Report of the Comptroller and Auditor General of India on Public Sector Undertakings for the year ended March 2015 Government of Tamil Nadu Report No.4 of 2016 TABLE OF CONTENTS Particulars Reference to Paragraph Page Preface vii Overview ix-xiv CHAPTER-I Functioning of State Public Sector Undertakings Introduction 1.1 1 Accountability frame work 1.2 - 1.4 2-3 Stake of Government of Tamil Nadu 1.5 3 Investment in State PSUs 1.6 - 1.7 3-5 Special support and returns during the year 1.8 5-7 Reconciliation with Finance Accounts 1.9 7 Arrears in finalisation of accounts 1.10 - 1.12 7-9 Impact of non-finalisation of accounts 1.13 9 Performance of PSUs as per their latest finalised 1.14 - 1.17 9-12 accounts Winding up of non-working PSUs 1.18 - 1.19 12-13 Accounts comments 1.20 - 1.21 13-14 Response of the Government to Audit 1.22 14 Follow-up action on Audit Reports 1.23 - 1.25 14-16 Coverage of this Report 1.26 16 Disinvestment, Restructuring and Privatisation of 1.27 - 1.28 16-17 PSUs and any reforms in power sector CHAPTER-II Performance Audit relating to Government Companies Performance Audit on Tamil Nadu Sugar 2.1 21 Corporation Limited and Perambalur Sugar Mills Limited Executive Summary 21-22 Introduction 2.1.1 - 2.1.2 22 Scope and methodology of Audit 2.1.3 23 Audit objectives 2.1.4 23 Audit criteria 2.1.5 23-24 i Audit Report (Public Sector Undertakings) for the year ended 31 March 2015 Particulars Reference to Paragraph Page Acknowledgement 24 Audit findings 2.1.6 – 2.1.33 24-38 Financial position and working results 2.1.7 24 Planning for availability of sugarcane 2.1.8 – 2.1.12 24-27 Sugarcane procurement 2.1.13 – 2.1.16 27-29 Production performance 2.1.17– 2.1.29 29-36 Other points of interest 2.1.30 36-37 Monitoring and internal control 2.1.31 - 2.1.33 37-38 Conclusion 38 Recommendations 38 Performance Audit on Procurement of Wind 2.2 41 Energy by Tamil Nadu Generation and Distribution Corporation Limited Executive Summary 41-42 Introduction 2.2.1 42-43 Development of wind power in the State 2.2.2 43-44 Scope and methodology of Audit 2.2.3 44 Audit objectives 2.2.4 45 Audit criteria 2.2.5 45 Acknowledgement 45 Audit findings 2.2.6 – 2.2.30 45-60 Planning 2.2.7 – 2.2.10 45-49 Procurement of wind energy 2.2.11 – 2.2.18 49-53 Execution of transmission schemes for wind energy 2.2.19 53-55 Wheeling of wind energy 2.2.20 – 2.2.29 55-59 Monitoring and internal control 2.2.30 59-60 Conclusion 60-61 Recommendation 61 ii Table of contents Particulars Reference to Paragraph Page CHAPTER-III Performance Audit relating to Statutory Corporation Performance Audit on Construction, operation 3 and maintenance of storage facilities by Tamil Nadu Warehousing Corporation Executive summary 65 Introduction 3.1 66 Organisational set-up 3.2 66 Audit objectives 3.3 66 Audit criteria 3.4 67 Scope and methodology of Audit 3.5 67 Acknowledgement 67 Audit findings 3.6 – 3.18 68-89 Augmentation of storage capacity 3.6 – 3.6.3 68-69 Construction of godowns 3.7 – 3.7.4 69-73 Utilisation of storage capacity 3.8 73-75 Scientific storage 3.9 -3.9.3 75-78 Warehousing charges 3.10-3.10.3 78-81 Operation and maintenance of Warehouses 3.11 – 3.11.3 81-84 Fire safety in warehouses 3.12-3.13 84-86 Manpower planning 3.14 86-87 Other points of interest 3.15 88 Monitoring and internal control 3.16 – 3.18 88-89 Conclusion 89 Recommendations 90 CHAPTER-IV Compliance Audit Observations 4 Delay in settlement of accident compensation by 4.1-4.1.10 93-98 State Transport Undertakings Pallavan Transport Consultancy Services Limited Improper contract management 4.2 98-100 iii Audit Report (Public Sector Undertakings) for the year ended 31 March 2015 Particulars Reference to Paragraph Page Electronics Corporation of Tamil Nadu Limited Loss of interest 4.3 100-101 Tamil Nadu Transport Development Finance Corporation Limited Avoidable loss 4.4 101-102 Tamil Nadu Tourism Development Corporation Limited Infructuous expenditure 4.5 102-103 Poompuhar Shipping Corporation Limited Avoidable penal interest 4.6 104 Tamil Nadu Minerals Limited Wasteful expenditure 4.7 105-106 Tidel Park Limited Unintended benefit 4.8 106-107 Tamil Nadu Generation and Distribution Corporation Limited Wasteful expenditure 4.9 107-108 Avoidable delay 4.10 108-109 Loss of revenue 4.11 110-111 ANNEXURES 1. Statement showing investments made by 1.11 115 State Government in PSUs, whose accounts are in arrears 2. Summarised financial position and working 1.14 116-123 results of Government Companies and Statutory Corporation as per their latest finalised financial statements/accounts 3. Statement showing financial position of 2.1.7 124 TASCO and PSM 4. Statement showing working results of 2.1.7 125 TASCO and PSM 5. Statement showing details of the target area 2.1.9 126 fixed vis-a-vis, area actually registered 6. Statement showing shortfall in procurement 2.1.13 127 of sugarcane in TASCO and PSM iv Table of contents Particulars Reference to Paragraph Page 7. Statement showing fall in sugar recovery rate 2.1.19 128 of TASCO and PSM 8. Statement showing excess consumption of 2.1.23 129 steam in TASCO and PSM 9. Statement showing excess consumption of 2.1.24 130 bagasse 10. Statement indicating non-fulfillment of 2.2.27 131-133 captive norms and the resultant loss of revenue 11. Financial position and working results of 3.1 134-135 Tamil Nadu Warehousing Corporation 12. Non-levy of liquidated damages for delay in 3.7.2 136 completion of works 13. Extra expenditure due to delay in finalisation 3.7.3 137 of tenders 14. Loss of storage charges due to actual 3.7.4 138 utilisation basis under PEG scheme 2008 (Phase-I) 15. Statement showing depositor-wise details of 3.8.1 139 occupancy out of total occupancy for the period 2010-15 16. Statement of dunnage material available in 3.9.1 140 sampled warehouses during 2010-15 17. Loss of revenue due to non-revision of tariff 3.10 141 18. Storage charges pending collection as on 3.10.3 142 31 March 2015 19. Statement showing age-wise analysis of the 4.1.4 143 pending accident claims as of March 2015 20. Statement showing drawal and disbursement 4.1.5 144 of fund from the Government and STUs for settlement of accident compensation 21. Statement showing penalty for non-supply of 4.2 145 ETMs 22. Statement showing interest for delayed 4.3 146 payment of upfront lease rent 23. Statement showing loss of interest for non- 4.3 147 recovery of development charges 24. Statement showing loss of lease rent 4.8 148 Glossary of Abbreviations 149-151 v PREFACE This report deals with the results of audit of Government Companies and Statutory Corporation for the year ended March 2015. The accounts of the Government Companies (including Companies deemed to be Government Companies as per the provisions of the Companies Act) are audited by the Comptroller and Auditor General of India (CAG) under the provisions of Section 619 of the Companies Act, 1956 and Section 139 and 143 of the Companies Act, 2013. The accounts certified by the Statutory Auditors (Chartered Accountants) appointed by the CAG under the Companies Act are subject to supplementary audit by officers of the CAG and the CAG gives his comments or supplements the reports of the Statutory Auditors. In addition, these Companies are also subject to test audit by the CAG. Reports in relation to the accounts of a Government Company or Corporation are submitted to the Government by CAG for laying before State Legislature of Tamil Nadu under the provisions of Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. In respect of Tamil Nadu Electricity Regulatory Commission, the CAG is the sole auditor. The Audit Report on the annual accounts of Tamil Nadu Electricity Regulatory Commission is forwarded separately to the State Government. The instances mentioned in this Report are those, which came to notice in the course of test audit for the period 2014-15 as well as those which came to notice in earlier years, but could not be reported in the previous reports; matters relating to the period subsequent to 2014-15 have also been included, wherever necessary. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. vii OVERVIEW 1 Overview of Government companies and Statutory Corporations Audit of Government companies is governed by Section 139 and 143 of the Companies Act, 2013. The accounts of Government companies are audited by Statutory Auditors appointed by the CAG. These accounts are also subject to supplementary audit conducted by the CAG. Audit of Statutory Corporations is governed by their respective legislations. As on 31 March 2015, the State of Tamil Nadu had 65 working PSUs (64 companies and one Statutory Corporation) and seven non-working PSUs (all companies), which employed 2.88 lakh employees. The State PSUs registered a turnover of ` 87,083.36 crore as per their latest finalised accounts.