had an accumulated loss of ₹1,74,596 crore as on March 31, 2020.
Of these, the net worth of 90 companies had been completely eroded, the audit said. “As a result, the aggregate net worth of these companies had become negative to the extent of ₹1,15,829 crore as on March 31, 2020. Only 13 of these companies earned profit of ₹1,713 crore during 2019-20,” the report said.
Dividend declaration
The CAG audited 697 CPSEs, including 488 government companies, 203 government-controlled other companies, and six statutory corporations. The report said government companies and corporations declared a dividend of ₹73,487 crore during 2019-20. “Out of this, the dividend received/receivable by the Centre amounted to ₹34,944 crore which represented 7.72 per cent return on the total investment(₹4,52,908 crore),” the report said. Thirteen oil and gas companies contributed ₹26,349 crore, representing 35.86 per cent of the total dividend. “Non-compliance with directive of Government of India on declaration of dividend by 49 CPSEs resulted in a shortfall of ₹11,488 crore,” it said.
Declining ROI
The consolidated Return on Investment (Average Annual Rate) of these 54 CPSEs was 178.21 per cent during 2017-18, and it reduced to 156.06 per cent in 2018-19 and 119.64 per cent in 2019-20. “Similarly, ROI (compound annual growth rate) reduced from 21.46 per cent in 2017-18 to 17.45 per cent in 2019-20. Consolidated ROI (Annual Average Rate) indicated a continuous declining trend since 2007-08 from 476 per cent to 120 per cent in 2019-20,” the report said. The performance of 36 listed CPSEs was compared with private companies with similar nature of business during the last five years on five parameters. “It was observed that ROE, ROCE, EPS, P/E ratio and ICR was on the lower side in 16, 17, 29, 28 and 17 CPSEs respectively, in comparison to private companies in same sector,” the report said.
The audit recommended the Centre to take steps to finalise issuing duplicate shares and dematerialisation of shares, towards monetisation of enemy shares within a specified time frame. It asked the Ministry of Corporate Affairs to issue clarification to CPSEs for following uniform practice in calculating the net profit under Section 198 of the Companies Act, 2013 for determining CSR allocation.
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