Compliance Financial Performance
Kerala

Report No. 3 of 2016 - Public Sector Undertakings, Government of Kerala

Date on which Report Tabled:
Tue 28 Jun, 2016
Date of sending the report to Government
Government Type
State
Sector Finance,Power & Energy,Industry and Commerce

Overview

Performance Audits 1. Raising forest plantations and implementation of ecotourism projects by Kerala Forest Development Corporation Limited KFDC (Company) is a joint undertaking of Government of India and Government of Kerala engaged in raising of forest plantations, cultivation of cash crops and ecotourism activities. Major findings: • The Company could not achieve the target fixed for replantation during 2010-11 to 2014-15. • Due to improper weeding and selection of wrong species, six plantations had failed resulting in wasteful expenditure of Rs.2.96 crore. • Due to failure of the Company to carry out intensive management, timely replanting and standard agronomic practices, there was significant shortfall in the productivity of the cash crops leading to loss of revenue amounting to Rs.45.70 crore. • Absence of safari vehicles, drinking water facilities, publicity, etc, contributed to low occupancy in the ecotourism centres. Due to delay in implementing eight projects, there was potential loss of revenue of Rs.10.72 crore. 2. Material Management by Kerala State Electricity Board Limited (KSEBL) KSEBL is engaged in generation, transmission and distribution of electricity in the State. Major Findings: • Lack of co-ordination between Corporate Planning Wing and CE, SCM resulted in short procurement of energy meters and delay in procurement of material. • Failure to assess the requirement with reference to available stock and average consumption led to shortage of material for up to nine months. • Delay in finalisation of tender and subsequent cancellation and retendering resulted in extra cost of Rs.16.32 crore in procurement of single phase meters at higher rate. • Due to delay in invitation and finalisation of fresh tender, KSEBL could not invoke price re-fixation clause which led to extra cost of Rs.2.87 crore. 3. Implementation of Restructured Accelerated Power Development and Reforms Programme by Kerala State Electricity Board Limited Government of India (GoI), Ministry of Power (MoP) approved (September 2008) ‘Restructured Accelerated Power Development and Reforms Programme’ (RAPDRP). Major Findings: • MoP sanctioned 43 projects each under Part A and Part B and three Supervisory Control and Data Acquisition (SCADA) projects for implementation in the State. The projects could not be completed within the extended scheduled completion period of five years • Erroneous price loading resulted in extra expenditure in implementation of Part A project to the extent of Rs.27 crore. • Delay in submission of DPRs and financial tie-up, delay in completion of work due to non-procurement of material, etc., constituted time overrun for more than three years and cost overrun to the extent of Rs.129 crore. • Undue delay in completion of RAPDRP projects led to non-realisation of envisaged benefit of Rs.202.70 crore by way of reduction in AT&C loss. Compliance Audit observations 1. Implementation of Greenfield Projects by five PSUs Implementation of Greenfield Projects by five PSUs was beset with poor planning and execution of projects. The DPRs were prepared without actual feasibility study. There were failures to avail of Central Government assistance and CENVAT credit. Envisaged funding was also not ensured leading to curtailment of investment in machinery and equipment. All these factors led to the Greenfield Projects clocking losses of Rs.11.59 crore in their operations. 2. Material procurement in Kerala Agro Machinery Corporation Limited The system of procurement of raw material followed by Kerala Agro Machinery Corporation Limited did not comply with the provisions of SPM and guidelines of Central Vigilance Commission (CVC). The procurement rules followed by the Company were also not approved by Government of Kerala (GoK). The non-compliance of procurement rules resulted in uneconomic and irregular procurement of material Failure of Kerala Agro Machinery Corporation Limited to ensure procurement of material at competitive rate by following mandatory provisions of Stores Purchase Manual on competitive bidding resulted in extra expenditure of Rs.61.28 crore. 3. Compliance of Public Sector Undertakings to the provisions of Income Tax Act, 1961 Non-compliance to the provisions of the Income Tax Act, 1961 by PSUs revealed instances of delay in submission of tax returns, non-payment of required amount of advance tax and consequent payment of interest, etc., to the tune of Rs.24.57 crore. 4. Kerala State Coastal Area Development Corporation Limited Avoidable payment of corporate tax Erroneous accountal of interest earned on unutilised funds pertaining to Government projects resulted in avoidable payment of corporate tax amounting to Rs.1.29 crore. 5. Malabar Cements Limited Avoidable extra expenditure Non-collection of adequate security deposit (SD) to ensure due performance of the contract coupled with non-recovery of damages resulted in avoidable extra expenditure of Rs.1.77 crore to the Company 6. Kerala State Civil Supplies Corporation Limited Avoidable committed liability The Company incurred avoidable additional liability of Rs.0.40 crore due to inordinate delay in complying with provisions of the Companies Act, 1956. 7. Kerala State Mineral Development Corporation Limited Loss of revenue Failure of Kerala State Mineral Development Corporation Limited to provide adequate security and storage for excavated sand resulted in loss of sand worth Rs.6.42 crore and consequent loss of revenue to Government. 8. Kerala State Electricity Board Limited Loss due to undue favour to cable TV operators Failure of to execute agreement by Kerala State Electricity Board Limited with Asianet and other cable TV operators resulted in loss of Rs.14.70 crore and short collection of service tax of Rs.1.75crore. 9. Kerala State Electricity Board Limited Avoidable expenditure Avoidable expenditure of Rs.68.31 lakh due to delay in surrendering railway siding by Kerala State Electricity Board Limited 10. Kerala State Electricity Board Limited Avoidable expenditure Avoidable expenditure of Rs.64.82 lakh due to delay in payment of excise duty by Kerala State Electricity Board Limited 11. Kerala State Beverages (Manufacturing & Marketing) Corporation Limited Failure of Kerala State Beverages (Manufacturing & Marketing) Corporation Limited in timely passing on the incidence of additional tax (i.e. medical cess) to consumers resulted in payment of tax Rs.2.10 crore. Besides, delay in payment of medical cess resulted in avoidable payment of interest of Rs.0.42 crore. 12. Kerala State Road Transport Corporation Kerala State Road Transport Corporation made irregular payment of performance allowance of Rs.3.24 crore in violation of Government Order.

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