Report of the Comptroller and Auditor General of India on Public Sector Undertakings
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Report of the Comptroller and Auditor General of India on Public Sector Undertakings for the year ended March 2012 Government of Andhra Pradesh Report No. 2 of 2013 TABLE OF CONTENTS Reference to SUBJECT Paragraph(s) Page(s) Preface … v Overview … vii-xiv Chapter I OVERVIEW OF STATE PUBLIC SECTOR UNDERTAKINGS Introduction 1.1 1 Audit Mandate 1.2 1-2 Investment in State PSUs 1.3 2-4 Budgetary outgo, grants/ subsidies, guarantees, loans and 1.4 4-6 outstanding dues from Government of Andhra Pradesh Reconciliation with Finance Accounts 1.5 6-7 Arrears in finalization of Annual Accounts 1.6 7-8 Performance of PSUs 1.7 8-10 Internal Audit and Internal Control System 1.8 10 Comments of the CAG of India and Statutory Auditors on 1.9 10-12 Accounts of PSUs Placement of SARs 1.10 12 Follow up action on Audit Reports (Commercial) 1.11 12-14 Chapter II PERFORMANCE AUDIT RELATING TO STATUTORY CORPORATION Andhra Pradesh State Financial Corporation 2.1-2.5 17-40 Chapter III THEMATIC AUDIT Land allotments by Andhra Pradesh Industrial Infrastructure 3.1-3.10 43-80 Corporation Limited Chapter IV COMPLIANCE AUDIT OBSERVATIONS GOVERNMENT COMPANIES Andhra Pradesh Industrial Infrastructure Corporation Limited Irregularities in construction of Corporate Office building 4.1 83-84 Undue benefit to the allottees 4.2 85-87 Andhra Pradesh Gas Infrastructure Corporation Limited Unfruitful expenditure 4.3 87-89 i TABLE OF CONTENTS Reference to SUBJECT Paragraph(s) Page(s) Krishnapatnam International Leather Complex Private Limited Abnormal delay in implementation of International Leather 4.4 89-90 Complex project Indira Gandhi Centre for Advanced Research on Livestock Private Limited Unfruitful expenditure 4.5 91-93 STATUTORY CORPORATION Andhra Pradesh State Road Transport Corporation Deficiencies in regulation of pay & allowances and related expenditure 4.6 94-105 ANNEXURES 1.1-4.1 109-173 GLOSSARY 174-176 ii List of Annexures Annexure Subject Page(s) No. Statement showing particulars of up to-date capital, loans 1.1 outstanding and manpower as on 31.3.2012 in respect of 109-117 Government Companies and Statutory Corporations Statement showing summarized financial results of Government 1.2 Companies and Statutory Corporations which have finalised their 118-121 accounts for 2011-12 Statement showing summarized financial results of Government 1.3 Companies and Statutory Corporations whose accounts for 122-127 2011-12 are in arrears Statement showing grants and subsidy received/receivable, guarantees received, waiver of dues, loans written off and loans 1.4 128-132 converted into equity during the year and guarantee commitment at the end of March 2012 Statement showing investments made by State Government in 1.5 133-138 PSUs whose accounts are in arrears Statement showing the financial position of Statutory 1.6 139-140 Corporations who have finalised accounts for the year 2011-12 Statement showing the financial position of Statutory Corporation 1.7 141 whose accounts for the year 2011-12 are in arrears Statement showing the working results of Statutory Corporations 1.8 142-143 who have finalised accounts for the year 2011-12 Statement showing the working results of Statutory Corporations 1.9 144 whose accounts for the year 2011-12 are in arrears Statement showing reviews/paragraphs for which explanatory 1.10 145 notes were not received (as on 30 September 2012) Statement showing department-wise break-up of outstanding 1.11 146 Inspection Reports (IRs) Statement showing the department-wise reviews and draft 1.12 147 paragraphs to which replies are awaited Statement showing the financial position and working results of 2.1 148-149 APSFC for the five years from 2007-08 to 2011-12 Statement showing gist of the main audit findings included in 3.1 150-154 recent CAG’s Audit Reports on APIIC iii List of Annexures Annexure Subject Page(s) No. Statement showing the extent of land allotted and number of 3.2 155 allotments checked by Audit in the Thematic Audit (2006-12) Statement showing allottees to whom allotments were made at 3.3 156-160 rates less than those recommended by Price Fixation Committee Statement showing the loss incurred due to non-fixation of cost of 3.4 161 land by Price Fixation Committee Statement showing the loss incurred due to non-charging cost of 3.5 162 Government land at par with Patta land Statement showing the loss incurred due to non-levy of 3.6 163-164 Commercial Rate Statement showing cases relating to Frontage charges up to the 3.7 165-166 limit of 20,000 sq. m. Statement showing the loss incurred due to non-levy/ short levy 3.8 167-169 of Service Charges and Process Fee 3.9 Statement showing non-levy and non-recovery of penal interest 170-171 Statement showing chronology of events relating to establishment 4.1 172-173 of IGCARL iv Preface Government Public Sector Undertakings, the accounts of which are subject to audit by the Comptroller and Auditor General of India (CAG), fall under the following categories; (i) Government Companies, and (ii) Statutory Corporations. 2. The Report deals with the results of audit of Government Companies and Statutory Corporations and has been prepared for submission to the Government of Andhra Pradesh under Section 19A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 as amended from time to time. 3. Audit of accounts of Government Companies is conducted by the CAG under the provision of Section 619 of the Companies Act, 1956. 4. In respect of Andhra Pradesh State Road Transport Corporation which is a statutory corporation, CAG is the sole auditor. As per ‘The State Financial Corporation (Amendment) Act, 2000, the CAG has the right to conduct the audit of accounts of Andhra Pradesh State Financial Corporation in addition to the audit conducted by Chartered Accountants appointed by the Corporation out of the panel of auditors approved by the Reserve Bank of India. In respect of Andhra Pradesh State Warehousing Corporation, CAG has the right to conduct the audit of accounts in addition to the audit conducted by the Chartered Accountant appointed by the State Government in consultation with the CAG. The Audit Reports on the annual accounts of all these corporations are forwarded separately to the State Government. 5. This Report contains a Performance Audit of the Andhra Pradesh State Financial Corporation (Chapter - 2), a Thematic Audit of land allotments by the Andhra Pradesh Industrial Infrastructure Corporation Limited (Chapter - 3), and other Compliance Audit observations (Chapter - 4). 6. The cases mentioned in this Report are those which came to notice in the course of audit during the year 2011-12 as well as those which came to notice in earlier years but were not dealt with in the previous Reports. Matters relating to the period subsequent to 31 March 2012 have also been included, wherever necessary. 7. Audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. v OVERVIEW 1. Overview of State Public Sector Undertakings The State Public Sector Undertakings (PSUs), consisting of State Government Companies and Statutory Corporations, are established to carry out activities of a commercial nature, while keeping in view the welfare of the people. Audit of Government Companies is governed by Section 619 of the Companies Act, 1956. The accounts of the State Government Companies are audited by Statutory Auditors, who are appointed by CAG as per the provisions of Section 619(2) of the Companies Act, 1956. These accounts are also subject to supplementary audit conducted by CAG, as per the provisions of Section 619 of the Companies Act, 1956. Audit of Statutory Corporations is governed by their respective legislations. • As on 31 March 2012, the State of Andhra Pradesh had 50 working PSUs (47 companies and three Statutory Corporations) and 24 non-working PSUs (all companies). As of the same date, the investment (capital and long-term loans) in these 74 PSUs was ` 57,982.25 crore. This investment has grown by 74.37 per cent from 2006-07 to 2011-12. The thrust of the investment was mainly in the power sector. • During 2011-12, the total outgo from the budget of the Government of Andhra Pradesh (GoAP) was ` 10,027.27 crore, of which equity capital outgo was ` 46.67 crore, loans outgo ` 3,035.07 and grants/ subsidies ` 6,945.53 crore. Notwithstanding this budgetary outgo, there was a total outstanding receivable amount from GoAP of ` 13,129.00 crore as of March 2012 towards subsidy for high cost power in respect of the four power distribution companies. • There was a difference of ` 2,953.92 crore in equity, ` 2,563.87 crore in loans and ` 4,842.94 crore in guarantees as per the Finance Accounts and the records of PSUs, which needs to be reconciled. • Out of 50 working PSUs, only 22 PSUs had finalized their annual accounts for 2011-12. The total number of annual accounts in arrears was 78, with arrears ranging from one to seven years. • Out of the 22 PSUs that had finalized their accounts for 2011-12, 16 PSUs earned an aggregate profit of ` 1,224.32 crore, while 4 PSUs incurred a loss of ` 586.34 crore. The main profit earning PSUs were Andhra Pradesh Power Generation Corporation Limited ( ` 401.52 crore), The Singareni Collieries Company Limited ( ` 358.27 crore) and Transmission Corporation of Andhra Pradesh Limited ( ` 308.46 crore). The main loss incurring PSU was Andhra Pradesh State Road Transport Corporation (` 585.31 crore). vii • Reports of Statutory Auditors on internal control of the companies indicated several weak areas.