Nearly 20% of SPSEs Are Defunct in Telangana, Says CAG
Many SPSEs are inactive or loss-making, and audit gaps and compliance failures raise concerns
Hyderabad: The Comptroller and Auditor General (CAG) has flagged serious concerns over the financial health and governance of State Public Sector Enterprises (SPSEs) in Telangana, revealing that 16 out of 83 entities were either defunct, under liquidation, or undergoing merger processes. The findings were presented in a report tabled in the Legislative Assembly on Monday.
According to the report, as of March 31, 2023, 83 SPSEs fell under the audit jurisdiction of the CAG, including eight in the power sector. Of these, only 67 were operational, while the rest remained inactive. Alarmingly, 49 of the working SPSEs, accounting for 73 per cent, were excluded from detailed audit coverage due to delays in submitting accounts for three or more years or failure to provide the necessary information.
The analysis of the remaining 18 SPSEs — seven in the power sector and 11 in the non-power sector—showed mixed financial performance. These enterprises recorded a combined annual turnover of Rs 95,204.74 crore, contributing 7.25 per cent to the State’s Gross State Domestic Product (GSDP) for 2022-23.
However, their financial stability appeared fragile, with total investments from the Centre, state, and other stakeholders amounting to Rs 98,572.08 crore.
Out of these 18 SPSEs, six reported profits of Rs 3,857.48 crore, while 11 incurred losses totalling Rs 11,969.66 crore, and one entity reported neither profit nor loss. The report highlighted a critical concern that the net worth of nine SPSEs had been completely eroded due to accumulated losses, resulting in a negative net worth of Rs 50,930 crore against an equity investment of about Rs 17,931 crore.
The CAG also pointed to widespread non-compliance in financial reporting, with 71 SPSEs, including inactive companies, failing to submit accounts on time. During the review period between October 2022 and September 2023, 47 accounts were finalised, of which 35 required audit comments. These observations had a financial implication of Rs 757.21 crore on profitability and Rs 31,989.68 crore on assets and liabilities.
Governance lapses were also evident, with several SPSEs failing to meet statutory requirements. Nine out of 15 eligible enterprises had not appointed Independent Directors, while some lacked the required number. No SPSE conducted separate meetings of Independent Directors, and three entities did not have a woman director during the financial year. In addition, five SPSEs did not constitute Audit Committees, and several others had deficiencies in their composition.
The report noted gaps in the appointment of key managerial personnel, irregular board meetings, the absence of vigilance mechanisms in some entities, and the failure to appoint internal auditors in two SPSEs.
The CAG recommended that the state government review loss-making enterprises, ensure the timely finalisation of accounts, and take appropriate decisions regarding the revival or closure of inactive companies to improve overall performance and accountability.
