Report of the Comptroller and Auditor General of India on Public Sector Undertakings for the year ended 31 March 2016 GOVERNMENT OF GUJARAT (Report No. 1 of the year 2017) http://www.cag.gov.in TABLE OF CONTENTS Reference to Particulars Paragraphs Pages Preface v Overview vii-xi i Chapter – I Functioning of State Public Sector Undertakings 1 Introduction 1.1 1 Accountability Framework 1.2-1.4 2-3 Stake of Government of Gujarat 1.5 3 Investment in SPSUs 1.6-1.7 3-5 Special support and returns during the year 1.8 5-6 Reconciliation with Finance Accounts 1.9 6-7 Arrears in nalisation of accounts 1.10-1.12 7-9 Placement of Separate Audit Reports 1.13 9 Impact of non-nalisation of accounts 1.14 9-10 Performance of SPSUs as per their latest nalised accounts 1.15-1.18 10-13 Winding up of Non-Working SPSUs 1.19-1.20 13-14 Accounts Comments 1.21-1.22 14-15 Response of the Government to Audit 1.23 15-16 Follow-up action on Audit Reports 1.24-1.26 16-17 Coverage of this Report 1.27 17 Chapter – II Performance Audits relating to 2 Government Companies Dakshin Gujarat Vij Company Limited, Madhya Gujarat Vij Company Limited, Paschim Gujarat Vij Company Limited and Uttar Gujarat Vij Company Limited Implementation of Re-structured Accelerated Power Development and Reforms Programme in Gujarat 2.1 Executive Summary 19-20 Introduction 2.1.1 20-22 Scope of Audit 2.1.2 22-23 Audit Objectives 2.1.3 23 Audit Criteria 2.1.4 23 Audit Methodology 2.1.5 24 Audit Findings 2.1.6 24 i Audit Report (PSUs) for the year ended 31 March 2016 - Report No. 1 of 2017 Reference to Particulars Paragraphs Pages Planning 2.1.7 24-26 Implementation of the Scheme 2.1.8 26-32 Reduction in AT&C losses 2.1.9 32-36 Quality of service 2.1.10 36-37 Conclusion 2.1.11 38 Material Management of Power Distribution Companies 2.2 Executive Summary 39-40 Introduction 2.2.1 40-42 Organisational set-up 2.2.2 42 Scope of Audit 2.2.3 42-43 Audit Objectives 2.2.4 43 Audit Criteria 2.2.5 43 Audit Methodology 2.2.6 44 Audit Findings 2.2.7 44 Procurement of material 2.2.8-2.2.10 44-50 Inventory control, stores management and disposal of scrap 2.2.11 50-52 Conclusion 2.2.12 52 Chapter – III Compliance Audit Observations 3 Government Companies Gujarat Mineral Development Corporation Limited Sale of land below the prevailing jantri rates 3.1 53-54 Gujarat State Handloom and Handicrafts Development Corporation Limited Performance of Emporia and Training cum Procurement Centres of Gujarat 3.2 State Handloom and Handicrafts Development Corporation Limited Introduction 3.2.1 54-55 Scope of Audit 3.2.2 55-56 Audit Findings 3.2.3 56 Financial performance of the Company and 3.2.4-3.2.5 56-57 its Emporia Operational performance of the Emporia and 3.2.6-3.2.12 57-62 the e-Store Generation of employment opportunities 3.2.13-3.2.14 63-64 Conclusion 3.2.15 64 ii Table of contents Reference to Particulars Paragraphs Pages Gujarat State Petroleum Corporation Limited Expenditure for KG-21 well remained idle 3.3 64-66 Sabarmati Gas Limited Accumulation of doubtful dues for want of 3.4 66-68 prompt remedial action Statutory Corporations Gujarat State Financial Corporation Recovery Performance of Gujarat State 3.5 Financial Corporation Introduction 3.5.1 69-70 Scope of Audit 3.5.2 70 Audit Findings 3.5.3 70-71 Formulation and Implementation of OTS 3.5.4-3.5.5 71-77 schemes Adequacy of recovery efforts in respect of 3.5.6 77-83 outstanding accounts Conclusion 3.5.7 83 Gujarat Industrial Development Corporation Short recovery of allotment price 3.6 83-85 Annexures Statement showing investments made by the 1 87 State Government in PSUs whose accounts are in arrears Summarised nancial position and working 2 88-94 results of Government Companies and Statutory Corporations as per their latest nalised nancial statements/accounts Statement showing cost of projects, 3 95-97 instalments released and present status of selected R-APDRP projects Statement showing the saving by DISCOMs 4 98-100 before and after R-APDRP projects due to reduction in AT&C loss and potential saving not achieved due to non achievement of AT&C loss targets Financial performance of the Emporia of 5 101 Gujarat State Handloom and Handicrafts Development Corporation Limited iii Audit Report (PSUs) for the year ended 31 March 2016 - Report No. 1 of 2017 iv Preface This Report deals with the results of audit of 86 Government Companies and four Statutory Corporations for the year ended 31 March 2016. The accounts of 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. Reports in relation to the accounts of a Government Company or Corporation are submitted to the Government by the CAG for laying before the State Legislature of Gujarat under the provisions of Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. CAG is the sole auditor for Gujarat State Road Transport Corporation, a Statutory Corporation, and Gujarat Electricity Regulatory Commission, a regulatory body. As per the State Financial Corporations (Amendment) Act, 2000, the CAG has the right to conduct the audit of accounts of Gujarat State Financial Corporation in addition to the audit conducted by the Chartered Accountants, appointed by the Corporation from the panel of auditors approved by the Reserve Bank of India. In respect of Gujarat State Warehousing Corporation, the CAG has the right to conduct the audit of their accounts in addition to the audit conducted by the Chartered Accountants, appointed by the State Government in consultation with the CAG. Audit of Gujarat Industrial Development Corporation is entrusted to the CAG under Section 19(3) of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 and CAG is a sole Auditor. The instances mentioned in this Report are those, which came to notice in the course of test audit during the year 2015-16 as well as those which came to notice in earlier years, but could not be reported in the previous Audit Reports; matters relating to the period subsequent to 31 March 2016 have also been included, wherever necessary. The audit has been conducted in conformity with the Regulations on Audit and Accounts and the Auditing Standards issued by the Comptroller and Auditor General of India. v Audit Report (PSUs) for the year ended 31 March 2016 - Report No. 1 of 2017 vi Overview Overv iew 1 Overview on the Functioning of State Public Sector Undertakings Introduction The State Public Sector Undertakings (SPSUs) consist of State Government Companies and Statutory Corporations. The SPSUs are established to carry out the activities of commercial nature keeping in view the welfare of people and also occupy an important place in the state economy. As on 31 March 2016, in Gujarat there were 72 Working SPSUs (68 Companies and four Statutory Corporations) and 14 non-working SPSUs. The working SPSUs registered a turnover of ` 1,11,036.50 crore as per their latest nalised accounts. The turnover was equal to 11.27 per cent of State’s Gross Domestic Product for 2015-16. Accountability framework The Audit of nancial statements of a Company in respect of nancial years commencing on or after 1 April 2014 is governed by section 139 and 143 of the Companies Act, 2013. The nancial statements of Government Companies are audited by Statutory Auditors who are appointed by the CAG as per the provisions of Section 139(5) or (7) of the Act. These nancial statements are subject to supplementary audit by CAG within 60 days from the date of receipt of the audit report under the provisions of Section 143(6) of the Act. Audit of Statutory Corporations is governed by their respective legislations. Investment in SPSUs As on 31 March 2016, the investment (capital and long term loans) in 86 SPSUs was ` 1,29,178.86 crore. Out of the total investment, 99.38 per cent (` 1,28,378.33 crore) was in working SPSUs and remaining 0.62 per cent (` 800.53 crore) was in non-working SPSUs. Arrears in nalisation of Accounts Thirty six working SPSUs had arrears of 64 accounts as on 30 September 2016. The extent of arrears ranged from one to six years. Performance of SPSUs During the year 2015-16, as per their latest nalised accounts, out of 72 working SPSUs, 49 SPSUs earned prot of ` 2,854.27 crore and 14 SPSUs incurred loss of ` 1,221.15 crore. The major contributors to the prot were Gujarat State Petronet limited (` 667.86 crore), Gujarat Gas Limited (` 252.25 crore), Gujarat Mineral Development Corporation Limited (` 336.63 crore) and Gujarat Energy Transmission Corporation Limited (` 302.79 crore). Major loss making SPSUs were Gujarat State Petroleum Corporation Limited (` 875.00 crore), Gujarat State Road Transport Corporation (` 132.45 crore), Gujarat State Financial vii Audit Report (PSUs) for the year ended 31 March 2016 - Report No.