A recent audit report of the Comptroller and Auditor General (CAG) on Telangana’s State Public Sector Undertakings (SPSUs) has revealed a concerning financial situation, with many SPSUs reporting significant losses and a negative net worth for the year ended March 31, 2023.
The report, tabled in the Telangana Assembly on Friday, calls for the urgent need for reforms within these State-run enterprises to improve their performance.
Of the 83 SPSUs in Telangana, only 18 working SPSUs furnished their accounts for scrutiny. These 18 SPSUs collectively contributed 7.25 per cent to Telangana’s Gross State Domestic Product (GSDP) during 2022-23, with a total turnover of ₹95,204.74 crore. However, only six of these SPSUs reported profits, amounting to ₹3,857.48 crore, while 11 SPSUs incurred substantial losses totaling ₹11,969.66 crore.
Three SPSUs in the power sector accounted for 98.76 per cent of the total profits, while another three SPSUs, including two power distribution companies (DISCOMs), were responsible for 99.41 per cent of the losses.
Accumulated losses
The accumulated losses of 10 SPSUs have reached a staggering ₹68,856.49 crore. As on March 31, 2023, the accumulated losses of 18 SPSUs were at ₹53,542.07 crore. As a result of losses, the combined net worth of 18 SPSUs was completely eroded and stood at ₹(-)33,005.15 crore. This indicates that the State Government’s investments in these SPSUs have been entirely wiped out.
The CAG report flags the issue of outstanding dues payable by DISCOMs to various power generation companies. These dues have seen a fluctuating trend, increasing by 43.70 per cent in 2021-22 to ₹37,505.00 crore and then decreasing by 9.94 per cent in 2022-23 to ₹33,776.59 crore. Given that power purchase costs constitute a significant portion (82.89 per cent) of DISCOMs’ expenditure, these outstanding dues pose a potential risk to the State’s finances.
In light of these findings, the CAG has recommended that the Telangana Government conduct a thorough review of all loss-making SPSUs. The Government is also urged to issue instructions to administrative departments to set targets for the timely submission of accounts and strictly monitor the clearance of arrears. Additionally, the CAG suggests a review of inactive Government companies to determine whether revival or winding up is appropriate.
The CAG report underscores the urgent need for comprehensive reforms within Telangana’s SPSUs to ensure their financial sustainability and effective contribution to the State’s economic development.