54 out of 107 functional PSUs earning profits: CAG

Karnataka has 37 public sector undertakings (PSUs) that incurred losses to the tune of Rs 6,103.96 crore for the fiscal ending March 2020. This was more than twice the profit earned by 54 other enterprises, according to a report of the Comptroller & Auditor General (CAG).

The 54 PSUs earned a profit of Rs 2,729.91 crore as per their latest finalised accounts, as of December 2020, said the CAG’s compliance audit report, tabled in the Legislative Assembly, on Tuesday.

Karnataka has 120 PSUs employing 2.04 lakh employees. Of them, 107 PSUs are working and 13 are not functional.

The major contributors to the profit were KPCL (Rs 1,209.56 crore) and KRIDL (Rs 293.94 crore). Significant losses were incurred by RPCL (Rs 2,084.95 crore) and GESCOM (Rs 987.59 crore), the report said.

“The working PSUs registered a turnover of Rs 74,922.04 crore as per their latest finalised accounts as of December 2020. This turnover was equal to 4.60% of the GDP for 2019-20,” the report said.

However, between 2015-16 and 2019-20, the working PSUs incurred a net aggregate loss of Rs 3,374.05 crore, the audit found.

“As on 31 March 2020, 13 PSUs having an investment of Rs 670.18 crore were non-working for the last 17 years. This was a critical area as the investments in non-working PSUs do not contribute to the economic growth of the state,” the report said.

The non-working PSUs include Bangalore Suburban Rail Company Ltd, Karnataka Agro Industries Corporation Ltd, Mysore Tobacco Company Ltd, Mysore Cosmetics Ltd, Karnataka Telecom Ltd among others.

“The state government made net investment of Rs 10,097.32 crore in 18 out of 45 PSUs during the years, for which accounts were not finalised. In the absence of finalisation of accounts and their subsequent audit, it could not be ensured whether the investments and expenditure incurred were properly accounted for and the purpose for which the amount was invested was achieved or not,” the report said.

Irregular funds to startups

The CAG found that the release of Rs 6.51 crore to 28 startups by the Karnataka Innovation Technology Society (KITS) under the Idea2PoC initiative was “irregular” as KPMG, the implementing partner, did not make available evaluation reports.

Further, under the Grand Challenge initiative, the KITS incurred an expenditure of Rs 4.13 crore that “did not yield the intended results”. That is because the programme was “practically abandoned” after a pilot and none of the innovative solutions were scaled up for adoption by the host department, the audit found.