CAG reveals severe lapses in state firms

Giving an insight into the level of mismanagement, the CAG said many of these companies have not even finalised the accounts in the last several years. MaharashtraState Housing Corporation, for instance, finalised its accounts last in 1993-94. Since then nothing is known about its accounts.

Overseas Employment and Export Promotion Corporation of Maharashtra last finalised its accounts in 1990-91, Maharashtra Rural Development Corporation in 1993-94 and Konkan Sea Foods 1993-94. Development Corporation of Konkan Ltd , started in December 1990 to promote industrial development of the Konkan region, has not finalised accounts for four financial years from 1993-94.

As per the Companies Act, all registered companies have to finalise their accounts every year, approve it in the annual general meeting and send a copy of the balance sheet to the Registrar of Companies.

The major loss-making companies are (losses in brackets): Maharashtra State Textile Corporation (Rs 119.03 crore), Irrigation Development Corporation of Maharashtra (Rs 20.28 crore), Maharashtra State Farming Corpn (Rs 16.55 crore), Textile Corpn of Maharashtra (Rs 59.23 crore), Maharashtra HandloomCorporation (Rs 18.42 crore) and Maharshtra Land Development Corporation (Rs 15.41 crore).

The CAG has also revealed severe lapses on the part of these companies. It has said in the case of six companies — Maharashtra Mendhi Va Sehli Vikas Mahamandal, Maharshtra State Farming Corpn, Haffkeine Bio-pharmaceuticals, Pratap Spinning, Weaving and Manufacturing Company and Krupanidhi Ltd — the property and asset register was either incomplete or not reconciled.

It said two companies — Haffkeine Pharmaceuticals and Krupanidhi Ltd — have not prepared manual of accounts. In the case of five companies — Haffkeine Ajintha Pharmaceuticals, CIDCO, Meltron Instrumentation, Maharashtra Small Scale Industries Development Corpn and Abhijat Samaydarshika Maharashtra Ltd — the system of internal audit was either inadequate or not carried out. The CAG has detected deviation in accounting policies in CIDCO.

Six companies — Maharashtra State Farming Corporation, Vidharbha Quality Seeds Ltd, Meltron InstrumentationLtd, Abhijat Samayadarshika Maharashtra Ltd, Maharashtra Small Scale Industries Development Corporation Ltd and Maharashtra Film, Stage and Cultural Development Corporation — have not done the reconciliation and confirmation of debtors balance. Seven companies including CIDCO, Maharashtra Electronics Corporation, Meltron Instrumention, Vidharbha Tanneries, Kalameshwar Textile Mills, Maharashtra State Textile Corporation and Maharashtra State Powerlooms Corporation have inadequate control on store/stock levels, valuation of WIP and obsolete stores.

Meltron Instrumentation also lacked proper system of costing. Non-reconciliation of inter-office accounts and bank accounts is noticed in Haffkeine Ajintha Pharmaceuticals, Maharastra Small Industries Development Corpn and Maharashtra State Powerlooms Corpn. In the case of Maharashtra Electronics Corpn, loss in value of investments is not accounted.

As on March 31, 1997, there were 57 Maharashtra government companies including 23 subsidiaries with totalinvestment of Rs 1747.16 crore. While the total equity of these companies is Rs 312.88 crore, the long-term loans taken by them is a whopping Rs 1,434.28 crore. The CAG audit covered 48 working companies, seven defunct companies and two companies under liquidation. Of the 48 working companies, six textile units have been referred to the BIFR. The state government has also given guarantees for the loans taken by these sick companies to the tune of Rs 649.67 crore.

"Despite regular persuance by audit and letter from the CAG to the state chief minister in March 1997, no improvement in reduction of arrears in finalisation of these government run companies has occurred," says the report. The administrative departments have to ensure the accounts are finalised and adopted by the companies in the AGM within the time schedule prescribed in the Companies Act.