REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA …agmaha.cag.gov.in/pdfReport/Comm2002-2003.pdf · 2007-08-23 · Comptroller and Auditor General of India (CAG) under the

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL

OF INDIA

FOR THE YEAR ENDED 31 MARCH 2003

COMMERCIAL

GOVERNMENT OF MAHARASHTRA

http://cagindia.org/states/maharashtra/2003

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL

OF INDIA

FOR THE YEAR ENDED 31 MARCH 2003

COMMERCIAL

GOVERNMENT OF MAHARASHTRA

i

TABLE OF CONTENTS

Particulars Reference to

Paragraph Page

Preface vi Overview vii-xii

CHAPTER – I

General view of Government companies and Statutory corporations

1 1

Introduction 1.1 1 Working Public Sector Undertakings (PSUs) 1.2-1.15 2 – 10 Non-working Public Sector Undertakings (PSUs) 1.16-1.20 10 – 12 Status of placement of Separate Audit Reports of Statutory corporations in Legislature

1.21 12

Disinvestment, Privatisation and Restructuring of Public Sector Undertakings

1.22 12

Results of audit of accounts of PSUs by Comptroller and Auditor General of India

1.23-1.36 12–15

Internal audit/internal control 1.37 16 Recommendations for closure of PSUs 1.38 16 Response to Inspection Reports, Draft paras and reviews

1.39 16-17

Position of discussion of Audit Reports (Commercial) by the Committee on Public Undertakings (COPU)

1.40 17-18

619-B Companies 1.41 18

CHAPTER – II

Review relating to Government company

Maharashtra State Handlooms Corporation Limited

2 19

Highlights 19– 20

Introduction 2.1 20

Objectives and activities 2.2 20-21

Organisational set up 2.3 21

Scope of Audit 2.4 21-22

Funding 2.5-2.6 22

Financial position and working results 2.7-2.8 22-23

Appraisal of activities 2.9-2.29 23–33

Inventory control 2.30 34

Credit control 2.31 34-35

Manpower 2.32 35-36

Management information system 2.33 36

Internal audit 2.34 36

Conclusion 36-37

Audit Report (Commercial Audit) for the year ended 31 March 2003

ii


Paragraph Page

CHAPTER – III

Reviews relating to Statutory corporation 3 39

Maharashtra State Electricity Board 39

Procurement, repairs and performance of energy meters

3.1 39

Highlights 39–40

Introduction 3.1.1 40

Organisational structure 3.1.2 41

Scope of Audit 3.1.3 41

Procurement of meters 3.1.4-3.1.12 42-45

Performance, testing and repairs of meters 3.1.13-3.1.16 46–48

Memorandum of Understanding 3.1.17-3.1.25 49-52

Conclusion 52-53

Performance of Khaperkheda Thermal Power Station including construction of Unit 3 and 4

3.2 55

Highlights 55-56


Organisational set up 3.2.2 56

Scope of Audit 3.2.3 56-57

Project planning and implementation 3.2.4-3.2.7 57–59

Civil works 3.2.8-3.2.12 59–61

Electrical and Mechanical works 3.2.13-3.2.23 61–64

Operational performance 3.2.24-3.2.25 64–65

Cost of generation 3.2.26-3.2.30 65-67

Procurement of material 3.2.31-3.2.34 67-68

Conclusion -- 68

Implementation of technology in the high tension billing system of Maharashtra State Electricity Board

3.3 69

Highlights 69–70


Organisational set up 3.3.2 70

Scope and Methodology of Audit 3.3.3 70-71

Salient features of HT billing system 3.3.4 71

General IT controls 3.3.5-3.3.13 71–75

Software development for HT billing system 3.3.14-3.3.19 75 – 78

Analytical review of data 3.3.20-3.3.25 78–80

Lack of utilisation of the application as a tool for management information system

3.3.26-3.3.32 81–84

Conclusion -- 84

Table of contents

iii


Paragraph Page CHAPTER – IV

Miscellaneous topics of interest 4 85 Government companies 85 City and Industrial Development Corporation of Maharashtra Limited

85

Loss of revenue 4.1 85– 87 Maharashtra Film, Stage and Cultural Development Corporation Limited

87

Under valuation of land 4.2 87-88 Undue benefit to a private party 4.3 88-89 Non recovery of loan due to lack of security 4.4 89-90 Statutory corporations 91 Maharashtra State Electricity Board 91 Implementation of information technology in stores management

4.5 91-97

Avoidable expenditure on purchase of steel pipes 4.6 97 Incorrect computation of penalty in a case relating to theft of energy

4.7 98

Short recovery of demand charges 4.8 99 Avoidable payment of commitment charges 4.9 100 Additional expenditure due to abnormal delay in finalisation of tender

4.10 100-101

Irregular waiver of interest receivable 4.11 101-102 Avoidable extra expenditure 4.12 102 Maharashtra State Road Transport Corporation 103 Release of payment despite short receipt of material 4.13 103 Blocking of funds 4.14 104 Extra expenditure 4.15 104-105 Loss due to procurement at higher rate 4.16 105-106 Maharashtra State Financial Corporation 107 Loss due to inadequate security 4.17 107 Irregular disbursement of loan 4.18 108 Disbursement of loan to an unviable project 4.19 109 Sanction of loan without adequate safeguard 4.20 110 Maharashtra Industrial Development Corporation 110 Idle outlay in Millennium business park 4.21 110–111 Investment in common effluent treatment plant 4.22 111-112 Irregular appointment of an intermediary 4.23 112 Undue benefit to a private firm 4.24 113


iv

Sl. No.

Annexures Page No.

1 Statement showing particulars of up-to-date paid-up capital, equity, loans received out of budget and loans outstanding as on 31 March 2003 in respect of Government companies and Statutory corporations

117-124

2 Summarised financial results of Government companies and Statutory corporations for the latest year for which accounts were finalised

125-130

3 Statement showing grants and subsidy received/receivable guarantees received, waiver of dues, loans on which moratorium allowed and loans converted into equity during the year and guarantees outstanding at the end of March 2003

131-133

4 Statement showing financial position of working Statutory corporations

134-138

5 Statement showing working results of working Statutory corporations

139-142

6 Statement showing operational performance of working Statutory corporations

143-147

7 Statement showing the department-wise outstanding inspection reports (IRs)

148

8 Statement showing the department-wise draft paragraphs/reviews replies to which were awaited

149

9 Statement showing paid-up capital, investment and summarised working results of 619-B companies as per their latest finalised accounts

150

10 Financial results of Maharashtra Electricity Regulatory Commission

151

11 Statement showing remarks in the Supplementary Audit Report 619(3) of the companies Act, 1956 by Statutory Auditors

152-153

12 Statement showing the financial position of Maharashtra State Handlooms Corporation Limited

154

13 Statement showing the working results of Maharashtra State Handlooms Corporation Limited

155

14 Maharashtra State Handlooms Corporation Limited contribution from sales depots

156

15 Maharashtra State Electricity Board - Statement showing the category-wise metered consumers

157

16 Maharashtra State Electricity Board - Statement showing the category-wise unmetered consumers

158

17 Maharashtra State Electricity Board - Statement showing the percentage of utilisation of meter testing benches

159-160

18 Maharashtra State Electricity Board – Details of negative energy loss at express feeders

161-165

Annexures

v

Sl. No.

Annexures Page No.

19 Maharashtra State Electricity Board – Statement showing the operational performance of four units of Khaperkheda Thermal Power Station

166-167

20 Maharashtra State Electricity Board – Statement showing cost of generation

168

21 Maharashtra State Electricity Board – Statement showing average calorific value of coal stipulated heat rate, Standard consumption of coal, actual and excess consumption of coal at Khaperkheda thermal power station

169

22 City and Industrial Development Corporation of Maharashtra Limited - Statement showing allotments of plots

170


vi

PREFACE

Government commercial concerns, the accounts of which are subject to audit by the Comptroller and Auditor General of India, fall under the following categories:

(i) Government companies,

(ii) Statutory corporations, and

(iii) Departmentally managed commercial undertakings.

2. This report deals with the results of audit of Government companies and Statutory corporations including Maharashtra State Electricity Board and has been prepared for submission to the Government of Maharashtra under Section 19A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, as amended from time to time. The results of audit relating to departmentally managed commercial undertakings are included in the Report of the Comptroller and Auditor General of India (Civil) – Government of Maharashtra.

3. Audit of the accounts of Government companies is conducted by the Comptroller and Auditor General of India (CAG) under the provisions of Section 619 of the Companies Act, 1956.

4. In respect of the Maharashtra State Road Transport Corporation and Maharashtra State Electricity Board, which are Statutory corporations, CAG is the sole auditor. As per State Financial Corporations (Amendment) Act, 2000, CAG has the right to conduct the audit of accounts of Maharashtra State Financial Corporation in addition to the audit conducted by the Chartered Accountants, appointed by the Corporation out of the panel of auditors approved by the Reserve Bank of India. In respect of Maharashtra State Warehousing Corporation, CAG has the right to conduct the audit of accounts in addition to the audit conducted by the Chartered Accountants, appointed by the State Government in consultation with CAG. The audit of accounts of Maharashtra Industrial Development Corporation was entrusted to the CAG under section 19 (3) of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 for a period of five years up to 2006-07. In respect of Maharashtra Electricity Regulatory Commission, CAG is the sole auditor. The Audit Reports on the annual accounts of all these corporations/Commission are forwarded separately to the State Government.

5. The cases mentioned in this Report are those which came to notice in the course of audit during the year 2002-03 as well as those which came to notice in earlier years but not dealt with in the previous Reports. Matters relating to the period subsequent to 2002-03 have also been included, wherever necessary.

Overview

vii

OVERVIEW

1. General view of Government companies and Statutory corporations

As on 31 March 2003, the State had 71 Public Sector Undertakings (PSUs) comprising 66 Government companies and five Statutory corporations, as against 66 PSUs as on 31 March 2002. Out of 66 Government companies, 48 were working Government companies, while 18 were non-working Government companies. All the five Statutory corporations were working corporations.

(Paragraph 1.1)

The total investment in working PSUs was Rs.17,808.73 crore as on 31 March 2003 as against Rs.20,663.27 crore as on 31 March 2002. However, the total investment in non-working PSUs was Rs.213.20 crore and Rs.191.40 crore during the same period.

(Paragraphs 1.2 and 1.16)

The budgetary support in the form of capital, loans, and grants/subsidies disbursed to the working PSUs decreased from Rs.2,153.36 crore in 2001-02 to Rs.1,798.55 crore in 2002-03. The State Government also contributed Rs.21.48 crore in the form of loan to one non-working company during 2001-02. The State Government guaranteed loans aggregating Rs.2,105.34 crore to working PSUs during 2002-03. The total amount of outstanding loans guaranteed by the State Government to all PSUs as on 31 March 2003 was Rs.12,921.88 crore.

(Paragraph 1.5)

Eight working Government companies and four working Statutory corporations finalised their accounts for the year 2002-03. The accounts of remaining 40 working Government companies (six companies have not submitted their first account) and one working Statutory corporation were in arrears for periods ranging from one to 14 years as on 30 September 2003. The accounts of 16 non-working Government companies were in arrears for periods ranging from one to 17 years as on 30 September 2003.

(Paragraphs 1.6 and 1.19)

According to the latest finalised accounts, 14 working PSUs (12 Government companies and two Statutory corporations) earned aggregate profit of Rs.46.22 crore out of which one Government company and one Statutory corporation declared dividend of Rs.42.90 lakh and Rs.87.11 lakh, respectively during the year. Against this, 31 working PSUs (28 Government companies and three Statutory corporations) incurred aggregate loss of

Audit Report (Commercial) for the year ended 31 March 2003

viii

Rs.973.28 crore as per their latest finalised accounts. Of the loss incurring working Government companies, 15 companies had accumulated losses aggregating Rs.885.37 crore, which exceeded their aggregate paid-up capital of Rs.332.02 crore. Of the three loss incurring Statutory corporations, two Statutory corporations had accumulated losses of Rs.1,232.49 crore, which exceeded their paid-up capital of Rs.598.78 crore.

(Paragraphs 1.7-1.11)

Even after completion of five years of their existence, the individual turnover of 16 working and 16 non-working Government companies was less than rupees five crore in each of the preceding five years as per their latest finalised accounts. Further, three Government companies (two working and one non-working) which had turnover of more than rupees five crore, had been incurring losses for five consecutive years as per their latest finalised accounts, leading to negative net worth. As such, the Government may either improve the performance of these 35 Government companies or consider their closure.

(Paragraph 1.38)

2 Review relating to Government company

2 Maharashtra State Handlooms Corporation Limited

The Maharashtra State Handlooms Corporation Limited (Company) was incorporated in 1971 with the main objective of assisting handloom weavers outside the co-operative fold by providing them with yarn and undertaking the marketing of their products. The Company failed to fulfil its main objective of supplying raw material to weavers as it could meet only 3 to 22 per cent of their requirement for yarn during 1998-2003. Despite having a low prime cost, the low volume of production and consequent high unit overheads resulted in uncompetitive prices. The non-recovery of overheads resulted in losses. Poor sales led to a working capital crunch leading to reduction in production and mounting overhead costs per unit of production. Poor internal resource generation necessitated repeated borrowings and interest burden thereon. Some of the important observations made in the review were as under:

Due to injudicious allotment of work to the weavers in cottages, Company’s employees could not get adequate work resulting in payment of idle wages of Rs.76 lakh.

(Paragraph 2.13)

Despite protection provided to the Company by reserving its products for purchase by Government departments, the Company appointed private agents for sale to Government departments and paid a commission of Rs.1.09 crore to them during 1998-2003.

(Paragraph 2.17)

Overview

ix

Although, the Government policy did not envisage procurement of cloth by Government departments from traders either directly or through the Company yet the Company supplied the finished goods by procuring the same from traders.

(Paragraph 2.18)

The Company irregularly diverted Rs.4.09 crore received for implementing delinking scheme (Rs.77 lakh), workshed cum housing scheme (Rs.85 lakh), project package scheme (Rs.60.88 lakh) and voluntary retirement scheme (Rs.1.86 crore) towards working capital.

(Paragraphs 2.25-2.27 and 2.32)

3. Reviews relating to Statutory corporation

Maharashtra State Electricity Board

3.1 Procurement, repairs and performance of energy meters

Maharashtra State Electricity Board (Board) is required to install and maintain correct energy meter on each point of supply of energy to consumers for measuring the energy sold as per Section 26(2) of the Indian Electricity Act, 1910. Yet at the end of March 2002, the Board had 18.79 lakh unmetered consumers. Installation of meters by Maharashtra State Electricity Board (Board) on feeders, distribution transformers and consumers' premises was the key to achieving reduction of transmission and distribution losses to 18 per cent. The Board could not achieve even the liberal target of 26.9 per cent set by Maharashtra Electricity Regulatory Commission. Procurement of meters for installation at feeders and distribution transformers without identifying consumers did not yield the desired objective. Some of the important observations made in the review were as under:

The Board incurred extra expenditure of Rs.45.30 crore due to procurement of meters at higher rates despite availability of technically acceptable meters at lower rates.

(Paragraphs 3.1.7-3.1.11)

Average utilisation of capacity of single phase and three phase meter testing benches in 95 out of 121 divisions worked out to 67 and 41 per cent, respectively. Non testing/recalibration of meters which slowed down with the passage of time resulted in underbilling of energy consumption to the extent of 118.61 million unit (MU) valuing at Rs.37.36 crore during first one year. Unrecorded consumption will further increase year after year till recalibration is done.

(Paragraphs 3.1.15-3.1.16)


x

As per commitments for power sector reforms the Board installed meters on 6,098 distribution feeders and 14,134 distribution transformers at a cost of Rs.22.26 crore but energy accounting could not be done due to non identification of consumers feeder-wise/transformer-wise. This resulted in unproductive expenditure.

(Paragraphs 3.1.17-3.1.22)

Due to non procurement of meters in a staggered manner, 2.10 lakh three phase meters valuing Rs.41.08 crore procured for agricultural consumers remained idle (March 2003).

(Paragraph 3.1.23)

3.2 Performance of Khaperkheda thermal power station including construction of unit 3 and 4.

Construction of unit 3 and 4 of Khaperkheda thermal power station (KTPS) was approved by the Planning Commission in June 1988, taken up for implementation in 1997-98 and commissioned in August 2000 and March 2001, respectively. Due to improper preparation of estimates, consumption of oversized steel, defective drawings, incorrect application of price variation clause, the Board incurred extra expenditure. Some of the important observations made in the review were as under:

In the execution of electrical and mechanical works, excess payment of Rs.31.66 crore was made to Bharat Heavy Electricals Limited due to incorrect computation of price variation.

(Paragraph 3.2.14)

Due to defective performance of ash handling plant supplied and commissioned by Mahindra Ash Tech Limited, the Board incurred extra expenditure of Rs.1.11 crore and also suffered power generation loss of Rs.71.08 crore. Irregular payment of Rs.60 lakh was made to the contractor towards reimbursement of excise duty. Penalty of Rs.18 lakh leviable as per terms of contract was also not levied.

(Paragraphs 3.2.16-3.2.20)

Excess consumption of coal by 17.43 lakh metric tonne over and above the standard laid down by the equipment supplier resulted in loss of Rs.165.70 crore during 1998-2003.

(Paragraph 3.2.27)

Extra expenditure of Rs.13.60 crore was incurred on transportation of coal from distant mines.

(Paragraph 3.2.30)

Overview

xi

3.3 Implementation of information technology in the high tension billing system of Maharashtra State Electricity Board

The computerised high tension (HT) billing system of Maharashtra State Electricity Board (Board) was initially implemented in 1981 and re-engineered during 1997-2000. Considering that about 58 per cent of the total revenue is generated from HT consumers, the system handling HT billing and revenue realisation is ‘mission critical’ in nature. The billing system has poor general information technology controls especially regarding the security features such as access controls, passwords, login attempts and security breach reports. The system was vulnerable to unauthorized access and data manipulation. Some of the important observations made in the review were as under:

In the absence of a formal information technology (IT) policy and long term strategy, the IT center sites prepared during April 1999 to August 2002 at a cost of Rs.1.40 crore were not made operational due to delay in procurement of hardware. The Board incurred expenditure of Rs.1.54 crore on outsourcing of billing due to delayed commissioning of IT centre at Bhandup.

(Paragraph 3.3.5)

There was waiver of minimum charges of Rs.7.13 crore and non levy of charges of Rs.1.54 crore in violation of rules.

(Paragraph 3.3.22)

Excess bulk discount of Rs.3.19 crore was granted to ineligible HT consumers and incorrect calculation of power factor incentive resulted in excess rebate of Rs.5.58 crore.

(Paragraphs 3.3.23-3.3.25)

4 Miscellaneous topics of interest relating to Government companies and Statutory corporations

City and Industrial Development Corporation of Maharashtra Limited

By charging lease premium less than prescribed rates, undue benefits of Rs.32.02 crore were passed on to educational institutions, newspapers groups and others.

(Paragraph 4.1)


xii

Maharashtra Film, Stage and Cultural Development Corporation Limited

The Company extended undue benefit to a private party by under valuation of land by Rs.28.20 crore.

(Paragraph 4.2)


Implementation of information technology in stores management did not yield the desired results as the systems developed by the Board were deficient.

(Paragraph 4.5)

The Board irregularly waived the interest of Rs.12.23 crore on liquidated letter of credit loan.

(Paragraph 4.11)

Maharashtra State Road Transport Corporation

Full payment to supplier despite short receipt of material resulted in overpayment of Rs.73 lakh to the supplier.

(Paragraph 4.13)

The decision of the Corporation to purchase fully fabricated 200 mini buses instead of purchasing the chassis and getting the body building done at its central workshops resulted in extra expenditure of Rs.1.94 crore.

(Paragraph 4.15)

Maharashtra State Financial Corporation

Sanction of loan without adequate security and delayed action for recovery resulted in non recovery of dues of Rs.16.59 crore.

(Paragraph 4.17)

Maharashtra Industrial Development Corporation

The construction of galas in millennium business park despite decline in demand resulted in idle outlay of Rs.163.32 crore on unsold galas.

(Paragraph 4.21)

Due to inclusion of a clause in the agreement in violation of rules, undue benefit of interest of Rs.11 crore was extended to a private commercial firm.

(Paragraph 4.24)

1

Chapter-I

1. General view of Government companies and Statutory corporations

Introduction

1.1 As on 31 March 2003, there were 66 Government companies (48 working companies and 18 non-working companies?) and five working Statutory corporations as against 61 Government companies (43 working companies and 18 non-working companies) and five working Statutory corporations as on 31 March 2002 under the control of the State Government. In addition, the State had formed Maharashtra Electricity Regulatory Commission whose audit is also being conducted by the Comptroller and Auditor General of India (CAG). During the year 2002-03, five Government companies? came under the audit purview of CAG. The accounts of the Government companies (as defined in Section 617 of Companies Act, 1956) are audited by Statutory Auditors who are appointed by the CAG as per provision of Section 619(2) of Companies Act, 1956. These accounts are also subject to supplementary audit conducted by the CAG as per provisions of Section 619 of the Companies Act, 1956. The audit arrangements in respect of Statutory corporations are as shown below:

Sl. No.

Name of the corporation

Authority for audit by the Comptroller and Auditor General

of India

Audit arrangement

1. Maharashtra State Electricity Board

Section 69(2) of the Electricity (Supply) Act, 1948

Sole audit by CAG

2. Maharashtra State Road Transport Corporation

Section 33(2) of the Road Transport Corporations Act, 1950

Sole audit by CAG

3. Maharashtra Industrial Development Corporation

Maharashtra Industrial Development Act, 1961 and Section 19 (3) of CAG’s (Duties, Powers and Conditions of Service) Act, 1971

Sole audit entrusted to CAG up to 2007.

4. Maharashtra State Financial Corporation

Section 37(6) of the State Financial Corporations Act, 1951

Audit by Chartered Accountants and supplementary audit by CAG

5. Maharashtra State Warehousing Corporation

Section 31(8) of the State Warehousing Corporations Act, 1962

Audit by Chartered Accountants and supplementary audit by CAG

?Non-working companies/corporations are those which are under the process of liquidation/closure/merger etc. ? Sl. No.A-27,28,39,40 and 48 of Annexure-2.


2

Working Public Sector Undertakings (PSUs)

Investment in working PSUs

1.2 The total investment in 53 working PSUs (48 Government companies and five Statutory corporations) at the end of March 2003 as against 48 working PSUs (43 Government companies and five Statutory corporations) at the end of March 2002 was as follows: (Rupees in crore)

Investment in working PSUs Year

Number of working

PSUs Equity Share application

money Loans? Total

2001-02 48 4,598.45 133.30 15,931.52 20,663.27

2002-03 53 4,749.37 123.72 12,935.64 17,808.73

The analysis of investment in working PSUs is given in the following paragraphs.

During the year 2002-03, 14 working PSUs (11 Government companies and three Statutory corporations) repaid loans aggregating Rs.5,498.16 crore.

The investment (equity and long term loans) in various sectors and percentage thereof at the end of 31 March 2003 and 31 March 2002 are shown below in the pie charts:

? Long-term loans mentioned in paras 1.2, 1.3, 1.4 and 1.16 are excluding interest accrued and due on such loans.

Chapter-I -General view of Government companies and Statutory corporations

3

Sector wise investment in working Government companies and Statutory corporations

Investment as on 31 March 2003 (Rupees in crore)

Power13,679.81

(76.81)

Others334.49(1.88)

Construction1,098.06

(6.17)

Textile630.93(3.54)

Agricultre & Allied116.37(0.65)

Development of Weaker Sections213.29(1.20)

Area Development

77.95(0.44)

Transport689.43(3.87)

Finance778.51(4.37)

Forest189.89(1.07)

(Figures in bracket indicate percentage of investment)

Investment as on 31 March 2002 (Rupees in crore)

Forest193.03(0.93)

Finance831.14(4.02)Transport

577.17(2.79)

Area Development

251.31(1.22)

Development of Weaker Sections200.05(0.97)

Agricultre & Allied216.03(1.05) Textile

489.79(2.37)

Construction3,809.13(18.43)

Others191.30(0.93)

Power13,904.32

(67.29)

(Figures in bracket indicate percentage of investment)


4

Working Government companies

1.3 The total investment in 48 working Government companies at the end of March 2003 as against 43 working Government companies at the end of March 2002 was as follows: (Rupees in crore)

Investment in working Government companies Year

Number of working

Government companies

Equity Share application money

Loans Total

2001-02 43 647.04 133.30 4,418.36 5,198.70

2002-03 48? 677.26 123.72 1,720.19 2,521.17

The summarised statement of Government investment in working Government companies in the form of equity and loans is given in Annexure-1.

As on 31 March 2003, the total investment in working Government companies, comprised 31.77 per cent of equity capital and 68.23 per cent of loans as compared to 15.01 per cent of equity capital and 84.99 per cent of loans as on 31 March 2002.

Working Statutory corporations

1.4 The total investment in five working Statutory corporations at the end of March 2002 and March 2003 were as follows:

(Rupees in crore) 2001-02 2002-2003 Name of corporation

Capital Loans Capital Loans Maharashtra State Electricity Board 3,464.62 10,439.70 3,464.62 10,215.19 Maharashtra State Road Transport Corporation

415.27 161.90 536.14? 153.28


---? 143.23 ---? 131.10

Maharashtra State Financial Corporation 62.81 768.33 62.64? 715.88 Maharashtra State Warehousing Corporation

8.71 --- 8.71 ---?

Total 3,951.41 11,513.16 4,072.11 11,215.45

The summarised statement of Government investment in working Statutory corporations in the form of equity and loans is given in Annexure-1.

? Information in respect of one company (Sl. No.A48 of Annexure-1) is awaited. ? Includes share application money of Rs.341.17 crore. ? There is no investment of State Government by way of share capital or loan in MIDC. However, the land is acquired by the State Government and handed over to MIDC for development activities. ?Reduced due to refund of capital of Rs.0.17 crore to equity shareholders.


5

Budgetary outgo, grants/subsidies, guarantees, waiver of dues and conversion of loans into equity

1.5 The details regarding budgetary outgo, grants/subsidies, guarantees issued, waiver of dues and conversion of loans into equity by State Government to working Government companies and working Statutory corporations are given in Annexures-1 and 3.

The budgetary outgo in the form of equity capital, loans and grants/subsidies from the State Government to working Government companies and working Statutory corporations for the three years up to 2002-03 are given below: (Amount : Rupees in crore)

2000-2001 2001-2002 2002-2003

Companies Corporations Companies Corporations Companies Corporations

Particulars

No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt.

Equity capital outgo from budget

7 18.60 1 82.19 8 20.63 1 132.91 5 7.09 - -

Loans given from budget

5 36.13 1 117.40 5 74.59 1 522.29 6 115.10 1 179.64

Other grants/ subsidy

4 27.07 - - 5 53.53 1 1,349.41 8 641.76 2 854.96

Total outgo 81.80 199.59 148.75 2,004.61 763.95 1,034.60

During the year 2002-03, the Government had guaranteed loans aggregating Rs.2,105.34 crore, obtained by eight working Government companies (Rs.135.62 crore) and two working Statutory corporations (Rs.1,969.72 crore). The guarantees in respect of outstanding loans decreased from Rs.18,199.46 crore at the end of March 2002 obtained by 12 working companies (Rs.4,197.83 crore) and three Statutory corporations (Rs.14,001.63 crore) to Rs.12,921.88 crore at the end of March 2003 obtained by 15 working companies (Rs.2,916.92 crore) and two Statutory corporations (Rs.10,004.96 crore). There was no case of default in repayment of guaranteed loans during the year. The guarantee fee/commission paid/payable to Government by 10 working Government companies during 2002-03 was Rs.225.31 crore.

Finalisation of accounts by working PSUs

1.6 The accounts of the companies for every financial year are required to be finalised within six months from the end of relevant financial year under Sections 166, 210, 230, 619 and 619-B of the Companies Act, 1956 read with Section 19 of Comptroller and Auditor General’s (Duties, Power and Conditions of Service) Act, 1971. They are also to be laid before the Legislature within nine months from the end of financial year. Similarly, in case of Statutory corporations, their accounts are finalised, audited and presented to the Legislature as per the provisions of their respective Acts.

However, as could be seen from Annexure-2, out of 48 working Government companies, only eight working companies and out of five working Statutory corporations, four working Statutory corporations had finalised their accounts


6

for the year 2002-03 within the stipulated period. During the period from October 2002 to September 2003, 21 working Government companies finalised 21 accounts for previous years. Similarly, one working Statutory corporation finalised one account for the previous year during this period.

The accounts of 40 working Government companies were in arrears for periods ranging from one to 14 years as on 30 September 2003, as detailed below. Besides, accounts of one working Statutory corporation (Sl.No.B-1 of Annexure-2) were also in arrear for one year, i.e. 2002-03.

Sl. No.

Number of working Government companies

Period for which accounts are in arrears

Number of years for which accounts are in arrears

Reference to Sl. No. of Annexure-2

1 2 3 4 5

1 1 1989-90 to 2002-03 14 A-34

2 1 1990-91 to 2002-03 13 A-33

3 1 1991-92 to 2002-03 12 A-46

4 1 1993-94 to 2002-03 10 A-35

5 2 1995-96 to 2002-03 8 A-4, 9

6 1 1996-97 to 2002-03 7 A-29

7 1 1997-98 to 2002-03 6 A- 45

8 5 1998-99 to 2002-03 5 A-16,26,30,37,38

9 3 1999-2000 to 2002-03 4 A-7,18,41

10 2 2000-01 to 2002-03 3 A-5,10

11 5 2001-02 to 2002-03 2 A-20,24,36,39,47

12 17 2002-03 1 A-1,2,3,6,8,11,12,

13, 21, 23,25, 27,

28,31, 42,43,48

Total 40

It is the responsibility of the administrative departments to oversee and ensure that the accounts are finalised and adopted by the PSUs within the prescribed period. Though the Audit apprised the administrative departments concerned regarding arrears in finalisation of accounts, effective measures had not been taken by the Government and as a result, the net worth of these PSUs could not be assessed in audit.

Financial position and working results of working PSUs

1.7 The summarised financial results of working PSUs (Government companies and Statutory corporations) as per their latest finalised accounts are given in Annexure-2. Besides, statements showing financial position and working results of individual working Statutory corporation for the latest three years for which accounts are finalised are given in Annexures-4 and 5, respectively.


7

According to the latest finalised accounts of 48 working Government companies and five working Statutory corporations, 28 companies and three corporations had incurred losses for the respective years aggregating Rs.296.72 crore and Rs.676.56 crore, respectively, 12 companies and two corporations earned an aggregate profit of Rs.36.42 crore and Rs.9.80 crore, respectively. Six companies (Sl.No.A-26,27,28,37,38,48 of Annexure-2) had not submitted their first accounts and two companies (Sl.No.A-23 and 44 of Annexure-2) had capitalised excess of expenditure over income.

Working Government companies

Profit earning working Government companies and dividend

1.8 Seven profit earning working Government companies, which finalised their accounts for previous years during October 2002 to September 2003, earned an aggregate profit of Rs.16.72 crore. Of these, five companies were earning profit for two or more successive years but only one company (Sl.No.A-42 of Annexure-2) declared dividend of Rs.42.90 lakh during the year. The State Government had not formulated a dividend policy for payment of minimum dividend.

Loss incurring working Government companies

1.9 Seven working companies that finalised their accounts for 2002-03 by September 2003, incurred losses aggregating Rs.188.41 crore.

Of the 28 loss incurring working Government companies, 15 companies had accumulated losses aggregating Rs.885.37 crore, which exceeded their aggregate paid-up capital of Rs.332.02 crore by more than two times.

Despite poor performance and complete erosion of paid-up capital, the State Government continued to provide financial support to these companies in the form of contribution towards equity, further grant of loans, conversion of loans into equity, subsidy etc. According to available information, the total financial support so provided by the State Government to four companies was Rs.114.07 crore by way of equity (Rs.30.73 lakh) and loans (Rs.113.76 crore) during 2002-03.

Working Statutory corporations

Profit earning Statutory corporations and dividend

1.10 Out of five working Statutory corporations, four Statutory corporations finalised their accounts for 2002-03 by September 2003. Of this, two Statutory corporations (B-4, 5 of Annexure-2) earned aggregate profit of Rs.9.80 crore and only one Statutory corporation (B-4) had declared dividend of Rs.87.11 lakh? which was 10 per cent of its share capital.

? Provisional.


8

Loss incurring Statutory corporations

1.11 Of the three loss incurring Statutory corporations, two Statutory corporations (Sl. No. B-2 and B-3 of Annexure-2) had accumulated losses aggregating Rs.1,232.49 crore, which exceeded aggregate paid-up capital of Rs.598.78 crore by more than two times.

Despite poor performance and complete erosion of paid-up capital, the State Government continued to provide financial support to Maharashtra State Road Transport Corporation in the form of contribution towards equity, further grants of loans, conversion of loans into equity, subsidy etc. According to available information, the total financial support during 2002-03 by the State Government to the Corporation in the form of grant was Rs.120.87 crore.

Operational performance of working Statutory corporations

1.12 The operational performance of the working Statutory corporations is given in Annexure-6. In MSEB, the percentage of transmission and distribution loss to total power available for sale had increased from 30.56 per cent in 1999-2000 to 36.8 per cent in 2002-03. In MSFC, the disbursements had come down from Rs.46.66 crore in 1999-2000 to Rs.30.35 crore in 2001-02 and the overdue amount had risen from Rs.739.56 crore in 1999-2000 to Rs.1,014.72 crore in 2001-02.

Return on capital employed

1.13 As per the latest finalised accounts (up to September 2003), the capital employed? worked out to Rs.5,336.15 crore in 40? working companies and total return? thereon amounted to Rs.198.79 crore which was 3.73 per cent as compared to total return of Rs.264.76 crore (5.22 per cent) in the previous year (accounts finalised up to September 2002). Similarly, the capital employed and total return thereon in case of working Statutory corporations as per the latest finalised accounts (up to September 2003) worked out to Rs.16,843.12 crore and Rs.622.55 crore (3.70 per cent), respectively as against the total return of Rs.688.50 crore (4.11 per cent) in previous year. The details of capital employed and total return on capital employed in case of working Government companies and Statutory corporations are given in Annexure-2.

?Capital employed represents net fixed assets (including capital works-in-progress) plus working capital except in finance companies and corporations where it represents a mean of aggregate of opening and closing balances of paid-up capital, free reserves, bonds, deposits and borrowings (including refinance). ? This does not include six companies (A-26,27,28,37,38 and 48) whose first accounts are awaited and two companies (A-23, 44) who had capitalised its excess of expenditure over income. ? For calculating total return on capital employed, interest on borrowed funds is added to net profit/subtracted from the loss as disclosed in the profit and loss account.


9

Reforms in Power Sector

Status of implementation of Memorandum of Understanding between the State Government and the Central Government

1.14 In pursuance to discussions in Chief Minister's conference on power sector reforms, held in March 2001, a Memorandum of Understanding (MOU) was signed (16 March 2001) between the Government of Maharashtra and the Government of India as a joint commitment for implementation of reforms programme in power sector with identified milestones. The MOU was valid for five years and subject to review annually. Status of implementation of reform programme against each commitment made in the MOU is detailed below:

Sl. No.

Commitments as per MOU

Targeted completion Schedule

Status (as on 31 March 2003)

Commitments made by the State Government

1 Reduction in transmission

and distribution losses

18 per cent by

March 2003.

36.8 per cent

2 100 per cent

electrification of all

villages

No target fixed. 100 per cent electrified.

3 100 per cent metering of

all distribution feeders

December 2001. Out of 7,128 feeders, 6,493

feeders provided with meters.

4 100 per cent metering of

all consumers

September 2002. Powerlooms and public water

works 100 per cent completed.

18.03 lakh agricultural consumers

are yet to be metered.

5 Securitise outstanding

dues of Central Public

Sector Undertakings.

--- Securitisation of NTPC dues has

been done.

6 State Electricity

Regulatory Commission

(SERC)

i) Establishment of SERC

ii) Implementation of

tariff orders issued by

SERC during the year.

---

During the year

no tariff order

was issued by

MERC.

SERC was established on

5 August 1999.

---


10

Maharashtra Electricity Regulatory Commission

1.15 Maharashtra Electricity Regulatory Commission (Commission) was formed on 5 August 1999 under Section 17 of the Electricity Regulatory Commissions Act, 1998 (Act) with the object of determining electricity tariff, advising on matters relating to electricity generation, transmission, distribution etc., in the State. The Commission is a body corporate and comprises three members including a Chairman, who are appointed by the State Government. The audit of accounts of the Commission has been entrusted to CAG under Section 34 of the Act, ibid. The Commission had finalised its accounts up to 2001-02 (30 September 2003). Financial results of MERC are given in Annexure-10? . During the year no tariff orders were issued by MERC.

Non-working Public Sector Undertakings (PSUs)

Investment in non-working PSUs

1.16 The total investment in 18 non-working PSUs (all Government companies) at the end of March 2002 and March 2003 was as follows:

(Rupees in crore)

Investment in non-working PSUs Year Number of non-working PSUs Equity Share application money Loans Total

2001-02 18 48.36 0.20 142.84 191.40

2002-03 18 48.36 0.20 164.64 213.20

The classification of the non-working PSUs was as under: (Amount: Rupees in crore)

Investment in companies Sl. No. Status of non-working PSUs

Number of companies

Equity? Long-term loans

(i) Under liquidation 3 20.50 9.25

(ii) Under closure 9 24.22 29.47

(iii) Others? 6 3.84 125.92

Total 18 48.56 164.64 (Note: There is no non-working Statutory corporation)

? The Corpus Fund and net profit of commission for the year 2001-2002 was Rs.1.36 crore and Rs.25.92 lakh, respectively. ?Equity includes share application money of Rs.20 lakh in respect of one company (C-1). ?Activities have been stopped and accounts are yet to be finalised and action has not been initiated for their closure.


11

Of the above non-working PSUs, 12 Government companies were under liquidation or closure under Section 560 of the Companies Act, 1956 for three to 25 years and substantial investment of Rs.83.44 crore was involved in these companies. Effective steps need to be taken for their expeditious liquidation or revival.

Budgetary outgo, grant/subsidy, guarantees, waiver of dues and conversion of loans into equity

1.17 The details regarding budgetary outgo, grants/subsidies, guarantees issued, waiver of dues and conversion of loans into equity by the State Government to non-working PSUs are given in Annexures-1 and 3.

The State Government had given budgetary support of Rs.21.48 crore by way of loan to one? non-working company during 2002-03. At the end of the year, guarantees for loans amounting to Rs.83.86 lakh obtained by two non-working companies were outstanding as against the outstanding guarantee for loan of Rs.78.17 lakh obtained by one non-working company as on 31 March 2002.

Total establishment expenditure of non-working PSUs

1.18 The year-wise details of total establishment expenditure of non-working PSUs and the sources of financing them during last three years up to 2002-03 are given below: (Amount: Rupees in lakh)

Financed by Year Number of PSUs

Total establishment expenditure Disposal of

investment/assets Government by

way of loans Others*


2000-01 11# 373.98 0.04 253.38 120.56

2001-02 10# 98.26 2.21 37.10 58.95

2002-03 10 2,111.51 - -- 2,111.51

(Note : There is no non-working Statutory corporation)

Finalisation of accounts by non-working PSUs

1.19 Out of 18 non-working Government companies, two companies (Sl. No. C-14 and C-15 of Annexure-2) finalised their accounts for the year 2002-03. The accounts of remaining 16 non-working companies were in arrears for periods ranging from one to 17 years as on 30 September 2003, as could be seen from Annexure-2.

? Sl. No. C-14 of Annexure-2. #There was no establishment expenditure in respect of remaining non-working companies. * Financed by holding company.


12

Financial position and working results of non-working PSUs

1.20 The summarised financial results of non-working Government companies as per their latest finalised accounts are given in Annexure-2.

The summarised details of paid-up capital, net worth, cash loss and accumulated loss of non-working Government companies, as per their latest finalised accounts, are given below:

(Amount : Rupees in crore) Particulars Paid-up capital Net worth? Cash loss Accumulated loss

Non-working Governmentcompanies

48.56 (-) 181.99 23.07 230.55

Status of placement of Separate Audit Reports of Statutory corporations in Legislature

1.21 Separate Audit Report on the accounts of Maharashtra State Financial Corporation for the year 2001-02 was issued on 13 September 2003 and awaiting placement before State Legislature by the Government (September 2003). Separate Audit Reports in respect of remaining four Statutory corporations upto 2001-02 have already been placed before State Legislature.

Disinvestment, Privatisation and Restructuring of Public Sector Undertaking

1.22 The State Government did not undertake disinvestment, privatisation and restructuring of any of its PSUs during 2002-03.

Results of audit of accounts of PSUs by Comptroller and Auditor General of India

1.23 During the period from October 2002 to September 2003, the audit of 41 accounts of 40 Government companies (working 29 and non-working 11) and five working Statutory corporations was taken up for review. As a result of the observations made by CAG, three Statutory corporations (B-1, 2 and 5 of Annexure-2) revised their accounts for 2001-02. In addition, the net ? Net worth represents paid-up capital plus free reserves less accumulated loss.


13

impact of the important audit observations as a result of review of the remaining PSUs was as follows:

Number of accounts (Amount: Rupees in lakh)

Government companies Government companies

Sl.No.

Details

Working Non-working

Statutory working

corporations Working Non-working

Statutory working

corporations

(i) Decrease in profit 1 - - 62.06 - -

(ii) Increase in profit 1 - - 22.05 - -

(iii) Increase in loss 2 1 3 368.40 0.50 1,770.06

(iv) Decrease in loss - 1 2 - 16.72 24,005.53

(v) Non-disclosure of material facts

2 - 2 139.17 - 90,344.00

(vi) Errors of classification

3 - 2 435.91 - 64,157.24

Some of the major errors and omissions noticed in the course of review of annual accounts of some of the above companies and corporations are mentioned below:

Errors and omissions noticed in case of Government companies

Mahatma Phule Backward Class Development Corporation Limited (1988-89)

1.24 The Company exhibited Rs.25.50 lakh as share capital though shares were not allotted and revenue receipt of matching assistance of Rs.26.54 lakh was also exhibited as capital resulting in overstatement of capital by Rs.52.04 lakh.

Marathwada Development Corporation Limited (2001-02) 1.25 Non provision for doubtful debts of Rs.2.25 crore had resulted in overstatement of receivables and understatement of loss to that extent.

1.26 An amount of Rs.1.29 crore being interest receivable from subsidiaries was included in receivables. As the possibility of its receipt was remote due to the continuous losses suffered by these subsidiaries, non provision of doubtful debts for interest receivable has resulted in overstatement of receivables and understatement of loss by Rs.1.29 crore.

Maharashtra Tourism Development Corporation Limited (1998-99) 1.27 The loans and advances included excess spent amount of Rs.62.06 lakh towards Central Government schemes (Rs.43.37 lakh) and State Government scheme (Rs.18.69 lakh) which is not reimbursable from the Government. This had resulted in overstatement of loans and advances as well as profit by Rs.62.06 lakh


14

Maharashtra State Handlooms Corporation Limited (2000-01)

1.28 Non provision of penal interest on the outstanding State Government loan of Rs.24.83 crore resulted in understatement of liabilities and loss by Rs.68.52 lakh.

Maharashtra State Road Development Corporation Limited (2000-01)

1.29 As per the accounting policy adopted by the Company, only “borrowing” cost relating to project assets substantially completed and put to use was to be treated as deferred revenue expenditure. However, the Company had overcharged borrowing cost by charging interest on own funds also in addition to borrowed funds. This had resulted in overstatement of deferred revenue expenditure and loss for the year to the extent of Rs.4.91 crore.

Forest Development Corporation of Maharashtra Limited (2001-02)

1.30 The Company had not written off the unrealisable cost of Rs.16.45 crore on failed plantations resulting in overstatement of current assets and profit by Rs.16.45 crore.

Errors and omissions noticed in case of Statutory corporations

Maharashtra State Electricity Board (2001-02)

1.31 Board commissioned 58,386 works amounting to Rs.1,147.82 crore during 2001-02. However, out of above, works completion reports (WCR) in respect of 10,193 works amounting to Rs.242.46 crore were not prepared. In addition to above WCR in respect of 20,696 works amounting to Rs.388.19 crore pertaining to previous years remained to be finalised. This resulted in understatement of fixed assets to the extent of Rs.630.65 crore and consequential over capitalisation of interest on work in progress and non provision of depreciation (amount unascertained)

1.32 The Board switched over to actuarial basis of provision for gratuity in 1997-98. However, excess provision for gratuity as on 31 March 2002 amounting to Rs.235.71 crore had not been adjusted. This resulted in overstatement of provision and deficit to that extent.

Maharashtra State Road Transport Corporation (2001-02)

1.33 Sundry debtors includes Rs.4.38 crore (principal Rs.3.09 crore and interest Rs.1.29 crore) being the licence fee receivable from commercial shops and establishments which is outstanding for more than three years (1969-1998). Provision for Rs.4.38 crore (upto 1997-98) should have been made for doubtful debts after review. Non provision has resulted in overstatement of sundry debtors and understatement of loss to that extent.


15

Audit assessment of the working results of State Electricity Board

1.34 Based on the audit assessment of the working results of the Board for three years up to 2001-02 and taking into consideration the major irregularities and omissions pointed out in the SARs on the annual accounts of the Board and not taking into account the subsidy/subventions receivable from the State Government, the net surplus/deficit of the Board would be as given below:

(Rupees in crore) Sl. No. Particulars 1999-2000 2000-2001 2001-2002

1 Net surplus/(-) deficit as per books of accounts 403.11 (-) 2,467.66 (-) 539.46

2 Subsidy from the State Government 2,084.19 (-) 373.85 Nil

3 Net surplus/(-) deficit before subsidy from the State Government (1-2)

(-) 1,681.08 (-) 2,841.51 (-) 539.46

4 Net increase/decrease in net surplus/ (-) deficit on account of audit comments on the annual accounts of the SEB

(-) 111.32 (-) 237.45 (-) 234.30

5 Net surplus/(-) deficit after taking into account the impact of audit comments but before subsidy from the State Government (3-4)

(-) 1,792.40 (-) 3,078.96 (-) 773.76

Persistent irregularities and system deficiencies in financial matters of PSUs

1.35 The following persistent irregularities and system deficiencies in financial matters of PSUs had been repeatedly pointed out during the course of audit of their accounts but no corrective action had been taken by those PSUs so far.


1.36 Third party risk does not include Rs.3.25 crore being liability on account of compensation payable to S.T. passengers in respect of 201 cases of death and 899 cases of permanent partial disability up to 31 March 2002 which should have been provided in compliance of Section 140(2) of Motor Vehicles Act, 1988. This has resulted in understatement of liability and loss to that extent.

? Dues from Government and local authorities includes Rs.2.06 crore being amount receivable on account of Agro-Advantage 1998. Out of this the Government decided (November 1998) to reimburse rupees one crore and there was no assurance/response from the State Government in respect of remaining amount of Rs.1.06 crore. Thus, a provision for the same should have been made in the accounts. Non provision has resulted in understatement of loss by Rs.1.06 crore.


16

Internal audit/internal control

1.37 The statutory auditors (Chartered accountants) under the directions issued by Comptroller and Auditor General of India under section 619(3)(a) of the Companies Act, 1956 have suggested major recommendations/comments on possible improvements in the internal audit/internal control system in respect of State Government companies as detailed in Annexure-11. As seen from the Annexure, the major comments were in the nature of need for increase in scope and coverage of audit, and internal audit not being commensurate with the size of the organisation.

Recommendations for closure of PSUs

1.38 Even after completion of five years of their existence, the annual turnover of 32? Government companies (working: 16, non-working: 16) has been less than rupees five crore in each of the preceding five years of their latest finalised accounts. Similarly, three? Government companies (two working and one non-working) had been incurring losses for five consecutive years (as per latest finalised accounts) leading to negative net worth. In view of poor turnover and continuous losses, the Government may either improve performance of above 35 Government companies or consider their closure. In addition, four? working Government companies engaged in similar activities having poor turnover could be considered for merger.

The State Government took a decision to wind up 14 companies in 1992. However, the process of liquidation of these companies could not be initiated on account of stay order issued by the Aurangabad Bench of Mumbai High Court and action was being taken to vacate the stay order. The Government further stated that a decision had been taken to close down some of the mills of Maharashtra State Textile Corporation Limited. Further developments were awaited (September 2003).

Response to Inspection Reports, Draft paras and Reviews

1.39 Audit observations noticed during audit and not settled on the spot are communicated to the heads of PSUs and departments concerned of State Government through Inspection Reports. The heads of PSUs are required to furnish replies to the Inspection Reports through respective heads of departments within a period of six weeks. Inspection Reports issued up to March 2003 pertaining to 52 PSUs disclosed that 2,607 paragraphs relating to 576 Inspection Reports remained outstanding at the end of September 2003.

? Annexure-2 Sl.No. A-4,5,6,9,12,16,22,23,29,30,31,33,34,35,44,45 and C-1 to 13,16,17,18. ? Annexure-2 Sl.No. A-13,20, and C-15. ?Annexure-2 Sl.No. A-33,34,35 and 36.


17

The department-wise break-up of Inspection Reports and Audit observations outstanding as on 30 September 2003 is given in Annexure-7.

Similarly, draft paragraphs and reviews on the working of PSUs are forwarded to the Principal Secretary/Secretary of the administrative department concerned seeking confirmation of facts and figures and their comments thereon within a period of six weeks. It was, however, observed that 16 draft paragraphs and four draft reviews forwarded to the various departments during January-September 2003, as detailed in Annexure-8, have not been replied to so far (September 2003).

It is recommended that the Government should ensure that:

? procedure exists for action against officials who failed to send replies to inspection reports/draft paragraphs/reviews as per the prescribed time schedule,

? action to recover loss/outstanding advances/overpayment is taken in a time bound schedule, and

? the system of responding to the audit observations is revamped.

Position of discussion of Audit Reports (Commercial) by the Committee on Public Undertakings (COPU)

1.40 The position of discussion of Audit Reports (Commercial) by the COPU, reviews and paragraphs pending for discussion in the COPU at the end of March 2003 is shown below:

No. of reviews and paragraphs appeared in the Audit Report

No. of reviews/paragraphs pending for discussion

Period of Audit Report

Reviews Paragraphs Reviews Paragraphs

1998-1999 4 11 3? 3?

1999-2000 4 18 4? 18

2000-2001 4 21 4 21

2001-2002 4 20 4 20?

Total 16 70 15 62

? Briefing of five reviews and three paragraphs to the COPU completed, discussions held in 2003-04. ? The Audit Report, (Commercial) 2001-02 was presented to Legislature on 21 July 2003.


18

During the year 2002-03, COPU made five recommendations for which Action Taken Notes on three companies and one corporation were awaited from concerned PSUs/State Government (September 2003). The Audit Report (Commercial) for the year 2001-02 was placed before the State Legislature on 21 July 2003.

619–B companies

1.41 There were three working companies coming under Section 619-B of the Companies Act, 1956. Annexure-9 indicates the details of paid-up capital, investment by way of equity, loans and grants and summarised working results of these companies based on their latest available accounts.

19

Chapter-II

Review relating to Government company


Highlights

The Maharashtra State Handlooms Corporation Limited (Company) was incorporated in October 1971 with the main objective of assisting handloom weavers outside the co-operative fold by providing them with yarn and undertaking the marketing of their products thereby reducing their dependence on middlemen.

(Paragraph 2.1)

The Company incurred continuous losses during 1998-2002. The accumulated loss of the Company at the end of March 2002 was Rs.68.21 crore which was more than four times of its paid-up capital.

(Paragraph 2.8)

The Company failed to fulfil its main objective of supplying raw material to weavers as it could meet only 3 to 22 per cent of their requirement for yarn during 1998-2003.

(Paragraph 2.10)

Due to injudicious allotment of work to the weavers in cottages, Company’s employees could not get adequate work resulting in payment of idle wages of Rs.76 lakh.

(Paragraph 2.13)

Due to low volume of production, the per unit cost was higher which led to uncompetitive sales prices.

(Paragraph 2.15)

Despite protection provided to the Company by reserving its products for purchase by Government departments, the Company appointed private agents for sale to Government departments and paid a commission of Rs.1.09 crore to them during 1998-2003.

(Paragraph 2.17)


20

Although, the Government policy did not envisage procurement of cloth by Government departments from traders either directly or through the Company yet the Company supplied the finished goods by procuring the same from traders.

(Paragraph 2.18)

The Company irregularly diverted Rs.4.09 crore received for implementing delinking scheme (Rs.77 lakh), workshed cum housing scheme (Rs.85 lakh), project package scheme (Rs.60.88 lakh) and voluntary retirement scheme (Rs.1.86 crore) towards working capital.

(Paragraphs 2.25-2.27 and 2.32)

Introduction

2.1 The Maharashtra State Handlooms Corporation Limited (Company) was incorporated in October 1971 with the prime objective of assisting handloom weavers outside the co-operative fold by providing them with yarn and by undertaking the marketing of their products thereby reducing their dependence on middlemen.

Objectives and activities

2.2 The main objectives of the Company are:

? to supply improved equipment and accessories to the handloom weavers;

? to supply raw material required for the industry;

? to buy finished products produced by the weavers;

? to install and run dye houses, plants for sizing, bleaching, calendaring, mercerising, printing and shrink processing and other processing plants required for the handloom industry.

The Company functioned as a nodal agency for implementation of various handloom development schemes introduced by Government of India (GOI) and Government of Maharashtra (GOM).

As on 31 March 2003, the Company had two weaving sheds* in which production was done by own employees. In addition, there were 20 production centres$ (4277 looms) through which it supplies yarn to weavers working in their own cottages for manufacture of items like bed sheets, grey

* Kamptee and Nagpur. $ Adyal, Andalgaon, Bela, Bhandara, Dhapewada, Gumgaon, Kalmeshwar, Kamptee I,II,III,

Khapa, Maindargi, Mohad, Mowad, Nagpur, Palandur, Paoni, Ramtek, Sangadi and Umred.

Chapter-II – Review relating to Government company

21

cloth, towels, napkins etc. The Company had one dye house@ for dyeing/bleaching of yarn and 22 sales depots# for marketing of its products.

Organisational set up

2.3 The management of the Company is vested in a Board of Directors consisting of one part time chairman appointed by State Government and nine directors of whom four are non-official directors. Out of four non-official directors, three are from political parties and one is a nominee of a financial institution. The Managing Director is the Chief Executive of the Company. Regular Managing Director has not been posted by GOM from October 1999 onwards and the Chief Marketing Officer of the Company has been holding the charge. None of the directors in the Board had technical expertise in the field of handlooms. Managing director is assisted by the officers in-charge of sales, production, accounts, audit, administration and legal sections.

GOM appointed (June 2000) a local politician as the chairman of the Company.

Scope of Audit

2.4 The working of the Company was last reviewed in the Report of the Comptroller and Auditor General of India for the year 1985-86, Government of Maharashtra (Commercial) which was discussed in December 1993 by the Committee on Public Undertakings (COPU). The COPU in its 18th Report of December 1993 recommended as follows:

? instances of unnecessary purchase of assets and non-disposal of obsolete items pointed out in the report should not recur;

? responsibility should be fixed for excess staff appointed;

? closure of the Company to avoid further increase in loss; and

? establishment of co-operative society of weavers for handing over the looms to the society.

The Company while submitting the Action Taken Report to COPU which was discussed by COPU in January 1998 stated that the excess staff has been reduced by implementing the voluntary retirement scheme.

@ Nagpur. # Akola, Amravati, Aurangabad, Bhandara, Buldhana, Chandrapur, Dattawadi, Dhantoli,

Gondia, Jalgaon, Kalachowki, Kamptee, Lalbaug, Nagpur, Nanded, Nerul, Parbhani, Pune, Ramtek, Solapur, Umred and Yavatmal.


22

The present review covers the activities of the Company for the five years ending 31 March 2003. Out of 20 production centres and 22 sale depots, five production centers* and six sale depots$ were selected for detailed check based on higher money value of production and sales, respectively in addition to test check of transactions of head office.

The audit findings, as a result of test check of records, were reported to Government/Company in April 2003 with a specific request for attending the meeting of Audit Review Committee for State Public Sector Enterprises (ARCPSE) so that the view points of Government/Company could be taken into account before finalising the review. The meeting of ARCPSE was held on 13 May 2003 and their view points had been duly incorporated in the review.

Funding

Capital structure

2.5 As on 31 March 2003, the authorised share capital of the Company was Rs.17 crore and paid-up capital was Rs.15.12 crore (GOM: Rs.13.22 crore and GOI: Rs.1.90 crore). During five years ending March 2003, State Government contributed Rs.2.12 crore towards the share capital of the Company.

Borrowings

2.6 As on 31 March 2003, loans of Rs.30.48 crore obtained from GOM and interest of Rs.25.12 crore thereon were outstanding. No repayment was made to the State Government either towards principal or interest during the five years ending March 2003. In addition, the Company also availed term loans, deposits and cash credit to meet its working capital requirements.

Financial position and working results

Financial position

2.7 Financial position of the Company for the four years ending 31 March 2002 (Annexure-12) shows increase in borrowings from Rs.23.83 crore in 1998-99 to Rs.36.01 crore in 2001-02 mainly due to loan received from GOM for delinking and voluntary retirement schemes. Similarly, current liabilities and provisions increased from Rs.15.56 crore in 1998-99 to Rs.34.37 crore in 2001-02 mainly due to increase in interest payable on Government loans. The net worth decreased from * Kamptee No 1, 2, 3, Dhapewada and Mohadi. $ Aurangabad, Bhandara, Jalgaon, Lalbaug, Nanded and Umred Road.


23

(-) Rs.27.94 crore in 1998-99 to (-) Rs.53.29 crore in 2001-02 due to continuous losses.

Working results

2.8 As could be seen in Annexure-13, there was a loss of Rs.9.04 crore, Rs.8.51 crore, Rs.10.52 crore and Rs.8.19 crore during 1998-99,1999-2000, 2000-01 and 2001-02, respectively. The accumulated losses of Rs.68.21 crore were more than four times of its paid-up capital. The loss was mainly due to poor volume of sales and consequently non-absorption of overheads. Poor sales led to a working capital crunch leading to reduction in production and mounting overhead costs per unit of production as discussed in paragraph 2.15. Poor internal resource generation necessitated repeated borrowings and interest burden thereon. Expenditure incurred on delinking scheme discussed in paragraph 2.25, had further aggravated the financial position as the same was funded through high cost borrowings.

Appraisal of activities

Coverage of weavers

2.9 The main objective of the Company was to assist the weavers outside the co-operative fold. The table below indicates the coverage by the Company vis-a-vis the number of weavers outside the co-operative fold during 1998-2003:

Year No of weavers attached to Company (as on 31 March)

Percentage of coverage*

1998-99 7,271 41

1999-2000 5,032 28

2000-01 4,783 27

2001-02 4,407 25

2002-03 4,221 24

* Coverage worked out based on 17,740 weavers outside co-operative fold as per latest census of 1995-96.

It could be seen from the above table that total number of weavers attached to the Company reduced from 7,271 (1998-99) to 4,221 (2002-03) which represents only 24 per cent. Thus, Company’s role in providing employment to weavers outside the co-operative fold has been diminishing steadily.


24

Supply of yarn far below required quantity

2.10 The requirement of yarn for handloom weavers attached to the Company and the yarn actually supplied by Company during 1998-2003 was as detailed below:

Yarn requirements for looms attached to the

Company

Actual supply of yarn by the Company

Percentage of supply to requirements of looms attached to Company

Year

(in lakh bundles) 1998-99 3.44 0.44 13 1999-2000 2.66 0.59 22 2000-01 2.42 0.32 13 2001-02 2.30 0.32 14 2002-03 2.12 0.06 3

As seen from above table, supply of yarn in respect of looms attached to the Company during 1998-2003 ranged between three and 22 only. The Company thus failed to fulfil its main objective of supplying raw material to weavers. The Company attributed (April 2003) its failure to non-availability of funds.

Production in common sheds and cottages

2.11 On submission of application, the weavers outside co-operative fold can get registered with the Company. Yarn is supplied to weavers in cottages for conversion to products like bed sheets, grey cloth, towels, sarees, etc. Eighty nine per cent production of the Company was through cottage weavers. Cottages are organised into groups (20 Nos), each group being linked to a production centre. Cottage weavers are paid on piece rate basis. In addition, the Company has its own two sheds wherein weaving is done by its employees.

Production in sheds

2.12 The table below shows the annual average production per loom, production, wages paid and average wages per meter during 1998-2003.

Year

Average production per loom (in metre)

Production (in lakh metre)

Wages paid (rupees in lakh)

Average wages per metre (Rupees)

1998-99 2,564 2.59 20.25 7.82 1999-2000 2,228 1.76 25.21 14.32 2000-01 1,153 0.83 29.94 36.07 2001-02 875 0.42 37.46 89.19 2002-03 739 0.34 24.39 71.74

From the table, it is seen that the average production per loom declined from 2,564 metres in 1998-99 to 739 metres in 2002-03. The average wages per metre increased from Rs.7.82 per metre in 1998-99 to Rs.71.74 per metre in 2002-03 due to decline in volume of production.

Supply of yarn was only 3 to 22 per cent of the requirement.

Abnormal increase in wages per metre was due to rapid decline in volume of production.


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Payment of idle wages

2.13 During 1998-2003, the Company paid idle wages of Rs.76 lakh (83,085 idle man days) to its employees working in sheds due to non-availability of yarn/beam etc. while work was allocated to the weavers in cottages by providing yarn/beam etc. involving wage payment of Rs.2.66 crore. To avoid idle wages, the Company should have ensured optimum utilisation of its employees before allotting the work to weavers in cottages. Thus, due to injudious allotment of work to weavers in cottages, the Company’s employees could not get adequate work resulting in payment of idle wages of Rs.76 lakh. The management stated (March 2003) that the weavers engaged in cottages were more in number and create law and order problem in the absence of regular work. It was further stated (May 2003) that items like durries, baskar patti, cotton/silk sarees, bedsheets and towels were produced in cottages and could not be made in sheds. The reply was not tenable as all these items could be produced in sheds (except basker patti) since the looms were wide enough. The Company should have ensured maximum production in sheds and only the balance should have been allotted to cottage weavers.

Production in cottages

2.14 The table below shows the number of production centres, average number of looms attached to the Company, looms utilised, production and average production per loom during 1998-2003.

Year Number of

production centers

Average number of

looms attached to

the Company

Average number of looms utilised

Percentage of

utilisation

Production (in lakh metres)

Average production per loom (metres)

1998-99 31 8,050 6,444 80 10.60 164

1999-2000 29 5,292 3,853 73 14.65 380

2000-01 28 4,697 2,059 44 11.51 559

2001-02 23 4,395 2,225 51 8.61 387

2002-03 20 4,277 2,290 54 2.75 120

The Company had 31 production centres during 1998-99, which declined to 20 during 2002-03 on account of merger of few centres. The average number of looms attached to the centres also declined from 8,050 in 1998-99 to 4,277 in 2002-03 due to delinking of weavers. Despite delinking, the utilisation of the looms declined from 80 per cent in 1998-99 to 54 per cent in 2002-03. The production declined from 10.60 lakh metres in 1998-99 to 2.75 lakh metres in 2002-03. The Company attributed (March 2003) the decline in production to its bad financial position. As already explained in paragraph 2.8, the bad financial position was due to low production.

Audit observed that in seven? production centres, the percentage of non-operative looms to total looms attached to the centres ranged between ? Adyal, Maindargi, Mowad, Nagpur, Palandur, Powni, and Umred.

Idle wages of Rs.76 lakh was paid.


26

68 and 96 during 2002-03 as against 20 and 37 during 1998-99. In Kalmeshwar production centre, all looms were non-operative from 2001-02.

Cost structure and pricing

2.15 In respect of sales to Government departments, the central stores purchase organisation of the State Government fixed the selling price for some categories and for the rest, the Company fixed rates by adding 30 per cent overhead to prime cost while for general sale the price was fixed after adding 100 per cent overhead to prime cost (70 per cent up to 2000-01). For general sale, 20 per cent discount is allowed throughout the year and additional 20 per cent discount is allowed during festival season.

The table below shows the production, administrative, selling and financial overheads and the cost of production for four years ended 2001-02.

(Rupees in lakh)

Overheads

Year

Cost of production

Production Administra-tive

Selling Financial (interest)

Total

Percentage of overhead

to cost of production

1998-99 342.85 100.18 196.33 111.20 341.07 748.78 218

1999-2000 414.59 101.30 241.06 143.91 400.31 886.58 214

2000-01 306.70 110.24 282.18 121.04 435.18 948.64 309

2001-02 236.01 72.25 248.90 91.84 528.11 941.10 399

Because of steep decline in value of production, the overheads could not be absorbed while fixing the price. There is a compelling need to increase production so that overheads can be absorbed without increase in price.

The production cost structure of the Company as on 31 March 2002 is given below:

Pie Chart

Selling Overhead

8%

Financial overhead

45%

Administrative overhead

21%

Production overhead

6%

Production cost 20%

As seen from the pie chart above, the overhead cost is 80 per cent out of which financial overhead constitutes a disproportionately large part i.e.

There is a compelling need to increase production to reduce overhead.


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45 per cent of the total cost. There is a need for the Company to become financially viable by increasing sales beyond the breakeven point and generate enough cash to repay the loans.

A comparison of the prime cost of some of the Company’s products with comparable products produced by a private co-operative society? in Maharashtra is made in the table below:

Sl. No.

Name of the product

Unit

Prime cost# of the

Company’s products

(In Rupees)

Prime cost of the Society’s

products (In Rupees)

Rate difference

(In Rupees)

Rate difference

in percentage

1. 52 Grey cloth Metre 24.42 32.47 (-)8.05 (-)24.79 2. 18 x 18 Handkerchief No. 5.09 7.27 (-)2.18 (-)29.99 3. 18 x 27 Napkins No. 7.52 9.09 (-)1.57 (-)17.27 4. 54 x 90 Plain check bed sheet No. 67.89 85.73 (-)17.84 (-)20.81 5. 60x90 check bed sheet No. 92.23 128.18 (-)35.95 (-)28.05 6. 124 cm x 4.15 mtr. Grey

dhoti No. 47.27 69.11 (-)21.84 (-)31.60

7. 6 yard Indigo cotton saree No. 182.44 171.95 10.49 6.10 8. 48 Jacquard curtain cloth Metre 53.04 55.12 (-)2.08 (-)3.77 9. 36 Check shirting Metre 45.11 38.15 6.96 18.24

10. 58 Grey cloth Metre 35.60 43.03 (-)7.43 (-)17.27

As seen from the above table, the Company’s products prime cost was much lower than that of the society in most cases. However, the selling price of Company's products was much higher as seen from table below:

Sl. No.

Name of the product

Unit

Company’s selling price (In Rupees)

Co-operative society’s

selling price (In Rupees)

Rate difference

Rate difference

in percentage

1. 52 Grey cloth Metre 38.40 35.70 2.70 7.56 2. 18 x 18 Handkerchief No. 8.80 8.00 0.80 10.00 3. 18 x 27 Napkins No. 11.20 10.00 1.20 12.00 4. 54 x 90 Plain check bed

sheet No. 107.20 94.30 12.90 13.68

5. 60 x 90 check bed sheet No. 141.60 141.00 0.60 0.43 6. 124 cm x 4.15 meter Grey

dhoti No. 78.40 76.02 2.38 3.13

7. 6 yard Indigo cotton saree No. 320.00 189.20 130.80 69.13 8. 48 Jacquard curtain cloth Metre 72.80 60.65 12.15 20.03 9. 36 Check shirting Metre 52.00 41.97 10.03 23.90 10. 58 Grey cloth Metre 59.20 47.33 11.87 25.08

? Data obtained from weavers service centre Mumbai -unit of the Development Commissioner for Handlooms, New Delhi. # Prime cost – cost of raw material and wages.


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It could be seen from the above tables that despite lower prime cost, the final selling price of the Company was higher. This was due to enormously high (80 per cent) overhead cost as shown in the pie chart. The Company needs to address the issue of uncompetitive pricing by increasing production so that unit overhead cost can be reduced.

Sales performance

2.16 The Company’s products are sold through 22 sale depots established throughout the State. Apart from sale of Company’s products to Government Departments and others, the Company resorted to trading sales by appointing agents to procure goods from market and sell to Government departments. The table below indicates the details of sales during the period 1998-2002.

(Rupees in lakh)

Details of sale 1998-99 1999-00 2000-01 2001-02

Own products Sales to Government departments 418.40

(48.85) 533.01 (58.33)

250.55 (22.78)

157.65 (14.16)

Sales to others 382.51 (44.65)

204.14 (22.34)

231.70 (21.07)

175.05 (15.72)

Sub total 800.91 (93.50)

737.15 (80.67)

482.25 (43.85)

332.70 (29.88)

Trading sales to Government departments

55.68 (6.50)

176.69 (19.33)

617.59 (56.15)

780.69 (70.12)

Total sales 856.59 913.84 1,099.84 1,113.39

Breakeven sales 7,209.35 3,520.72@ 6,674.47 5,475.42

Percentage of sales to breakeven sales

12 26 16 20

(Figures in bracket indicate percentage of sale to total sales)

From the above table, it could be seen that the sale of Company’s own product decreased from 93.50 to 29.88 per cent during 1998-2002. The percentage of total sales to breakeven sales was not only very low but also had a decreasing trend.

The scrutiny of sales performance revealed the following:

Sales to Government departments

2.17 GOM (January 1992) reserved the purchase of handloom cloth by its departments from the Company and Maharashtra State Handloom Co-operative Federation Limited (MAHATEX), Mumbai. In order to avoid unnecessary competition between the agencies, Government demarcated (January 1999) their area of operation. The departments situated in the

@ Decrease in breakeven sales during 1999-2000 was stated to be due to huge reduction in closing stock on account of sale to GOM towards Orissa flood relief.


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19 districts? were directed to purchase their requirement of handloom products from the Company.

Despite protection provided to the Company by reserving its products for purchase by Government departments, the Company appointed private agents for sale to Government departments and paid Commission of Rs.1.09 crore to them at the rate of 12 per cent during 1998-2003. The Company justified (March 2003) the appointment of agents on the ground that special efforts were required as the purchasing departments gave last priority for purchase of textile items. The reply was not acceptable as no special efforts were required in view of the reservation as per government policy. Reducing dependence of weavers on middlemen was one of the objectives of the Company. The appointment of agents was, therefore, not in conformity with the role assigned to it to eliminate middlemen.

2.18 Apart from irregular appointment of agents for sale to Government departments, the Company supplied finished goods (trading sale) procured from traders. The policy of the Government regarding procurement of cloth by the Government departments did not envisage procurement from traders either directly or through the Company. It could be seen from the table that trading sale to Government departments increased from 6.50 to 70.12 per cent during 1998-2002.

2.19 On test check of 136 cases relating to 1998-2003, it was noticed that in 99 cases, payments from Government departments were realised after delays ranging between one and 17 months. The duty of agents which entitled them to 12 per cent commission inter alia included obtaining payments from Government Departments. But there were delays as the Company did not stipulate any time period within which payments were to be made.

2.20 Though the Company registered itself with Handloom Promotion Council in August 2002 with the purpose of introducing its products in the export markets, it had not yet succeeded in export of its goods (March 2003). The Company attributed (March 2003) this to acute financial crunch. The fact remained that the Company was not successful in exporting goods so as to develop alternative markets for its products.

Performance of sale depots

2.21 In the year 1998-99, sales targets were fixed for 23 sales depots out of 37 and only one depot achieved the target. The performance of the remaining 22 depots ranged between 0.28 and 47 per cent. The Company did not fix any sales targets thereafter. Annexure-14 showing the contribution by sales depots indicates that 8 to 17 out of 22 sale depots had negative contribution during 1998-2003. This includes six depots having continuous negative contribution

? Eleven districts of Vidharbha region, Aurangabad, Dhule, Jalgaon, Jalna, Nanded, Parbhani, Pune and Thane.

Commission of Rs.1.09 crore towards sale to Government departments was paid to private agents.


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during the last three or more years as follows:

Sl. No. Name of the depots Continuous negative contribution

1. Aurangabad and Gondia last 5 years

2. Lalbaug (Mumbai) last 4 years

3. Nerul, Parbhani and Pune last 3 years

There is a need to analyse the reasons for continuous negative contribution and to improve performance.

Loss due to sale below cost of production

2.22 The Company agreed (October 1999) to sell 40x40x8 yard patti plain sarees at the rate of Rs.88 to Narayan Synthetics, Amalner, a regular purchaser of the Company, which was sufficient to recover prime cost (cost of raw material and wages) only. On request from the purchaser, the Company agreed (February 2000) to reduce the rate to Rs.80 per saree and again to Rs.78 per saree from August 2001. The Company sold 1.86 lakh sarees below the prime cost. As a result of it, leaving aside the overheads, even the prime cost to the extent of Rs.19.22 lakh remained unrecovered. The Company did not invite tender/quotation for the sale.

The Company stated (March 2003) that apart from commercial activities, the Company had a social objective of providing employment to handloom weavers. The reply was not acceptable in view of the fact that Company’s action had resulted in benefits being passed on to a private party.

Non-implementation of recommendations

2.23 In 1990, the Company appointed Kirloskar consultants to recommend comprehensive measures for improvement of organisation and methods, towards which an amount of Rs.2.05 lakh was paid. The consultants recommended interalia formulation of marketing plan based on marketing needs, production plan based on marketing plan and purchase plan based on production plan, relocation of sales depots, standardisation of products, training of sales personnel, regular monitoring of products being offered by competitors and prices thereof, weeding out of non-saleable varieties etc. The Board of Directors accepted (September 1990) the recommendations of the consultants only to the extent of reduction of staff.

The Company stated (July 2003) that it had taken action for reduction of staff and 101 employees were retrenched. However, the Company had not taken action on other recommendations made by the consultants.

Implementation of schemes

2.24 The Company implemented several schemes for handloom weavers. A review of implementation of these schemes revealed the following:


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Delinking scheme

2.25 The Company submitted (February 1998) a proposal to GOM for approval of a scheme to delink 3,000 weavers above the age of 55 who were unable to weave good quality cloth due to advanced age. Weavers were to be paid Rs.10,000 each as ex-gratia to delink them from the Company. GOM approved the scheme (November 1998) and sanctioned loan of Rs.6 crore up to November 1999 at an interest rate of 18.5 per cent repayable in five equal instalments after a moratorium of two years. The ex-gratia was enhanced to Rs.15,000 per weaver by GOM.

? Audit observed that no tangible benefits accrued to the Company by implementing this scheme since the beneficiaries were cottage weavers who would be paid only when assigned work. The entire scheme had gone against the Company’s objective of assisting weavers outside the co-operative sector. Further, reduction in number of weavers and consequent decline in production would increase overheads per unit.

? Out of rupees six crore received from GOM, the Company disbursed Rs.5.23 crore and diverted the remaining amount of Rs.77 lakh to reduce cash credit balance. Since the interest rate on loan was higher than that of cash credit account, the Company suffered interest loss of Rs.8.26 lakh.

Workshed cum housing scheme

2.26 GOI revised (June 1997) norms of the centrally sponsored scheme called workshed cum housing scheme to provide assistance to handloom weavers for construction of workshed/house cum workshed. The terms and conditions for grant of assistance under the scheme, inter alia, were as follows:

? For construction of workshed, the maximum subsidy to be released by GOI was Rs.7,000 and Rs.10,000 for rural and urban workshed, respectively.

? The implementing agency had to ensure that title of the land was clearly vested with the weaver.

The Company submitted (October 1997) a proposal to GOM for construction of 6,172 worksheds (4,535 urban and 1,637 rural) involving financial assistance of Rs.5.68 crore of which GOI sanctioned and released Rs.2.25 crore up to July 2002 for construction of 2,784 worksheds (1,000 urban and 1,784 rural). The Company constructed 1,627 worksheds (867 urban and 760 rural) up to March 2003.

A review of implementation of the scheme revealed the following:

? On test check of 388 cases involving Rs.35.89 lakh released to weavers attached to the production centres at Kamptee No.1, 2, 3 and Mohadi, it was noticed that, the right/title of the land only in respect of 84 applications was as per the requirement under the scheme. In Dhapewada production centre, the documents proving the right/title of the land in the name of

The right/title of land did not vest with the weaver.

The scheme fund of Rs.77 lakh was diverted towards cash credit.


32

beneficiaries were not maintained. In respect of 12 cases, assistance amounting to Rs.1.20 lakh was granted based on duplicate copy of property tax receipts to more than one member of the family. Thus, benefit under the scheme was given in violation of scheme conditions.

? Assistance of rupees seven lakh was provided to 100 weavers for repairs in Dhapewada production centre in violation of scheme condition that assistance should be given only for construction. In reply (May 2003) it was stated that as the living condition of weavers is bad, all the conditions cannot be insisted upon. The reply was not tenable as the same was against the scheme guidelines.

? The Company did not utilise Rs.85 lakh received (January-July 2002) as the last instalment and diverted the same for its working capital requirements while 320 applications were pending as at the end of March 2003.

Project package scheme

2.27 GOI introduced (1991-92) project package scheme for assisting handloom weavers. Funding under the scheme was to be on the basis of 50:50 between GOM and GOI.

GOI approved 10 projects on the basis of proposals submitted by the Company at a cost of Rs.2.65 crore between February 1995 and March 1996. The project components included providing frame looms, accessories, training stipend to weavers for three months, raw material for training, arranging publicity and exhibitions, construction of worksheds and working capital loan to the Company etc.

Review of the implementation of above projects revealed (March 2003) the following:

? GOM delayed release of funds of Rs.1.90 crore by seven to 67 months.

? GOM and GOI have not released funds of Rs.26.11lakh and Rs.49.52 lakh, respectively to the Company (March 2003).

? The Company did not utilise Rs.60.88 lakh released in October 2000 and August 2001 and diverted the funds to meet working capital requirements.

? Funds of Rs.25.67 lakh received for frame loom and workshed components were diverted to training, publicity and working capital components of the scheme.

? An expenditure of rupees one lakh was shown in the utilisation certificate of one project (Project No.2/94) under design development component of the project being the salary of two designers at the rate of Rs.5,000 per month for 10 months period but the Company did not have designers on their roll.

The scheme fund of Rs.85 lakh was diverted towards working capital requirements.

The scheme fund of Rs.60.88 lakh was diverted towards working capital requirements.


33

? Project No. 2/82 involved supply of frame looms (200 Nos.) at the rate of Rs.6,000 per weaver involving capital outlay of Rs.12 lakh. Though the utilisation certificate submitted by the Company (January 2000) indicated that an amount of rupees three lakh was utilised, audit found that the Company supplied only seven looms valuing Rs.42,000.

? As per the scheme, the projects were to be implemented over a period of one to two years. However, all the ten projects were incomplete even after lapse of more than seven years (March 2003), thereby defeating the objective of enhancing the wage earning capacity of the weavers.

Deendayal hathkargha protsahan yojana

2.28 GOI introduced (September 2000) Deendayal hathkargha protsahan yojana, a comprehensive scheme for the handloom sector. Under the marketing incentive component of the scheme, state handlooms corporations shall receive assistance to enable the Company to marginally reduce its price and increase its competitiveness in the handloom sector. The grant would be shared between the Central and State Governments in the ratio of 50:50.

The Company claimed (January and July 2001) subsidy of Rs.52.13 lakh under the scheme. The claim was rejected by the Director of Handlooms, GOM on the ground that the State Government had not made budgetary allocation. Thus, the delay of two years in implementation of the scheme by the State Government deprived the Company of Rs.52.13 lakh towards marketing incentive. The GOM made budget allocation for the scheme effective from the year 2002-03. However, the Company's claim (July 2002) for the year 2002-03 amounting to Rs.17.28 lakh was pending (March 2003) with Director of Handlooms, GOM.

Thrift fund scheme

2.29 In pursuance of Textile Policy, 1985 the GOI introduced (December 1985) a centrally sponsored thrift fund scheme in the nature of provident fund for social welfare of weavers. As per the scheme, 8 per cent of wages was to be recovered from weavers and equal matching contribution was to be provided by GOI and GOM (4 per cent each). Interest was payable as per rate decided by GOI from time to time. The scheme was implemented by the Company in respect of weavers attached to the Company.

Review of the scheme revealed that an amount of Rs.40.10 lakh was due from GOI/GOM (GOI-Rs.10.54 lakh, GOM-Rs.29.56 lakh) towards matching contribution from 1993 onwards. In view of delay in receipt of matching contribution from GOI/GOM, the Company while making final payment to the weavers allowed interest on Government’s matching contribution only to the extent of 60 per cent. Test check in seven production centres$ revealed that the delay in receipt of matching contribution under the scheme deprived 4,375 weavers of 40 per cent of interest benefit on Government’s contribution amounting to Rs.11.02 lakh.

$ Bharatmata, Budhwari, Juni, Kamptee I, II and III, Mangalwari and Timki,.

Non-completion of project despite lapse of more than seven years.


34

Inventory control

Inventory of cloth

2.30 The inventory of the Company consists of finished goods, grey cloth and processed cloth. The table below gives the inventory position for the four years ending 31 March 2002. (Rupees in lakh)

Period ending Stock in terms of months’ sales

31 March 1999 7.05

31 March 2000 6.87

31 March 2001 10.03

31 March 2002 14.64

Audit observed that:

? Stock in terms of months’ sales showed an increasing trend rising from 7.05 months in March 1999 to 14.64 months in March 2002.

? The Company had no system to carryout age wise analysis of each item of inventory to determine the old stock which should be sold first. Monthly consolidation of stock reports received from sale depots to ascertain stock position was not done and consequently, production of unwanted goods could not be avoided. As a result, despite having sufficient stock to meet the annual requirement, the Company undertook further production of 28 categories of items, the carrying cost (considering stock in excess of six months’ sales/consumption and cash credit interest rate) of which was Rs.26.94 lakh. In respect of other items, the inventory carrying cost of stock exceeding six months’ sales/consumption during 1998-2003 worked out to Rs.21.63 lakh.

Credit control

Sundry debtors and advances

2.31 Sundry debtors, sales and debtors expressed in terms of months’ sales during 1998-2002 are given below:

Particulars 1998-99 1999-2000 2000-01 2001-02 (Provisional)

Total debtors (Rupees in lakh)

248.24 403.54 837.87 973.85

Sales (Rupees in lakh) 737.53 871.53 1,042.70 1,061.15 Total debtors in terms of months’ sale

4.04 5.56 9.64 11.01


35

It could be seen from the table that total debtors and debtors in terms of months’ sale were on the increase during 1998-2002. Debtors increased by almost four times during the four years. The age wise break-up of debtors of more than six months old was as under:

(Rupees in lakh)

Particulars 1998-99 1999-2000 2000-01

Over six months to one year 117.42 238.75 604.29

Over one year to two years 23.19 46.87 120.17

Over two years to three years 49.87 50.28 46.81

Over three years 57.76 67.64 66.60

Total 248.24 403.54 837.87

Audit observed that:

? The Company did not have any credit policy. The Company had no system for levying penalty for delay in payments. Consequently, the debtors over six months increased from Rs.2.48 crore in 1998-99 to Rs.8.38 crore in 2000-01.

? Subsidiary register showing party-wise bills issued, payments received, reminders issued etc. was not maintained. On test check, it was found that reminders were sent only once to 28 parties from whom Rs.7.20 lakh was due as on March 2002 whereas in respect of 157 parties from whom Rs.2.47 crore was outstanding as on 31 March 2002, no reminder was sent during 2002-03.

? Legal suits for recovery of dues from private parties were not initiated by the Company.

The management stated (May 2003) that orders were issued for vigorous pursuance and recovery of dues.

Manpower

2.32 A proposal for implementation of voluntary retirement scheme (VRS) was sent to GOM in July 1995 for approval and financial assistance. GOM sanctioned Rs.5.64 crore in 2000-01 and Rs.1.83 crore in 2001-02 as loan carrying an interest rate of 13.25 per cent repayable in five equal annual instalments after a moratorium of one year.

Ineffective recovery measures resulted in huge outstandings.


36

Audit observations on implementation of the scheme are as follows:

? The Company diverted Rs.90 lakh during 2000-03 for meeting its working capital requirements.

? Funds amounting to Rs.96 lakh were utilised irregularly for the payment of arrears of salary, earned leave encashment etc. of retired employees. Had the Company not diverted the above amounts, it could have settled the VRS claim of at least 93 employees and thereby saved recurring expenditure of Rs.55.24 lakh spent on salary and allowances during May 2002-March 2003.

Management information system

2.33 Audit observed that the management information system (MIS) of the Company was inadequate. The Company did not prepare monthly or quarterly financial statements to have periodic appraisal of the financial position for taking remedial action. Reports of item-wise sales, stocks and collection of dues from sundry debtors were not prepared by the Company and this affected the Company’s ability to take timely remedial action.

Internal audit

2.34 The internal audit of the Company was carried out departmentally. However, the officials carrying out internal audit were not adequately trained and professionally qualified. The statutory auditors in their report (January 2002) under section 619(3)(a) of Companies Act, 1956 pointed out that logical and analytical review of affairs of units was not carried out by internal audit.

The internal audit reports (262) were not submitted to the Managing Director but to the Financial Advisor and Chief Accounts Officer. The scope of internal audit was inadequate as head office transactions were not under the purview of internal audit. The Company stated (May 2003) that henceforth internal audit reports would be submitted to Managing Director.

Conclusion

The Company failed to fulfil its main objective of supplying raw material to weavers as it could supply only meager quantity of yarn to meet their requirement. The Company incurred continuous losses and its accumulated losses were much more than its paid-up capital. Despite having a low prime cost, the low volume of production and consequent high unit overheads resulted in uncompetitive prices. The non-recovery of overheads resulted in losses. Poor sales led to a working capital crunch

VRS fund of Rs.1.86 crore was diverted towards working capital.


37

leading to reduction in production and mounting overhead costs per unit of production. Poor internal resource generation necessitated repeated borrowings and interest burden thereon. Expenditure incurred on delinking scheme aggravated the financial position further as the same was funded through high cost borrowings.

In view of persistent losses and failure to fulfill its main objective by the Company, the Government should either take effective steps to make the Company financially viable or consider its closure to avoid further increase in losses, as also recommended by the Committee on Public Undertakings in December 1993.

19

39

Chapter-III

3. Reviews relating to Statutory corporation


3.1 Procurement, repairs and performance of energy meters

Highlights

Maharashtra State Electricity Board (Board) is required to install and maintain correct energy meter on each point of supply of energy to consumers for measuring the energy sold as per Section 26(2) of the Indian Electricity Act, 1910. At the end of March 2002, the Board had 18.79 lakh unmetered consumers.

(Paragraph 3.1.1)

The Board incurred extra expenditure of Rs.45.30 crore due to procurement of meters at higher rates despite availability of technically acceptable meters at lower rates.


As per the Indian Electricity Rules, 1956 the Board has to check the consumers’ installations including meters once in five years. Out of installations of 33.68 lakh low tension consumers (March 1998) in 40 divisions test checked in audit, the Board checked installations of 16.87 lakh consumers (50.09 per cent) during 1998-2003. Similarly, out of 30,099 high tension meters required to be test checked, the Board checked only 21,719 meters (72.16 per cent) during 1998-2003.

(Paragraphs 3.1.13-3.1.14)

Average utilisation of capacity of single phase and three phase meter testing benches in 95 out of 121 divisions worked out to 67 and 41 per cent, respectively. Non testing/recalibration of meters which slowed down with the passage of time resulted in underbilling of energy consumption to the extent of 118.61 million unit (MU) valuing at Rs.37.36 crore during first one year. Unrecorded consumption will further increase year after year till recalibration is done.

(Paragraphs 3.1.15-3.1.16)


40

As per commitments for power sector reform the Board installed meters on 6,098 distribution feeders and 14,134 distribution transformers at a cost of Rs.22.26 crore but energy accounting could not be done due to non identification of consumers feeder-wise/transformer-wise. This resulted in unproductive expenditure.

(Paragraphs 3.1.17-3.1.22)

Due to non procurement of meters in a staggered manner, 2.10 lakh three phase meters valuing Rs.41.08 crore procured for agricultural consumers remained idle (March 2003).

(Paragraph 3.1.23)

Time of Day metering resulted only in consumers already working during off peak hours getting the benefit of lower tariff leading to revenue loss of Rs.80.17 crore.

(Paragraph 3.1.24)

MOU stipulated reduction of transmission and distribution losses to 18 per cent. However, the Board could not achieve even the liberal target of 26.9 per cent set by Maharashtra Electricity Regulatory Commission. transmission and distribution losses in excess of 26.9 per cent worked out to 6,707 MU valuing Rs.2,113 crore during 2002-03.

(Paragraph 3.1.25)

Introduction

3.1.1 Energy meters are static/electromechanical equipment installed for recording the quantum of energy supplied to the consumer. Energy meters are of five types viz. single phase, poly phase low tension (LT), low tension current transformers (CT), high tension (HT) and feeder meters. Meters other than feeder meters are installed at the supply point for measuring the energy supplied to consumers. Feeder meters are installed at sub-stations for recording the electricity received/supplied.

The Maharashtra State Electricity Board (Board) is required to install and maintain correct energy meters at each point of supply of energy to consumers for measuring the energy sold as per Section 26(2) of the Indian Electricity Act, 1910. At the end of March 2002?, there were 111.64 lakh metered consumers (residential, commercial, industrial, public lighting, agricultural and public water works) and 18.79 lakh unmetered consumers.

? Figures at the end of March 2003 not available.

Chapter-III – Reviews relating to Statutory corporations

41

Organisational structure

3.1.2 Supply of electricity, installation, maintenance and reading of the energy meters are regulated by the respective Operation and Maintenance Divisions (divisions) headed by Executive Engineers working under Chief Engineer of respective Zonal Office. The Zonal Office places the annual indent for the quantity and type of energy meters with the Distribution Wing in Headquarters. The Distribution Wing consolidates indents received from respective Zones and forwards it to the Central Purchase Agency (CPA). CPA procures meters and equipment and arranges for supply thereof to various divisions through its stores centres. As of March 2003, there were 108 divisions working under 34 circles controlled by nine zonal offices? . Besides, there were two Urban Zones at Nagpur and Pune, which directly control 5 and 8 divisions, respectively.

Scope of Audit

3.1.3 The present review conducted during December 2002 to May 2003 covers procurement, repairs and performance of energy meters and meter testing equipment during 1999-2003. The review also covers the position of implementation of commitments for power sector reform made by the Government of Maharashtra in the Memorandum of Understanding (MOU) signed (March 2001) with the Government of India.

The audit findings as a result of checking of records relating to purchase of meters (26 tenders valued at Rs.669.71 crore) by CPA, performance of LT meters and metering system in 40 out of 121 divisions, performance of LT meter testing benches in 95 out of 121 divisions, review of unmetered and metered supply and T & D losses in all the 121 divisions were reported to Government/Board in June 2003 with the request for attending the meeting of Audit Review Committee for State Public Sector Enterprises (ARCPSE) so that the view points of Government/Board could be taken before finalising the review. The meeting of ARCPSE was held on 18 July 2003 which was attended among others by Technical Director (Distribution) of the Board and a representative of the administrative department of Government of Maharashtra. The review has been finalised after taking into consideration the view points/deliberation of ARCPSE.

? Nagpur Zone (5 circles, 15 divisions), Nasik Zone (4 circles, 19 divisions), Aurangabad Zone (4 circles, 8 divisions), Amaravati Zone (4 circles, 13 divisions), Kolhapur Zone (5 circles, 21 divisions), Kalyan Zone (3 circles, 9 divisions), Beed Zone (4 circles, 10 divisions), Konkon Zone (2 circles, 3 divisions) and Bhandup Urban Zone (3 circles, 10 divisions).


42

Procurement of meters

Requirement of meters

3.1.4 In order to implement power sector reform, a Memorandum of Understanding was signed between Government of India and State Government in March 2001. As per commitments in the MOU, the Board was to provide meters to all consumers by September 2002. As per the provisions of the Indian Electricity Act, 1910, the Board has to provide meters for measurement of energy supplied. LT consumers are provided with single phase meters, three phase meters and CT operated meters whereas HT consumers are provided with trivector meters.

As of March 1998, the Board had 101.79 lakh metered consumers (101.67 lakh LT consumers and 12,000 HT consumers) and 17.80 lakh unmetered consumers. During 1998-2002, the Board released 24.49 lakh new LT connections at the rate of 5 to 8 lakh connections per annum. The category-wise information in respect of metered and unmetered consumers during 1998-2002 is given in Annexures-15 and 16.

Purchase procedure

3.1.5 Based on the requirement received from zonal offices for releasing new connections and replacement of old/faulty meters, Distribution wing places in the month of November, an indent for the next year commencing from April. CPA starts process of procurement of meters in December and the tender gets finalised in or around June. On the basis of indent, CPA invites tenders for procurement of meters under annual/biennial rate contract. The Board did not compile make/supplier-wise failure rate data. Consequently, vendor rating has not been done so far.

Finalisation of tenders

3.1.6 During 1998-2003, the Board procured 38.05 lakh HT and LT meters at a cost of Rs.481.17 crore as against indents for 83.58 lakh meters.

The details of meters indented and procured during 1998-2003 are given below:

(Number in lakh) No. of meters

indented No. of meters ordered No. of meters actually

received No. of meters

issued

Year Total Single/ Three phase LT meters

Total Single/ Three phase LT meters

Total Single/ Three phase LT meters

Single/ Three phase LT

meters

1998-99 9.36 8.99 10.19 (72.76)

10.11 (65.41)

5.24 (31.54)

5.17 (24.99)

4.87 (23.18)

1999-2000 9.38 8.82 2.63 (34.57)

2.63 (34.57)

3.82 (34.20)

3.74 (29.27)

4.47 (29.46)

2000-01 20.76 20.37 4.66 (59.03)

4.50 (42.02)

4.20 (52.64)

4.14 (47.15)

3.84 (49.49)

2001-02 21.85 21.40 27.64 (308.59)

27.58 (302.18)

15.00 (216.25)

14.67 (186.26)

11.04 (144.46)

2002-03 22.23 21.66 0.06 (19.17)

-- --

9.79 (146.54)

9.68 (134.95)

12.78 (148.84)

Total 83.58 81.24 45.18 (494.12)

44.82 (444.18)

38.05 (481.17)

37.40 (422.62)

37.00 (395.43)

(Figures in brackets denote value in crore of rupees)

No vendor rating has been done, as the Board did not compile make/supplier wise failure rate data.


43

As against the norm for placement of indent in November of the previous financial year, placement of four annual indents for 1999-2000 to 2002-03 was delayed by one to two months due to delay in consolidation of requirement for all zones.

Due to delay in submission of breakup of types of meters and finalisation/revision of technical specifications for meters incorporating modifications after advertisement of tender, finalisation of seven (out of 13 tenders for 1998-2003) tenders during February 2000-October 2001 for 25.5 lakh single phase and 2.77 lakh three phase LT meters was delayed by two-13 months. Two tenders were cancelled in September and November 2000 due to revision of specifications and two tenders for five lakh three phase meters were in process of finalisation (May 2003) even after delay of 11 months from due date. Due to shortfall in procurement of new meters on account of the above delays, the Board released 3.26 lakh single phase connections by providing old/repaired meters during three years ending 2000-01.

During 1998-2003, nine tenders for purchase of LT meters were finalised. Scrutiny of these tenders revealed the following irregularities:

Procurement of LT meters at higher cost

3.1.7 In order to reduce its single phase meter inventory, the Board decided (October 1997) to procure meters having long range current rating of 5-30 ampere (A) capable of catering to a load ranging from 5-30 A instead of procuring meters of current rating of 5-10 A, 5-20 A and 5-30 A separately. In spite of this decision the Board purchased (August 1998-February 1999) one lakh meters having current rating of 5-20 A at Rs.886.40 per meter from VXL?.

The price of Rs.886.40 per meter was much higher than the price at which the Board purchased meters having rating of 5-30A in the same tender (Rs.444.82). Thus, purchase of one lakh meters at higher rate from VXL resulted in extra expenditure of Rs.4.42 crore when other tested and approved meters of current rating of 5-30A were available at a lower rate. In reply, the Board stated (May 2003) that the quality of meters was excellent and not a single complaint was received. The Board's reply was not tenable because purchase of 5-20A meters was not consistent with earlier decision of the Board (October 1997) that meters having current rating of 5-30A, capable of catering to a load ranging from 5 to 30A should only be procured instead of procuring meters of current rating of 5-10A, 5-20A and 5-30A separately.

Procurement of special type single phase electromechanical LT meters at higher cost

3.1.8 The Board received 11 technically acceptable offers at the rate of Rs.462.43 per meter in the tender for special type single phase electromechanical LT meters opened in June 1999. Three suppliers (VXL,

? VXL-VXL Landys and Gyr Limited Joka.

The Board incurred extra expenditure of Rs.4.42 crore on purchase of one lakh meters.


44

CGS, TTL?) offered 3.40 lakh meters each at the rate of Rs.1,036.47, Rs.1,018.60 and Rs.1,019.38 per meter respectively, of specifications different from those mentioned in the tender. The Board cancelled the tender and called for (October 2000) fresh tender with revised specifications matching the specifications of those three suppliers. The Board placed orders on these three suppliers for 8 lakh meters at the net payable rate of Rs.932.90 as their offers were technically acceptable (VXL, CGS and SIL?). Thus, procurement of meters at a higher rate though there were 11 technically acceptable offers at lower rate resulted in avoidable expenditure of Rs.37.64 crore. The Board replied (July 2003) that these meters were purchased as they had consistent accuracy and long life. The Board’s reply was not tenable as revision of specifications after opening of price bids violates the norm of transparency.

Procurement of LT static three phase energy meter at higher rate

3.1.9 The Board procured 58,000 meters from seven suppliers who agreed to match the lowest acceptable rate of Rs.2,125 per meter quoted by Bharat Heavy Electricals Limited (BHEL). India Meters Limited (IML) and Larsen and Toubro Limited (L&T) did not agree to match their rates with BHEL's rate with the result that their offers were liable to be rejected. Despite this, the Board procured 10,000 meters at the rate of Rs.2,328.20 from IML and L&T and incurred extra expenditure of Rs.21.32 lakh during July-October 2001. The above quantity of 10,000 meters could have been procured from the seven suppliers at Rs.2,125 per meter and the extra expenditure could have been avoided.

Extra expenditure due to revision of specifications

3.1.10 The Board also placed orders for 1,000 meters each with CGS and ABB? at Rs.5,340 and Rs.5,397.52 per meter, respectively. The Board purchased these meters on the grounds that the meters would be capable of continous operations and recording of energy consumption despite tampering. Not only were the meters supplied by these two firms different from those specified in tender but the Board also incurred extra expenditure of Rs.64.88 lakh on the purchase. Thus, revision of specifications after calling for tenders was another case of the Board not exhibiting transparency in procurement. The Board stated (July 2003) that these meters were procured for educational purpose and not considered for further extension orders. The performance of these meters had not been monitored (June 2003).

Procurement of polycarbonate case LT meters

3.1.11 Between December 1998 and November 2002, the Board procured 11.68 lakh meters of assorted types having polycarbonate case at the rate of Rs.444.82, Rs.409.57, Rs.491.83, Rs.867.58 and Rs.866.37 and Rs.1,040.30 per meter and 11.41 lakh meters of the same types with

?CGS-C.G.Schlumberger Electricity Management Limited, Gurgaon, TTL-TTL Limited, Delhi and SIL-Seahorse Industries Limited. ? ABB-Asea Brown Boveri Limited.

Purchase of 10,000 meters at higher rate resulted in extra expenditure of Rs.21.32 lakh.

Procurement of 2,000 meters at higher rate resulted in extra expenditure of Rs.64.88 lakh.

Purchase of 8 lakh meters at higher rate resulted in avoidable expenditure of Rs.37.64 crore.


45

conventional steel case at the corresponding rate of Rs.362.56, Rs.362.56, Rs.429.07, Rs.855.51, Rs.855.51 and Rs.842.64 per meter, respectively.

? Audit observed that procurement of 11.68 lakh meters with polycarbonate case resulted in extra expenditure of Rs.2.38 crore. The purchase of meters with polycarbonate case was made on the grounds that these meters had transparent covers which would enable the meter reader to know whether any tampering had been done with the internal mechanism of the meter and would facilitate their immediate replacement in order to avoid loss of revenue. There were no records to show that there was tangible benefit by way of early detection of tampered meters and their expeditious replacement.

? Transparency would demand that before calling for tenders, the allocation of quantities between the two categories of meters should have been done. This requirement was not met with in case of three out of four tenders finalised during July 1998-February 2001. In reply, the Board stated (May 2003) that whenever new developments come up, additional expenditure is inevitable which is outweighed by advantages in the long run. The Board further stated (June 2003) that gain in revenue due to early detection of tampering could not be exactly quantified.

The Board's reply was not acceptable as procurement of these meters should not have been made on such a large scale. Initial procurement should have been restricted to a trial lot and further purchases made only after ascertaining whether the high cost was commensurate with stated advantages.

Non recovery of liquidated damages

3.1.12 There were delays on the part of suppliers for which Rs.2.82 crore was recoverable from the suppliers as liquidated damages as per the terms of contract. The Board did not effect recovery to the extent of Rs.1.88 crore on the ground that it had delayed payments to suppliers. The Board stated (July 2003) that delay in payment was due to non availability of funds.

The reply is not tenable. As per the terms of purchase orders, payment was to be made to suppliers within 60 days from the receipt of meters in a lot. However, the Board delayed the payments by 5 to 126 days beyond the stipulated date. Audit observed that the placement of orders and delivery schedules had been fixed after ensuring the availability of funds. Due to delay in passing the bills by Stores billing section, the time limit of 60 days for payment could not be adhered to.

The Board purchased 11.68 lakh meters with polycarbonate case at extra cost of Rs.2.38 crore despite availability of meters with steel case at cheaper rate.


46

Performance, testing and repairs of meters

Checking of installation at the consumer’s premises

LT consumers

3.1.13 As per Indian Electricity Rules, 1956, the Board has to check the consumers’ installations including meters and metering equipment once in five years in order to have timely control over unauthorised extension or illegal use of electricity, tampering of meters and correctness of metering equipments. Scrutiny of records of 40 out of 121 divisions revealed that these divisions had 33.68 lakh LT consumers at the beginning of 1998-99. The Board should have checked installations of all these consumers by the end of 2002-03. However, the Board checked installations of only 16.87 lakh (50.09 per cent) LT consumers during 1998-2003. Table below indicates the number of connections checked and number of theft cases/defective meters detected during1998-2003:

Cases of theft/defective meters

detected

Year

No. of connections

checked Number Penalty recovered

(Rupees in crore)

Percentage of cases of theft/defective meters

detected to No. of connections checked

1998-99 2,26,802 29,713 1.36 13.10

1999-2000 2,64,297 34,197 2.15 12.94

2000-01 3,53,502 39,605 3.66 11.20

2001-02 3,83,413 47,801 5.42 12.47

2002-03 4,59,202 54,294 3.75 11.82

Total 16,87,216 2,05,610 16.34 12.19

Given the alarmingly high proportion of cases of theft/defective meters, there was a compelling need to do complete checking to minimize pilferage/ non recording of energy. But there was shortfall in checking of meters year after year as indicated below:

Shortfall in checking

Year Number Percentage

1998-99 4,46,819 66.33

1999-2000 4,09,324 60.76

2000-01 3,20,119 47.52

2001-02 2,90,208 43.08

2002-03 2,14,419 31.83

Total 16,80,889 49.91


47

In respect of divisions at Dhule (Urban), Pachora, Dharangaon, Gondia and Sangli (Urban), the percentage of checking was as low as 4.4, 8.1, 13.4, 14.2 and 14.5 respectively during 1998-2003. The shortfall in checking was not justified. The Board replied (July 2003) that shortfall was due to shortage of manpower. The reply was not acceptable since the percentage of cases of theft/defective meters was more than 10 per cent and the Board recovered Rs.16.34 crore towards penalty during 1998-2003. As such complete checking should have been done.

HT consumers

3.1.14 The Board prescribed (July 1987) that for early and timely detection of faulty HT meters, testing of meters of HT consumers having contract demand up to 1,000 KVA, up to 3,000 KVA and above 3,000 KVA should be done once in a year, once in six months and once in three months, respectively.

Audit observed that out of 30,099 meters required to be tested, the Board carried out testing of only 21,719 meters (72.16 per cent) during 1998-2003 as given below:

Year Number of HT consumers as per

information available

No. of meters to be tested

No. of meters tested

Shortfall in testing of meters

Number of meters found

faulty

1998-99 4,450 5,292 4,307 985 382

1999-2000 5,219 6,056 4,810 1,246 1,069

2000-01 5,382 6,226 4,571 1,655 1,257

2001-02 5,611 6,450 4,202 2,248 1,550

2002-03 6,180 6,075? 3,829 2,246 1,040

Total 26,842 30,099 21,719 8,380 5,298

Thus, there was a shortfall in testing of 8,380 HT meters during 1998-2003. The Board attributed (July 2003) shortfall in testing to insufficient staff, diversion of testing staff to other works, reluctance of consumers for shutdown of power supply for installation of testing equipment and problems in testing vehicles.

In the tests carried out, 5,298 meters were found faulty. Considering that these are HT consumers, 100 per cent check should have been done.

Utilisation of meter testing benches

3.1.15 Sub Rule (1) of Rule 46 of Indian Electricity Rules, 1956 provides that every connected installation should be periodically inspected and tested at intervals not exceeding five years by the Board. As per the Board's circular of August 1969, testing and recalibration of LT meters should be done once in three years. The Government of India also prescribed (November 2001)

?This includes 3/4th of the prescribed testing in respect of 3,585 consumers as per information available up to December 2002.

There was a shortfall in testing of meters of 8,380 HT consumers.


48

testing of single phase and three phase LT meters once in five and two years, respectively.

For the purpose of testing and calibration of single phase and three phase LT meters, the Board provided meter testing benches at division/sub-division levels. Scrutiny of data in respect of 95 divisions accounting for 88 lakh LT metered connections (March 2002) revealed that they were provided with 324 meter testing benches installed at a cost of Rs.154.08 lakh (March 2003).

? Against the aggregate capacity of testing and calibration of 41.58 lakh single phase meters and 10.55 lakh three phase meters during April 1997 to December 2002/March 2003? , utilisation of single phase and three phase meter testing benches in 95 out of 121 divisions worked out to 67 and 41 per cent, respectively (Annexure-17).

? Out of 88 lakh meters required to be tested and recalibrated as of March 2003, 55.63 lakh meters remained to be tested and recalibrated for want of meter testing benches (35.87 lakh meters) and under utilisation of meter testing benches (19.76 lakh meters).

The divisions attributed low percentage of utilisation to non-availability of meters for testing and replacement, shortage of manpower, benches being under repair and non-availability of sufficient quantity of three phase meters for testing. The reply was not tenable as testing of meters is an important activity and hence there could be no shortfall. Audit also noticed that despite having enough capacity, in 30 out of 95 divisions, testing of 0.66 lakh meters was outsourced resulting in extra expenditure of Rs.32.80 lakh. The Board accepted (July 2003) the fact.

Loss due to shortfall in recalibration of LT meters

3.1.16 As per Board's circular (August 1969), meters slow down by 0.5 per cent per annum. As per the laid down norms, all LT meters should be recalibrated and tested in a span of 5 years. Scrutiny of 56 divisions accounting for 57.10 lakh meters revealed that as on 31 March 2003, 42.05 lakh meters remained to be tested/recalibrated for more than five years. Non testing/recalibration of meters which slow down with the passage of time resulted in under billing of energy consumption to the extent of 118.61 MUs valuing at Rs.37.36 crore during first one year. The unrecorded consumption will increase year after year till recalibration is done. The Board replied (July 2003) that as all electromechanical meters would be replaced with static meters, testing of meters would not be required. The fact remains that non recalibration had resulted in under recorded consumption.

? In respect of 58 divisions information was available up to December 2002 and in respect of 37 divisions information was available up to March 2003.

Capacity utilisation of single phase/ three phase meter testing benches in 95 divisions was 67 and 41 per cent respectively.


49

Implementation of reforms programme under Memorandum of Understanding

3.1.17 In order to implement power sector reforms, a Memorandum of Understanding (MOU) was signed (16 March 2001) between the Government of Maharashtra and Government of India as a measure of joint commitment to undertake the reforms in a time bound manner. The MOU was valid for five years. As per MOU, the Board was to achieve breakeven in distribution operations by 31 March 2003 and generate positive returns thereafter. For this purpose, energy audit and energy accounting was to be undertaken at all levels to promote accountability and to reduce transmission and distribution losses to 18 per cent.

The Board was required to:

? install meters on all distribution feeders by 31 December 2001,

? provide 100 per cent metering on the LT side of distribution transformers by 31 December 2001,

? provide meters to all consumers by September 2002, and

? provide time of day (TOD) metering for HT consumers for demand side management and flattening of demand curve.

Installation of meters on distribution feeders

3.1.18 MOU stipulated that Board should install meters on all distribution feeders by December 2001 with a view to identify feeder-wise losses. However, as of March 2003, out of 7,128 feeders, panel meters were installed on 6,493? feeders at a cost of Rs.7.14 crore.

? Prior to installation of meters on feeders, it was absolutely essential to identify consumers attached to each feeder for reconciliation of energy consumed/billed with energy recorded at the feeder meter. The installation of meters on 6,098 feeders without undertaking this exercise resulted in unproductive expenditure of Rs.6.71 crore as in the absence of this data, feeder-wise losses could not be ascertained.

? Distribution feeders-6,098, express feeders-314 and MIDC feeders-81.


50

3.1.19 Table below gives details of express feeders:

2001-02 2002-03 Number of express feeders 298 314 Number of express feeders for which energy accounting reports received

270 198

Number of express feeders for which no energy accounting reports received

28 116

Number of express feeders on which energy loss was more than 2 per cent

54 15

Number of express feeders on which energy loss was below (-) 0.5 per cent

67 34

As per Maharashtra Electricity Regulatory Commission (MERC) stipulation, energy loss on express feeders was to be in the range of (-) 0.5 to 2 per cent. Loss on 54 feeders in 2001-02 and 15 feeders in 2002-03 was in the range of 2 to 5.6 per cent. Loss beyond permissible limit on the 54 feeders in 2001-02 worked out to 7.82 MU and 3.54 MU valuing Rs.2.46 crore and Rs.1.12 crore, respectively. One 220 KV express feeder of Jejuri sub-station supplying power to one steel tube manufacturer (Indian Seamless) alone recorded loss over and above the limit of 2 per cent to the extent of (3.88 MU valued at Rs.1.22 crore) during 2001-03. The Board did not take any action to reduce the excessive loss.

3.1.20 The details of negative energy loss recorded at express feeders during 2001-02 and 2002-03 are given in Annexure–18. During 2001-02 and 2002-03, 67 and 34 feeders, respectively, recorded negative loss of energy in the range of (-) 0.5 to (-) 16.45 per cent. The Board replied that variation of positive and negative errors was permissible. The Board’s reply was not tenable as such high negative losses are attributable to faulty meters installed at HT consumers/feeders. The Board should have taken corrective action.

3.1.21 In 2001-02, no energy accounting report was received in respect of 28 express feeders. In 2002-03, the situation deteriorated when reports were not received in case of 116 feeders. There should not have been any shortfall in the case of express feeders as the effort involved is insignificant since only one consumer is served by a feeder.

Installation of meters on the LT side of distribution transformers

3.1.22 MOU also stipulated that the Board would install energy meters on the LT side of all distribution transformers by 31 December 2001. As of March 2003, there were 1.10 lakh distribution transformers in 11 distribution zones*. Instead of providing meters on each distribution transformer, the Board installed meters only on 14,134 distribution transformers (12.85 per cent).

* Akola -19,356, Aurangabad -17,404, Beed -21,898, Bhandup Urban - 4,869, Kalyan -9,210, Kolhapur -46,648, Konkan - 4,935, Nagpur -17,473, Nagpur Urban - 2,154, Nashik - 48,449 and Pune Urban - 4,553.

Loss beyond permissible limit was Rs.3.58 crore during 2001-03.


51

Prior to installation of meters on distribution transformers, it was absolutely essential to identify consumers attached to each distribution transformer for reconciliation of energy consumed/billed with energy recorded at the distribution transformer meter. The installation of meters on 14,134 distribution transformers without undertaking this exercise resulted in unproductive expenditure of Rs.15.55 crore as transformer-wise losses could not be ascertained in the absence of required data.

Installation of meters at unmetered consumers

3.1.23 MOU had provided that 100 per cent metering of all consumers was to be achieved by 30 September 2002. MERC also directed in May 2000 that all consumers were required to pay tariff on metered consumption and the Board should ensure that all consumers would be metered within the next three years.

As per the Board’s annual administrative report for 2001-02, there were 18.52 lakh agricultural consumers and 26,949 public water works (PWW), who were not provided with meters. The Board had resolved (January 2001) to provide meters to all unmetered agricultural and PWW consumers by December 2004. Accordingly 4.88 lakh meters were purchased during May 2001 to December 2002 at a cost of Rs. 95.68 crore. As on March 2003, 18.03 lakh agricultural consumers remained unmetered. In reply, the Board stated (March 2003) that agricultural consumers were reluctant to opt for metered tariff. Further, agricultural consumers did not pay their energy bills in anticipation of certain concessions from the Government which also intervened to prevent disconnection of their supply in the event of arrears. The reply was not tenable because the Board should not have procured such large number of meters. Procurement should have been done in a phased manner only after successful installation of meters in each lot. As a result, 2.10 lakh three phase meters costing Rs.41.08 crore purchased during February to December 2002 for agricultural consumers remained unutilised (March 2003).

‘Time of day’ metering

3.1.24 For the purpose of shifting the energy consumption from peak hours to off peak hours, system of ‘Time of day’ (TOD) metering was introduced (May 2000). Tariff rules (May 2000) provide for lower tariff during ‘off peak’ hours and higher tariff during peak hours. As of September 2000, the Board provided TOD meters to all live 10,456 HT consumers. Scrutiny of records relating to billing of 8,167 HT consumers in HTP-I and II tariff category under TOD metering revealed that there was no shift in energy consumption from peak hours to off peak hours. Instead, the Board sustained loss of revenue of Rs.80.17 crore during June 2000 to March 2003 due to the concessional tariff. The revised tariff which provided for rebate during off peak hours and higher charges during peak hours resulted only in the consumers, already working during off peak hours, getting concessional tariff. In reply, the Board stated (July 2003) that it would approach MERC for revision in TOD tariff.

Due to non-procurement of meters in a staggered manner, 2.10 lakh meters costing Rs.41.08 crore remained idle.

TOD metering resulted in concession of Rs.80.17 crore to consumers already working during off peak hours.


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High T & D losses

3.1.25 MOU stipulated a target of reduction of T&D losses to 18 per cent by March 2003. The Board could not achieve even the liberal target of 26.9 per cent set by MERC.

Table below gives T&D losses during 1999-2003:

Year Percentage of T & D losses

1999-2000 31.9

2000-01 39.4? 2001-02 39.2?

2002-03 36.8?

Out of 34 circles and 2 urban zones, 25 circles/zones in 2001-02 and 27 circles/zones during 2002-03 recorded T&D losses above 26.9 per cent of energy input as shown below:

Number of circles/urban zones and divisions during

2001-02 2002-03

Range of T & D losses Circles/ urban zones

Divisions Circles/ urban zones

Divisions

Below 26.9 per cent 11 41 9 26 Between 27 and 39.9 per cent

13 48 14 44

Between 40 and 49.9 per cent

8 18 7 32

Above 50 per cent 4 14 6 19

Loss of energy in those circles/urban zones where T&D losses were more than 26.9 per cent worked out to 4,165 MU valued at Rs.1,312 crore in 2001-02 and 6,707 MU valued at Rs.2,113 crore in 2002-03.

Conclusion

Installation of meters on feeders, distribution transformers and consumers' premises was the key to achieving reduction of transmission and distribution losses to 18 per cent. Procurement of meters for installation at feeders and distribution transformers without identifying consumers did not yield the desired objective. Procurement was carried out in a non-transparent manner resulting in higher expenditure. There was a huge shortfall in calibration/testing of meters, which is very essential for accurate billing.

? The Board attributed higher T&D losses after the year 1999-2000 to better estimation based on improved level of energy audit.


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The Board needs to procure adequate number of meters at economic rates, strictly implement the policies of monitoring of independent feeders and carry out required checking of installations to avoid revenue losses. There is need to speedily implement the reforms programme committed in the Memorandum of Understanding and take steps for effective energy audit and metering the consumers.

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3.2 Performance of Khaperkheda Thermal Power Station including construction of Units 3 and 4

Highlights

Construction of unit 3 and 4 of 210 mega watt capacity each at Khaperkheda thermal power station was approved by the Planning Commission in June 1988, taken-up for implementation in September 1997 and commissioned in August 2000 and March 2001, respectively.

(Paragraph 3.2.1)

During implementation of civil works extra expenditure of Rs.1.03 crore was incurred due to improper estimates, issue of oversized steel and delay in revision of drawings.


In the execution of electrical and mechanical works, excess payment of Rs.31.66 crore was made to Bharat Heavy Electricals Limited due to incorrect computation of price variation.

(Paragraph 3.2.14)

Due to defective performance of ash handling plant supplied and commissioned by Mahindra Ash Tech Limited, the Board incurred extra expenditure of Rs.1.11 crore and also suffered power generation loss of Rs.71.08 crore. Irregular payment of Rs.60 lakh was made to the contractor towards reimbursement of excise duty. Penalty of Rs.18 lakh leviable as per terms of contract was also not levied.

(Paragraphs 3.2.16-3.2.20)

Due to rejection of technically and commercially acceptable lowest offer, the Board incurred extra expenditure of Rs.86 lakh on installation of coal handling plant.

(Paragraph 3.2.21)

Excess consumption of coal by 17.43 lakh metric tonne over and above the standard laid down by the equipment supplier resulted in loss of Rs.165.70 crore during 1998-2003.

(Paragraph 3.2.27)

Extra expenditure of Rs.13.60 crore was incurred on transportation of coal from distant mines.

(Paragraph 3.2.30)


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Steel worth Rs.2.21 crore was lying idle due to procurement in excess of requirement at the closing stage of the project.

(Paragraph 3.2.34)

Introduction

3.2.1 In order to meet the growing demand for power in the State, Maharashtra State Electricity Board (Board) set up stage-I of Khaperkheda thermal power station (KTPS) with two units of 210 mega watt (MW) capacity each. Prior to commissioning of stage-I units in 1990-91, the Planning Commission had approved (June 1988) two more units of 210 MW capacity each as stage-II of KTPS at an estimated cost of Rs.454.42 crore. The units were to be commissioned within a period of four years from the date of sanction of the project by the Planning Commission. However, the units 3 and 4 were taken up for implementation in September 1997 and commissioned in August 2000 and March 2001, respectively.


3.2.2 The Chairman is the Chief Executive of the Board and is assisted by a Technical Member and an Accounts Member. The Technical Member is assisted by one Technical Director (Generation Projects and Generation, Operation and Maintenance). The Technical Director is assisted by four Chief Engineers who look after planning and implementation of Generation Projects. The Chief Engineer responsible for the Operation and Maintenance of KTPS is assisted by one Deputy Chief Engineer, four Superintending Engineers and one Deputy Chief Accounts Officer.

Scope of Audit

3.2.3 The execution of stage-I of KTPS comprising commissioning of unit-I in September 1990 and unit-2 in January 1991 was reviewed in the Report of Comptroller and Auditor General of India (Commercial) – Government of Maharashtra for the year ended 31 March 1993, which was discussed in July 1996 by the Committee on Public Undertakings (COPU). The recommendations of the COPU were given in its 4th Report of 1995-96 which was presented to the Legislature on 24 July 1996. The COPU recommended that all aspects of expenditure should be considered while preparing the estimates for the execution of work; the Board should utilise the expertise of its own engineers and technicians rather than outsourcing the works and the action taken report on the recommendations should be intimated to COPU within three months. Even after lapse of seven years, the action taken report on the recommendations of COPU was awaited (July 2003) from the State Government and the Board.


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The present review covers the construction of unit 3 and 4 of the KTPS through test check of 45 major contracts (Rs.1,195.50 crore) out of 58 major contracts (Rs.1,229.25 crore) and review of operational performance of all the four units during 1998-2003.

The audit findings, as a result of test check of records, were reported to Government/Board in May 2003 with the request for attending the meeting of Audit Review Committee for State Public Sector Enterprises (ARCPSE) so that view points of Government/Board could be taken into account before finalising the review. The meeting of ARCPSE was held on 17 July 2003 which was attended by the officials of the State Government and Board and their view points had been duly incorporated in the review.

Project planning and implementation

Project planning

3.2.4 The project report of stage-II of KTPS consisting of two units of 210 MW capacity each, having estimated cost of Rs.454.42 crore was approved by the Planning Commission (June 1988) while the execution of stage-I was in progress. The Planning Commission gave in principle acceptance for implementation of the project in 1988-89.

Commissioning of units 3 and 4 of KTPS was to be completed within a period of 48 months (June 1992) and 54 months (December 1992), respectively from the date of approval of the project by the Planning Commission. The equipments were required to be procured from indigenous sources. Bharat Heavy Electricals Limited (BHEL) offered to finance the project and forwarded to the Board (July 1989), its proposal for supply of main plant and equipments and auxiliary packages on deferred payment basis.

However, it was decided by the Board to offer the project for private sector participation. Accordingly, the Board and Aranco Line Shipping Company Limited (Aranco) signed (January 1993) a Memorandum of Understanding (MOU) for implementation of the project. The progress of the project was not monitored effectively and the MOU was cancelled in December 1995 in view of the dismal progress shown by Aranco in implementing the project.

Subsequently, the Government of Maharashtra accorded (December 1995) approval for execution of Khaperkheda stage-II project departmentally. After a delay of 21 months from the date of Government’s approval, the Board commenced (September 1997) implementation of the project departmentally. The project was completed in March 2001.

Project financing

3.2.5 On the basis of a proposal from BHEL for arranging lease finance of Rs.600-800 crore through Kotak Mahindra Finance Limited (KMFL), the Board issued a letter of mandate to KMFL and sought approval of the State

There was delay in implementation of project.


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Government to obtain lease finance through KMFL. The Government, however, advised (March 1997) the Board to implement the project departmentally by arranging finance through other sources.

The project cost was revised (August 1997) to Rs.1,130 crore based on BHEL’s offer (November 1995) of Rs.638 crore and it was decided (August 1997) that the financing of the Project would be met through plan outlay to the extent of Rs.705 crore and through loan (Rs.425 crore) from Power Finance Corporation Limited (PFC). The project cost was again revised (September 1997) to Rs.1,366 crore. The project was financed through loan from PFC (Rs.630 crore), loan from commercial banks (Rs.140 crore), issue of bonds (Rs.118 crore), lease arrangement with State Bank of India (Rs.37 crore), nonconvertible debentures with Industrial Finance Corporation of India (Rs.59.94 crore) and balance (Rs.381.06 crore) through internal sources.

Loss due to delay in availing subsidised loan

3.2.6 The Board borrowed Rs.630 crore from PFC. Pending sanction of loan by PFC, the Board incurred expenditure of Rs.130 crore (during August 1999 to March 2001) from funds borrowed from other commercial banks at an interest rate of 14.5 per cent. As per the terms and conditions of sanction, the rate of interest as on the date of sanction (February 2001) was 15 per cent per annum (subsequently reduced to 14.5 per cent per annum). Since the PFC loan was included under the accelerated generation and supply programme of Government of India (GOI), the Board was entitled to four per cent interest subsidy. Thus, the effective rate of interest payable to PFC was 10.5 per cent.

PFC sanctioned (February 2001) loan of Rs.130 crore to the Board. As per the agreement, the expenditure already incurred from August 1999 onward for payment to BHEL and other suppliers for civil, electrical and mechanical works was covered by this loan. To save on interest cost, there was an urgent need for availing of loan from PFC immediately after sanction (February 2001). However, the Board delayed the availing of loan by 121 to 302 days (delay worked out from May 2001 after allowing margin of about 12 weeks).

Thus, due to delay in availing the loan from PFC, the Board suffered loss of Rs.2.07 crore on account of higher interest rate.

The Board stated (July 2003) that it would be incorrect to attribute loss to delay in claiming reimbursement of expenditure; on the contrary, a postponement of drawal of loan would amount to saving in interest due to drawal of loan at a later stage. The reply was not tenable, as postponement of drawal of loan will not result in saving of interest as the loan was to be utilised to repay funds already used to finance the expenditure out of funds borrowed at a higher rate of interest.

Due to delay in availment of loan from PFC, Board suffered loss of Rs.2.07 crore.


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Time overrun

3.2.7 As against Central Electricity Authority (CEA) guidelines for finalisation of bids within twelve months from pre-project activities to zero date (date of placement of order), the time actually taken for placement of order was 20 months despite a conscious decision taken to procure equipment from BHEL and dispensing with the tendering process.

Due to delay in commissioning of unit-3 and 4, there was generation loss of 136.489 million units as tabulated below:

Particulars Unit-3 Unit-4

Scheduled date for commissioning 9 June 2000 9 December 2000

Actual date of commissioning 20 August 2000 24 March 2001

Delays 72 days 105 days

Generation loss of power 55.521? million units 80.968 million units

Value (Rupees in crore) 14.64 21.34

Delay in commissioning was attributed to internal reasons such as delayed release of fronts in turbo generator house, primary air fan foundation, bunkers, electrostatic precipitators and control room etc. Out of total delay of 3.5 months in commissioning of Unit-4, delay of 2 months was attributable to BHEL on account of non-availability of oil pump, delay in supply of material, delay in carrying out insulation work by sub contractor and shortage of insulation material. There was delay of one month in supply of material by BHEL in respect of Unit No.3. Similarly, in respect of the erection contract, there was a delay of 2 months (8 weeks) on the part of BHEL in respect of Unit No.4. The total liquidated damages of Rs.7.73 crore were not recovered from BHEL as per the terms of contract.

The Board stated (July 2003) that liquidated damages (LD) were not recovered as there was some delay by the Board in releasing payment to BHEL and no interest was paid to them on delayed payments. The Board further stated that Rs.2.92 crore were retained towards LD. The reply was not correct, as the payments should have been made in time and the full LD recovered as per the contract.

Civil works

3.2.8 The project cost of civil works was Rs.130 crore (September 1997) against which the Board incurred expenditure of Rs.139.37 crore (March 2003). The scrutiny of 12 civil contracts (Rs.109.57 crore) out of 14 (Rs.114.16 crore) major civil contracts revealed the following:

? Power generation loss is calculated based on the norm of plant load factor (PLF) of 15.3 per cent set by CEA.

Against the CEA’s norms of 12 months, 20 months were taken for placement of orders despite dispensing with tendering process.

Liquidated damages of Rs.7.73 crore were not recovered.


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Preparation of improper estimates

3.2.9 As per the terms of contracts for civil works, the contractor was entitled to revise the rates if the quantities exceed 125 per cent of schedule-B quantities of the works order. Thus, to save extra expenditure on account of revision in rates, the estimates were required to be prepared on realistic basis. Further, the COPU had also recommended (1995-96) that estimates should be prepared realistically. The Board, however, prepared the estimates for civil works of main plant building by considering the actual quantities executed in unit-1 and 2 without giving weightage to site conditions. The Board had, therefore, to pay additional amount of Rs.19.26 lakh due to rate revision in respect of 20 items.

The Board stated (July 2003) that estimates were prepared on the basis of available data of unit-1 and 2 at KTPS and hence quantities differed. The fact remained that estimates were prepared without taking into account site conditions.

Issue of oversized steel

3.2.10 The Board supplied steel of non-standard higher size to a civil contractor. The weight of the actual steel issued was more by 191.675 MT valuing Rs.51 lakh than that of theoretical weight of steel required to be issued to the contractor as per drawings. This resulted in extra expenditure of Rs.51 lakh.

The Board justified (July 2003) issue of excess steel by saying that excess weight of steel issued was within the tolerance limit prescribed in ISI standard. The reply was not correct as the excess has been worked out by audit with respect to the tolerance limit.

Revision in drawing after award of works

3.2.11 The contract for structural steel works for main plant building and adjacent structures was awarded (April 1998) to R. S. Avtarsingh and Company, New Delhi. As per the terms of contract, the contractor was required to fabricate the columns, girders etc. as per specifications and drawings approved by the Board. The Board approved the drawings in September 1998. After a period of seven months from approval of original drawings, the Board revised (April 1999) the drawings. In the meantime, the contractor had fabricated and erected columns of 385.87 MT which had to be dismantled and re-erected in accordance with revised drawings resulting in extra expenditure Rs.27.17 lakh.

3.2.12 The contract for structural steel works in bunker bay and miscellaneous structures was awarded (October 1998) to Sunil Engineering Works. The contractor had erected the columns of 184.955 MT based on drawings received during September 1998 of which 124.839 MT were dismantled and re-erected as per revised drawings received during June 1999 resulting in extra expenditure of Rs.5.70 lakh.

Estimates prepared without considering the site conditions resulted in avoidable expenditure of Rs.19.26 lakh.

Issue of oversized steel led to extra expenditure of Rs.51 lakh.

The Board incurred extra expenditure of Rs.32.87 lakh due to belated revision of drawings.


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The Board stated (July 2003) that the work was started with primary drawings. The floor framing plan was revised and additional brackets could not be fixed on erected position and necessitated dismantling of already erected column. The fabrication work was not stopped for want of detailed drawings. The reply of the Board was not acceptable as the revision of drawings after seven months of award of work and failure to stop the fabrication work resulted in dismantling and consequent extra expenditure.

Electrical and mechanical works

3.2.13 Expenditure of Rs.1115.09 crore on electrical and mechanical works constituted 82 per cent of total estimated project cost of Rs.1366 crore. Audit scrutiny of 33 major contracts (Rs.1,085.93 crore) out of 44 contracts (Rs.1,115.09 crore) revealed the following:

Excess payment on account of improper computation of price variation

3.2.14 The prices for supply and erection of steam generator (SG), turbo generator (TG) and other manufactured equipments were negotiated (14 August 1997) with BHEL. The following negotiated conditions were accepted (9 September 1997) by the Board:

? The total price of BHEL supplies would be Rs.701 crore with base indices as prevailing on 1 October 1996.

? Price variation was not payable on advance payment and price variation formula for final payments would be similar to Khaperkheda stage-I.

Although, price variation on advances to BHEL was not payable, the Board paid price variation of Rs.9.39 crore on advances (Rs.106.13 crore) to BHEL. Further, as per price variation formula, price variation was payable on indices prevailing on two-third of the period from the base date to the date of despatch of materials. However while making payment, the two-third period was reckoned from the zero date (date of placing the order) instead of base date. As a result, the Board paid excess price variation of Rs.22.27 crore.

The Board stated (July 2003) that BHEL disputed the price variation clause and hence the Board agreed (March 1998) for the revision as asked for by BHEL. The reply was not acceptable. Once the agreement was entered into after mutual discussion, it was incorrect to say that the price variation formula had been incorrectly incorporated in the agreement.

Award of contract for ash handling plant

3.2.15 The contract for design, engineering, manufacturing, shop testing, supply, receipt, handling and storage at site, erection, testing and commissioning of the dry fly ash collection and transportation (DFACT) and high concentrated slurry disposal (HCSD) system was awarded (April 1999) to Mahindra Ash Tech Limited, Mumbai (MATL) at a cost of Rs.36.77 crore.

The Board made excess payment of Rs.31.66 crore due to incorrect computation of price variation.


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At the tendering stage, the Board received an offer for fluidizing air system from Macawber Beekay at a total cost of Rs.35.50 lakh. MATL opined that this equipment was not required. The Board preferred not to opt for this additional equipment. Review of operation of AHP during December 2002 revealed the following:

3.2.16 The ash evacuation was not proper resulting in ash build up in electrostatic precipitator (ESP) leading to ESP failure. The Board incurred expenditure of Rs.94.96 lakh on rectification of ESP during June 2001 to February 2002.

3.2.17 Due to choking of ash in conveying pipes, the ash was unloaded on the floor of AHP and was transported manually to ash disposal point by the Board by incurring expenditure of Rs.16.26 lakh.

3.2.18 Due to problem in ash evacuation from ESP hoppers, the load on the units was restricted to 100-170 MW in both units between January and September 2001 and May 2001 and February 2002 thereby causing a generation loss of 433.773 MU valued at Rs.71.08 crore.

There were problems in evacuation of ash. MATL could resolve these problems only after installing fluidizing air system (August 2001) at a cost of Rs.37.50 lakh.

The Board stated (July 2003) that the provision of fluidizing air system for ESP was not envisaged and the same was not specified in the bid documents. The reply was not acceptable as due to lack of proper appreciation of the need for fluidizing air system, the Board not only incurred extra expenditure of Rs.1.11 crore but also suffered power generation loss valuing Rs.71.08 crore.

3.2.19 As per the terms of contract, all taxes, duties and any variation thereof are to be borne by the contractor. This meant that if there was any downward revision in taxes, no benefit would be passed on to the Board. Similarly, in case of upward revision no additional payment would be made by the Board. Supply commenced from January 2000 and was completed by January 2002. On the grounds that excise duty was increased from 8 to 16 per cent with effect from 1 March 2000, the contractor sought reimbursement of Rs.1.20 crore from the Board. Despite the fact that Accounts Member of the Board expressed an opinion that contract does not envisage any such payment, the Board reimbursed 50 per cent of the increase in duty amounting to Rs.60 lakh to the contractor (February 2003).

The Board replied (July 2003) that as per legal opinion, it was a new levy and the contractor was entitled to the benefit. The reply was not tenable. Any benefit in case of downward payment would not have been passed on to the Board. Similarly, the Board was not obliged to compensate the increase in duty. Hence, the payment was not in order.

3.2.20 As per the terms and conditions of the contract, penalty was to be levied for increase in power consumption by centrifugal fan in excess of the guaranteed limit of 4.5 KW per fan.

Board made irregular reimbursement of excise duty amounting to Rs.60 lakh to MATL.

Due to defective performance of AHP, the Board not only incurred extra expenditure of Rs.1.11 crore but also suffered generation loss of 433.773 MU valuing Rs.71.08 crore.


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The AHP was commissioned in March 2001. The performance guarantee test was conducted during 24 to 28 May 2002. The actual power consumption of the pressurization fans No.1 and 2 measured during performance guarantee (PG) test was 17.60 and 15.20 KW, respectively i.e. much higher than limit of 4.5 KW. There was excess auxillary consumption of 26.99 MU due to higher consumption of power by fans during August 2000 to March 2003.

As per terms of the contract, penalty of Rs.18 lakh was recoverable from the contractor. The Board did not recover the penalty stating (July 2003) that the total power consumption of all the auxillaries clubbed together had remained within total guaranteed power consumption. The reply was unacceptable as power consumption limit for each auxillary unit and penalty for excess power consumption was specified in the contract, and hence, penalty was leviable.

Rejection of technically and commercially acceptable lowest offer

3.2.21 The Board invited (January 1998) tenders for design, engineering, manufacture, supply, erection, testing and commissioning of extension system for coal handling plant (CHP) with designed capacity of 1500 tonne per hour (TPH) of unit 3 and 4 at KTPS. Fenner (I) Limited, Kolkata (Fenner) was qualified as per tender condition that though the bidder had supplied smaller capacity CHP, he should have valid collaboration with reputed collaborator who independently fulfills qualifying criteria.

Out of 21 bids received, 7 bidders qualified as per the qualifying requirement (QR) stipulated by the Board. The offer of Fenner was assessed to be technically and commercially acceptable to the Board. Based on the prices quoted, the offer of Fenner (Rs.3.27 crore) was the lowest. However, after opening the price bid, the Board did not consider the offer of Fenner on the ground that Fenner had installed CHPs of lesser capacity and had no experience of design and supply of CHPs in a thermal power station. The order was placed (May 1999) on the second lowest bidder viz. Elecon for Rs.4.13 crore.

Transparency demands that technical/commercial evaluation of offers should have been done before opening of price bids. The rejection of offer after opening of price bids was not in order. Further, the Board overlooked the fact that Elecon had delayed CHP works in other power stations of the Board. The rejection of the lowest technically and commercially acceptable offer resulted in extra expenditure of Rs.86 lakh (Rs.4.13 crore–Rs.3.27 crore).

The Board stated (July 2003) that delay in supply of CHP by Elecon had not caused any delay in commissioning of the unit and the firm had executed work of CHP having capacity of 360 tonne per hour (TPH). The reply was not acceptable since non-availability of CHP was one of the reasons for delay in commissioning of the unit 3 and 4.

Excess payment to the contractor

3.2.22 The contract for electrical installations was awarded (August 1999) to Ahmedabad Electricity Co. The prices were inclusive of works contract tax

Rejection of lowest offer resulted in extra expenditure of Rs.86 lakh on commissioning of CHP.

Board failed to levy penalty of Rs.18 lakh as per agreement.


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(WCT). The contract stipulated that price would vary with any variation in the rate of WCT (four per cent). Though the rate of WCT was reduced from four to two per cent with effect from 1 January 2000, the Board did not regulate payment accordingly resulting in excess payment of Rs.5.05 lakh to the contractor. The Board stated (February 2003) that the matter had been taken up with the agency for recovery. However, the amount had not been recovered so far (July 2003).

Non-recovery of liquidated damages

3.2.23 The table below gives details of cases where contractors (other than BHEL) were liable to pay liquidated damages at the rate of half per cent of the contract price per week of delay or part thereof subject to a maximum of 10 per cent of the contract price. Despite delay in execution of works, liquidated damages of Rs.4.13 crore were not levied as tabulated below:

Name of the

work Name of the contractor

Scheduled date of completion

Actual date of completion

Delay in months

Liquidated damages

recoverable (Rupees in

crore)

Ash handling system (AHP)

Mahindra Ash Tech Limited, Mumbai

May 2000 October 2000

August 2000

March 2001

3

5

3.68

Fire protection system (FPS)

Speck Turnkey Projects (P) Limited, New Delhi

February 2001 Not completed (July 2003)

29 0.31

115/25 MT EOT crane

ACME Manufacturing Company Limited, Mumbai

April 1999 November 2000 19 0.14

Total 4.13

The Board stated (July 2003) that coal firing activities were not held up at all due to incomplete AHP and there was no delay in commissioning the units for want of AHP; in case of supply of FPS, the matter was being pursued with the contractor for early commissioning; in case of EOT crane, the liquidated damages were not levied considering the serious financial position of the contractor. The reply was not acceptable as non-availability of AHP was one of the reasons for delay in commissioning the unit and the reasons cited for non-recovery were not justifiable in terms of the contracts.

Operational performance

Generation

3.2.24 Generation performance of the plant during 1998-2003 is given in Annexure-19.

Liquidated damages of Rs.4.13 crore were not recovered.


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Plant outages

3.2.25 The table below indicates total hours available, actual hours operated and outages during 1998-2003:

Sl. No.

Particulars Unit No.

1998-99

1999-2000 2000-01 2001-02 2002-03

1&2 17,520 17,568 17,520 17,520 17,520 1 Total available hours

3&4 - - 5,088 17,520 17,520

1&2 15,386 12,981 15,144 16,001 15,822 2 Actual hours operated 3&4 - - 3,668 14,456 16,035

3 Shutdown (hours):

1&2 1,107 3,868 1,311 354 1,081 Planned 3&4 - - 856 1,961 1,081

1&2 1,027 719 1,065 1,165 617 Forced 3&4 - - 564 1,103 404

4 Percentage of:

1&2 6.32 22.02 7.48 2.02 6.17 Planned shutdown hours to available hours

3&4 - - 16.82 11.19 6.17

1&2 5.86 4.09 6.08 6.65 3.52 Forced shutdown hours to available hours 3&4 - - 11.08 6.29 2.31

Total shut down hours to available hours

1&2 3&4

12.18 -

26.11 -

13.56 27.9

8.67 19.48

9.69 8.51

It would be seen from above table that the percentage of shutdown to available hours ranged from 8.67 to 26.11 in respect of unit 1 and 2 and 8.51 to 27.90 in respect of unit 3 and 4 during 1998-2003. As per norms fixed by Central Electricity Authority, the planned outages of the plant should not exceed 10 per cent of available hours. It would be seen from the above table that the planned outages in respect of unit 1 and 2 during 1999-2000 was 22 per cent and in respect of unit 3 and 4 during 2000-01 and 2001-02 was 16.82 and 11.19 per cent, respectively.

The Board stated (July 2003) that the increase in planned outages was due to certain defects and deficiencies in equipment which were rectified during this period. The fact remained that planned outages were in excess of norms fixed by CEA.

Cost of generation

3.2.26 The cost of generation per kilo watt hour (KWH) during 1998-2002 is given in Annexure-20. It would be seen from the Annexure that generation cost increased from 128.66 paise per unit in 1998-99 to 155.69 paise per unit in 2001-02.


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Excess consumption of coal

3.2.27 Equipment supplier’s specifications provide that heat rate required to generate one unit of power is 1,970 Kilo calorie (K.cal)/ kilo watt hour (KWH) with boiler efficiency at 86.61 per cent for unit No 1 and 2 and 1,939 Kcal/KWH with boiler efficiency at 86.80 per cent for unit No.3 and 4. The details of consumption of coal as per standards adopted for actual generation, coal actually consumed vis-à-vis excess consumption of coal are given in Annexure-21. It would be seen from the Annexure that during 1998-2003, there was excess consumption of coal of 17.43 lakh MT valued at Rs.165.70 crore as compared to equipment supplier’s specifications. The excess consumption also resulted in excess auxiliary consumption of 941.513 MUs valued at Rs.137.71 crore due to additional operation of coal mills for 51,874 hours.

The Board stated that the “designed heat rate” could not be considered to calculate coal consumption because it was under ideal test conditions. Reply was not tenable on the grounds that the excess consumption of coal was worked out on the basis of calorific value in coal received and technical specifications stipulated by the manufacturer.

Excess expenditure due to delay in commissioning of coal mills

3.2.28 As per the technical specifications, the unit-4 was to be commissioned by BHEL by installing six coal mills (four in operation plus two standby). However, the unit-4 was commissioned (24 March 2001) with two coal mills only. In absence of coal mills, the Board had to feed furnace oil (15,370 KL) into the boiler instead of coal (48,916 MT) resulting in extra expenditure of Rs.14.09 crore.

The Board accepted (July 2003) the fact of commissioning of unit with only two coal mills. However, the fact remained that extra expenditure on furnace oil had to be incurred by the Board due to non availability of required coal mills.

Low performance of coal mills

3.2.29 Based on the guaranteed performance of 78 per cent of installed capacity of coal mills, coal to the extent of 28.66 lakh and 22.29 lakh MT should have been pulverised? in unit 3 and 4, respectively since commissioning (August 2000, March 2001). As against this, the actual quantity of coal pulverised was 24.69 lakh and 20.13 lakh MT only which was 67 and 70 per cent of installed capacity. Thus, there was shortfall of 3.97 lakh and 2.16 lakh MT which required additional 16,650 coal mill hours and consequent excess consumption of energy to the extent of 302.197 MU valuing Rs.49.52 crore. In addition, the pulverisation of coal was not to the required level of fineness (75 to 85 per cent).

? Pulverisation of coal means powdering of coal.

Use of furnace oil instead of coal resulted in excess expenditure of Rs.14.09 crore.

Poor performance of coal mills resulted in excess consumption of energy valuing Rs.49.52 crore.

Coal valued at Rs.165.70 crore was consumed in excess of standard norm.


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The Board stated (July 2003) that the calorific value of coal received was 3,217 to 3,757 Kcal/Kg whereas boiler is designed for calorific value of 3,500 Kcal/Kg. The quality of coal received from Mahanandi Coal Field Limited (MCL) was very poor and hence additional coal mill was required. The reply was not tenable as four coal mills were sufficient as per technical specifications taking into account the calorific value of actual coal received. Due to inefficient performance of the coal mills, additional coal mill had to be run.

Transportation of coal from long distance

3.2.30 The Board lifts coal from various coal mines under South Eastern Coal Fields Limited (SECL), MCL and Western Coal Fields Limited (WCL) based on quantity allotted by Standing Linkage Committee. The mines of WCL are nearer and quality of coal is also better than that of SECL and MCL. Though the Board was allotted 27 lakh MT of coal from WCL by the standing linkage committee, it failed to lift 6.9 lakh MT. The Board stated that WCL failed to deliver the linkage quantity. The reply was not acceptable since the Board should have prevailed on WCL to release quantity as per linkage by vigorous pursuance with linkage committee. By not doing so, it incurred additional transportation cost of Rs.13.60 crore.

Procurement of material

Purchase of cable

3.2.31 Based on Guaranteed Technical Specification (GTS), the central purchase agency of the Board procured (August 1999), 3 kms. of IC x 400 sq.mm M. S. armoured cable and 1.5 kms of IC x 400 sq. mm copper armoured cables.

Audit observed as follows:

3.2.32 The excess cable lying in Chandrapur thermal power station was transferred to KTPS for utilisation. The Board without considering the quantity transferred and ascertaining the proper requirement of cable procured (August 1999) 3.819 kms. cable valuing Rs.48 lakh which remained idle since its receipt (March 2000) resulting in interest loss of Rs.22 lakh during March 2000 to July 2003.

3.2.33 As per the technical specification given alongwith purchase order, the total weight of the quantity supplied ought to have been 78.941 and 40.075 MT in respect of M.S. and copper cable respectively. However, the actual weight of the cable received in major stores was 22.053 and 11.782 MT, respectively. Though there was major weight variation in cable received, the short receipt was not pointed out by stores authorities while accepting the material and entire payment was released to the supplier. The excess payment made to the supplier worked out to Rs.41.53 lakh.

Extra expenditure of Rs.13.60 crore was incurred on transportation of coal.


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The Board stated (July 2003) that the weight of cable mentioned by various tenderers was within the range of 7,000 - 7,500 kgs. and the weight received was within the range. Moreover, the quantity ordered was placed considering the stock position of TPS Chandrapur. The reply was not acceptable as the weight of cable received was far less than GTS. The Board had also not considered the stock of 3.58 kms. of cables transferred from TPS Chandrapur while placing the order.

Locking up of funds due to procurement of steel in excess of requirement

3.2.34 At the closing stages of the project when almost all civil works were over and without assessing the actual requirement of steel required for balance work left to be executed, the Board placed orders (May 1999 to January 2000) of 1,731.160 MT steel on various firms for supply of mild and structural steel. Of this, 70 per cent i.e.1,210.170 MT steel valued at Rs.2.21 crore remained unused (March 2003). Consequently, the Board incurred interest loss (at the borrowed interest rate) of Rs.1.12 crore. The Board stated (July 2003) that the quantity of steel was assessed on the basis of consumption pattern of unit 1 and 2. This material would be utilised for works at Khaperkheda and balance would be transferred to other projects. The reply was not tenable as there was no need to procure such large quantity of steel at the closing stage of civil works.

Conclusion

Due to improper preparation of estimates, consumption of oversized steel, defective drawings and incorrect application of price variation clause, the Board incurred extra expenditure on construction of unit 3 and 4.

Defective performance of ash handling plant and high pressure heater tubes contributed to generation loss. Consumption of coal at the plant was in excess of the standards laid down by the equipment supplier. Besides, extra expenditure was incurred due to transportation of coal from distant mines.

The Board should take effective steps in preparing realistic estimates for projects, improve efficiency for brining the coal consumption within the prescribed norms and lift the coal from nearby mines as per linkage.

Steel valuing Rs.2.21 crore was lying idle due to procurement at closing stage of project.

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3.3 Implementation of information technology in the high tension billing system of Maharashtra State Electricity Board

Highlights

The computerised high tension (HT) billing system of Maharashtra State Electricity Board (Board) was initially implemented in 1981 and re-engineered during 1997-2000. Considering that about 58 per cent of the total revenue is generated from HT consumers, the system handling HT billing and revenue realisation is ‘mission critical’ in nature.

(Paragraph 3.3.1)

In the absence of a formal information technology (IT) policy and long term strategy, the IT center sites prepared during April 1999 to August 2002 at a cost of Rs.1.40 crore were not made operational due to delay in procurement of hardware. The Board incurred expenditure of Rs.1.54 crore on outsourcing of billing due to delayed commissioning of IT centre at Bhandup.

(Paragraph 3.3.5)

No policy regarding physical and logical security of IT assets including software and data existed. Insufficient security features with respect to access control, passwords and login control rendered the system vulnerable to unauthorized access and data manipulation.


The disaster recovery and business continuity plan was not documented. The data backup was not periodically checked to ensure recovery of data.

(Paragraphs 3.3.10-3.3.11)

In the absence of undertaking by Price Waterhouse Associates for passing on intellectual property rights to the Board, the system design, source codes of IT billing system developed are vulnerable to misuse.

(Paragraph 3.3.17)

There was waiver of minimum charges of Rs.7.13 crore and non levy of charges of Rs.1.54 crore in violation of rules.

(Paragraph 3.3.22)

Delay in issue of bills to HT consumers (Rs.868.44 crore) resulted in loss of interest of Rs.1.15 crore.

(Paragraphs 3.3.20 and 3.3.27)


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Excess bulk discount of Rs.3.19 crore was granted to ineligible HT consumers and incorrect calculation of power factor incentive resulted in excess rebate of Rs.5.58 crore.

(Paragraphs 3.3.23-3.3.25)

Introduction

3.3.1 Maharashtra State Electricity Board (Board) was incorporated under section 5(1) of the Electricity (Supply) Act, 1948 in 1960 with the main objective of generating, transmitting and distributing electricity power in the State of Maharashtra. The consumers of power were mainly divided into the category of high tension (HT) consumers and low tension (LT) consumers. Based on the provisional accounts of the Board for 2002-03, the HT consumers contributed Rs.7,201 crore(58 per cent) revenue as against the total revenue of Rs.12,436 crore. The computerised HT billing system was initially implemented in 1981 in COBOL? on Unix? platform and after considering the sensitivity of the application and ever increasing need for changes, the above system was re-engineered using a RDBMS# platform (Oracle-Developer 2000) by Price Waterhouse Associates (PWA) during 1997-2000 at a total cost of Rs.32.85 lakh. Considering that 58 per cent of the total revenue is generated from HT consumers, the system handling HT billing and revenue realisation is “mission critical” in nature.


3.3.2 The IT needs of the Board are overseen by the Department of Information Technology (DIT), with 26 IT centers, functioning under the Accounts Member. DIT is headed by one Director who is assisted by Additional Director, Joint Directors, System Analysts and Programmers. The DIT is responsible for monitoring the implementation and maintenance of HT Billing system implemented during 1997-2000 using Oracle RDBMS and Developer 2000 front-end tool.

Scope and methodology of Audit

3.3.3 The audit covered the evaluation of general IT controls that establish a framework for controlling the design, security and use of computer programs in the Board. The scope of audit also included the evaluation of IT application controls specific to computerised HT billing system and the effectiveness of this IT system in achieving organisational objectives. ? COBOL-Common business oriented language. ? Operating system developed by Unix. # Relational data base management system.

Chapter-III – Review relating to Statutory corporations

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The data of HT billing pertaining to April 1998-March 2003 which was extended to earlier period wherever required in respect of ten Board circles was chosen for substantial checking of data completeness, regularity and consistency. The selected 10 circles? contributed 49 per cent of the total HT revenue of the Board.

Based on the various policy guidelines, circulars of the Board and tariff rules of Maharashtra Electricity Regulatory Commission (MERC) relating to the HT billing, audit developed queries which were run on the live data of the HT billing and collection system with the assistance of the Board personnel at the Department of Information Technology (DIT) at Mistry Bhavan, Mumbai, Nerul, Navi Mumbai, Bhandup, Pune, Nasik, Kolhapur and Nagpur. The reports so generated were further verified and based on the results, audit identified the areas concerning lack of controls, which either caused loss of revenue to the Board or directly impacted its revenue earning capacity. The findings of audit are discussed in the succeeding paragraphs.

Salient features of HT billing system

3.3.4 The HT billing system which was earlier on the Unix-COBOL platform was re-engineered during 1997-2000. The objectives of the re-engineered HT billing system were to:

? increase the efficiency and provide an upgraded and faster platform for billing which would result in timely generation of bills;

? quickly re-organise the required changes in the HT billing system for the frequent changes in the business rules regulated by MERC;

? aid the Board in decision-making by timely generation of reports based on data analysis and generation of various management information system (MIS) reports for taking decisions aimed at reducing arrears in revenue realisation ;and

? provide HT consumers with information relating to billing.

General IT controls

Lack of formulated and documented IT policy

3.3.5 Though the Board has over the years developed substantial IT applications it is yet to formulate and document a formal IT policy and a long-term/medium-term IT strategy incorporating the time frame, key performance indicators and cost benefit analysis for developing and integration of various systems. No planning/steering committee with clear

? Bhandup, Kalyan, Kolhapur, Pen, Pune (Rural), Pune (Urban), Nagpur, Nasik, Vasai, Vashi.


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roles and responsibilities exists to monitor the development of software for each functional area in a systematic manner.

This lack of co-ordinated strategy is reflected in the manner in which Board decentralized the bill processing system and created IT infrastructure at six? IT centers. During April 1999-August 2002, Board incurred Rs.1.40 crore on development of infrastructure at these six IT centers, but these centers were not operational (January 2003) as the order for the procurement of hardware worth Rs.3.98 crore was issued only in August 2002. The placement of the order could have been so co-ordinated with the creation of IT infrastructure that hardware should have been made available on completion of the civil/electrical work at the IT centers.

Audit also observed that since Bhandup IT center could not be commissioned by April 1999 mainly due to unavailability of necessary hardware equipment, the Board incurred expenditure of Rs.1.54 crore during April 1999-March 2003, as the processing and generation of consumer bills (including LT) were still being outsourced to Bombay Suburban Electric Supply in respect of Mulund, Bhandup and Thane divisions of Bhandup circle. There was a need for timely completion of project to avoid expenditure on outsourcing of billing.

Lack of segregation of duties

3.3.6 Audit observed that apart from DIT functioning under Accounts Member, another department namely Management Information System (MIS) Department functioning under Secretary to the Board was also involved in the acquisition and monitoring the development and implementation of various IT Applications’ requirements of the Board. However, the roles of DIT and MIS departments had not been clearly defined and documented.

Although the roles and responsibilities of all personnel within the DIT were documented, it was observed that there was no segregation of duties amongst the systems analysts, programmers and assistant programmers within DIT as all were having direct access to live data and programs relating to HT Billing system.

When pointed out in audit, the Board stated (December 2002) that such problems existed due to shortage of manpower. The reply is untenable as the applications running under the control of the DIT including the HT billing system account for a substantial part of Board’s revenue and is too critical to suffer from manpower shortage.

Audit also noticed that the DIT did not maintain any record indicating the allotment of work among system analysts/programmers, assistant programmers, computer operators, etc; the time limit for performance of each task, actual date of completion were also not maintained. Moreover, role of DIT vis-a-vis its relationship with other departments was not formally established or documented. ? Bhandup, Kalyan, Amaravati, Buldhana, Sangli and Yavatmal.

Six IT centers costing Rs.1.40 crore were not commissioned due to delay in procurement of hardware.

Board incurred expenditure of Rs.1.54 crore on outsourcing due to delay in commissioning of Bhandup IT center.

Roles of DIT and MIS had not been clearly defined and documented.

Segregations of duties within DIT were incompatible.


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IT security policy

3.3.7 The Board had not formulated and documented an IT security policy regarding the security of IT assets and software and data security. When pointed out in audit, the Board stated (December 2002) that formal IT security policy would be formulated.

Non identification/classification of critical and sensitive data/programs

3.3.8 Audit observed that there was no policy regarding the identification and classification of the data/programs of the HT billing into critical, sensitive and confidential categories based on risk analysis and risk mitigation methodology. In the absence of such identification and classification of data/programs, the accessibility to these at various levels of hierarchy had not been defined resulting in risk of unauthorised access and manipulation of data/program. When pointed out in audit, the Board stated (December 2002) that necessary steps would be taken while formulating the IT security policy.

Inadequate access control mechanism

3.3.9 Audit further noticed that "Mandatory access controls" were not maintained by granting of privileges to individuals based on "need to know" or "least privilege" basis. Majority of the access controls were of a discretionary nature, which permitted system staff to have access to database and vice versa. Further, the number of system administrators was too large ranging from four to nine with full access rights in respect of five circles. The Board replied (December 2002) that necessary steps would be taken while formulating the IT security policy.

Audit scrutiny further revealed that there was no well-defined and documented password policy. Normal password control procedures like restriction on unsuccessful login attempts by the users or automatic lapse of password after a predefined period and periodical change of passwords after certain period were non-existent. The system did not generate any logs to record the number of failed login attempts. The tables containing the list of usernames, passwords were not encrypted and the information was retained in text form thus rendering it vulnerable to misuse.

Non-existence of such basic controls regarding data security in a mission critical system with huge revenue implication posed a serious threat to both the application and the data. The Board stated (December 2002) that necessary steps would be taken to improve the situation.

Lack of adequate ‘disaster recovery and business continuity plan’

3.3.10 The HT billing system is a critical system. If there is disaster and the HT consumers bills are not generated on time, revenue earning capacity of the Board will be substantially affected. The Board, however, had not documented disaster recovery and business continuity plan, outlining the action to be undertaken immediately after a disaster and to effectively ensure that information processing capability can be resumed at the earliest. The identities

Critical, sensitive database programs were not identified.

Mandatory access controls were not maintained.

User account management system was not adequate.

Board had not documented disaster recovery and business continuity plan.


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of personnel to be notified immediately, their roles/responsibilities had also not been outlined. The plan/procedure laid down to support such critical IT system in the event of a failure had also not been formally documented. No emergency hot sites, correct/current version of system software, etc., which are important for recovery from disaster, were identified and documented.

Inadequacies in data backup

3.3.11 Although backups of HT billing data were being taken at periodical intervals, there was no formal policy regarding the frequency of test checking the backups for recovery. Neither the backups so obtained were tested periodically nor any logs maintained in support of such test checks. The Board replied (December 2002) that necessary steps would be taken to rectify the situation.

Inadequate physical security controls

3.3.12 Although the HT billing system is mission critical to the Board, no physical security arrangement, like fire/water detectors, was made to control the physical threats to IT assets/system.

Audit observed that paper stocks of HT bills/reports and combustible supplies such as printer cartridges, toners, cleaners, high speed printers producing paper dust were stored within the main server room. There was neither any documentation viz. circulars/guidelines to computer operations staff detailing the fire fighting techniques nor any individuals were identified who could be assigned the responsibilities to take preliminary emergency action to control the fire before the arrival of professional fire fighters.

Audit observed that there were only three fire extinguishers which were not adequate compared to the size of IT center (Mistry Bhavan); no logs were maintained to ensure periodical inspection and maintenance of the fire extinguishers by the authority concerned. Moreover, there was no documentation detailing the tested emergency plans, fire or evacuation drills conducted in the computer center for human safety and protection of mission critical system like the HT billing system. Also the data backup was stored at the front of main entrance and separated only by a fiberglass partition, which makes it vulnerable to theft. When pointed out in audit, the Board stated (December 2002) that necessary steps would be taken to address the above lacunae.

Inadequate change management controls

3.3.13 Any information system of this scale requires a sound change management procedure covering control of the ongoing maintenance of system, standard methodology for recording and performing changes. An appropriate level of administration should authorise changes to the programs.

Audit scrutiny revealed that the Board had no documented formal policy relating to change management controls, testing standards, quality assurance standards, and documentation standards. Audit also observed that DIT

Highly combustible supplies were stored within the main server room.

Data backup was stored at main entrance.


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interpreted the tariff orders issued by the Maharashtra Electricity Regulatory Commission and various circulars issued by the Chief Engineer (Commercial) and incorporated the required changes in the HT billing system without involving the Chief Engineer (Commercial) who was responsible for the implementation of the Board’s directives. Instead, sample bills in case of major changes were sent to the Chief Engineer (Commercial), but there was no system of formal certification from the Chief Engineer (Commercial).

Audit observed that due to misinterpretation of Commercial Circular No.646 dated 17 June 2000 the current transformer/potential transformer (CT/PT) rent amounting to Rs.1.37 crore was not charged in time from HT consumers during May-December 2000 in 10 circles resulting in loss of interest computed to Rs.12.12 lakh at 15 per cent interest rate.

It was further observed that the program changes in the HT billing system were sent to the various IT centers as version patches through e-mail. However, no formal acknowledgements were being obtained by DIT from all IT centers that all the patches had been correctly received and uploaded in a timely manner.

Audit observed that as per amended business rules, the HTP-II consumers in specified areas whose contract demand is above 500 KVA should be charged HTP-I tariff, and HTP-II consumers in specified areas whose recorded maximum demand is more than 500 KVA should be charged HTP-I tariff for six months in succession from the month in which their maximum demand exceeded 500 KVA. However, audit scrutiny revealed that the above business rules were not adhered to by the HT billing system in two circles (Pune rural circle and Pen circle). In respect of Pen circle and Pune rural circle, eight HTP-II consumers whose contract demand were greater than 500 KVA and recorded maximum demand was more than 500 KVA, respectively during August 2000-April 2002 were not charged HTP-I tariff for 6 months resulting in loss of revenue of Rs.5.80 lakh and Rs.0.58 lakh respectively.

It was evident from the above that the latest version patches were not uploaded in respect of the above two circles. Moreover sending the patches through internet without proper encryption also entailed high risk of interception and manipulation of tariff parameters. When pointed out in Audit, the Board stated (December 2002) that a separate register would be maintained to record the details of patches, acknowledgements etc at all the IT centers immediately and this register would be verified by the head of the department at periodic intervals.

Software development for HT billing system

Incorrect evaluation of bids

3.3.14 To develop the reengineered HT billing system, the Board called (April 1997) limited quotations on a turnkey basis, from eight selected software developers. Only five firms submitted (May 1997) their proposals

Formal certification from Chief Engineer (Commercial) was not obtained for change management controls resulting in loss of Rs.12.12 lakh.

Data/programs transmitted in clear text instead of encrypted form entailed high risk of interception and manipulation.


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and the evaluation of proposals was done in two parts viz., technical and financial. The Board devised a point formula for technical evaluation with a clause stating that vendors scoring less than 85 points on this formula would not be considered for financial bidding. After technical evaluation, four out of five vendors scored below the 85-point benchmark and only Price Waterhouse Associates (PWA) qualified for financial bidding. Audit noticed that the Board, while evaluating the technical proposals, awarded six points to PWA for "Billing experience of the project team", and zero point to the rest of the four vendors. Audit scrutiny revealed the awarding of points was erroneous as only two members of PWA had such billing experience and accordingly PWA should have been awarded only two points under this category. Thus, PWA was awarded 4 extra points, which resulted in PWA scoring 87 points making it the only firm scoring above the minimum benchmark of 85 points. Eventually, the contract was awarded to PWA at Rs.32.85 lakh (July 1997). Due to such erroneous award of points, the financial bids of the other firms were not even considered.

Lack of system documentation

3.3.15 As per terms of contract, the PWA was to finalise and give a system design document (SDD) detailing the process design, data design within 14 weeks from commencement of project (i.e. 31 October 1997). However, Audit observed that PWA gave no such SDD to the Board. The Board stated (December 2002) that the system manual furnished by PWA represented the SDD. The management’s reply is not tenable in view of the fact that in terms of clause 8.2, "Deliverables of the terms of contract" - SDD would be given on completion of system design while the "System Manual" would be given after acceptance testing of the HT billing system, which reflects that SDD and system manual are different from each other. Further, the PWA also failed to give as per terms of contract a ‘quality plan’ by 31 October 1997, in the absence of which it was not possible for audit to verify whether the quality standards were achieved/maintained for the software developed.

The contract also empowered the Board to conduct inspection/quality audit of facility and quality practice of PWA as detailed in technical bid. However, the Board did not give documents to audit to establish that such quality audit was ever conducted by the Board.

Phase wise system testing not done

3.3.16 The development of software was to be subjected to "system testing" in various phases such as module testing, system testing on test data and system testing on live data, which was to be completed by 6 February 1998. But Audit findings indicated that no systematic phase-wise testing was done to properly evaluate each stage of system development. Similarly, no phase wise certification regarding satisfactory performance of the system was obtained from the competent authority.

The consultancy charges which were essentially charges for development of the application were to be paid in four stages (25 per cent each) i.e. at the stage of requirement study; system design; coding and testing and;

There was erroneous award of points in technical evaluation of bids.

Critical system documentation was not obtained.

Phase wise system testing was not done, certification from competent authority was not obtained.


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implementation. Clause 8.4 of terms and conditions in the technical proposal clearly envisaged that review of deliverables would be conducted at various stages wherein the deliverables would be submitted to the Board by PWA and the work on ensuing phases cannot be started without the acceptance of the deliverables of the previous phases by the Board. Audit observed that there was no documentation available, which showed that the PWA submitted the phase wise deliverables and phase wise testing/acceptance by competent authority of the Board was carried out. However, phase-wise payment was made to PWA without the above documentation.

Ownership of exclusive intellectual property rights (IPR)

3.3.17 As per contract, the IPR of the developed software package with algorithms, design, source codes, documentation shall rest with the Board. The PWA had to give an undertaking that it would not retain any copy of the software including documentation and would not use the software or design for any commercial gain without obtaining prior permission of the Board. However, audit observed that PWA did not give such undertaking which was not only in violation of the contract, but also not in the interest of the Board as the system design, algorithm, source codes of such critical system was vulnerable to misuse. This assumes importance in view of the deficiencies in the access control system as detailed in paragraph 3.3.9.

Data migration from COBOL to ORACLE

3.3.18 The PWA designed a strategy to migrate the Board's HT billing and collection data from COBOL based system to the new Oracle based system by populating the various tables required for the application to run properly. Some data, which was not available in the legacy system, was captured manually. Data cleansing of the legacy system and capturing of data not available in the legacy system was the responsibility of the Board.

However, a test check by audit revealed that critical data fields in the concerned database table were incorrectly migrated; date of migration was accepted as date of permanent disconnection thus affecting the integrity of the data. In reply, the management agreed to suitably modify the field values to remove the deficiency. Similarly, for HT consumers having registered office in Mumbai and factory outside Mumbai, the meter address and the mailing address were the same. Thus, data was not properly checked during data migration.

Audit trails not properly maintained

3.3.19 Although the initial system designed by PWA did incorporate audit trails with fields like ‘updated by’, ‘updated on’, and ‘updated from’, a test check by audit revealed that such audit trails were not available for seven tables designed by PWA and for 48 tables created later by DIT. In test check of documentation of another 145 tables it was noticed that information regarding audit trails was not maintained/updated in nine tables and the data stored in the audit trail data fields of 136 tables were incomplete and

HT billing system was vulnerable to misuse.

Data was not properly checked during data migration.


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inaccurate. When pointed out in audit, the Board stated (December 2002) that necessary steps would be taken to maintain the audit trails.

Analytical review of data

Delay in issue of first bill to HT consumers

3.3.20 Clause 6.4.1 of Chapter VI of the Code of Commercial Instructions, 1996 of the Board stipulated that the first energy bill in respect of new connected HT consumers was to be issued within one month from the date of connection.

Audit scrutiny, however, revealed that 1,623 newly connected HT consumers of 10 circles were issued first bill amounting to Rs.29.06 crore after a delay ranging from two to 203 days from the date of new connection, which resulted in loss of interest of Rs.35.22 lakh to the Board.

It was also observed that no checks were incorporated in the HT billing system to ensure that in respect of newly connected HT consumers the first energy bill was issued within one month from the date of connection.

Irregular time limit for payment of bills

3.3.21 As per clause 27 of Conditions and Miscellaneous Charges for Supply of Electrical Energy amended up to 31 July 1998, the time limit for payment of bills for HT consumers was 15 days from the date of the bill inclusive of the date of the bill. For the purpose of computation of time limit of 15 days, the date of bill is required to be included as per Note below Clause 27 (a), but it was not included.

As a result, one to four days in excess of time limit were given for payment in respect of 2.76 lakh HT bills amounting to Rs.12,623.58 crore during 1999-2003.

The Board stated (December 2002) that as per Commercial Circular No.523 dated 4 December 1993, the date of bill was to be excluded while computing the time limit of 15 days. The reply is not tenable as the above circular was superceded by clause 27 of Conditions and Miscellaneous Charges for Supply of Electrical Energy as amended on 31 July 1998.

Waiver and non levy of minimum charges from temporarily disconnected HT consumers

3.3.22 Clause 9.19.1 of Chapter IX of the Code of Commercial Instructions, 1996 read with clause 10(a) and 11 of the agreement with HT consumers, stipulated that permanent disconnections should be made on the expiry of six months from the date of temporary disconnection and minimum charges are required to be charged for the period of six months during the period between the dates of temporary disconnection and permanent disconnection. Audit

Waiver of minimum charges was in violation of rules.


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scrutiny of data for 1998-2003 revealed that 51 HT consumers of six circles were initially charged minimum and other charges for six months to the tune of Rs.7.13 crore from the date of temporary disconnection but the charges were later withdrawn by way of credit adjustments in subsequent HT energy bills. Further, it was also observed that 52 HT consumers of five circles who were temporarily disconnected, had not been charged minimum charges for six months to the tune of Rs.1.54 crore from the date of temporary disconnection. It was observed that tables containing temporary disconnection details were not maintained/updated in time.

The Board stated (December 2002) that minimum charges from temporary disconnection to permanent disconnection were waived to reduce the fictitious arrears of the circle. The reply is not tenable as waiver of charges of Rs.7.13 crore and non levy of minimum charges of Rs.1.54 crore was in violation of business rules.

Bulk discount granted to ineligible HT consumers

3.3.23 As per para 49.2.2 of Part III of Maharashtra Electricity Regularity Commission’s order of 2000, if the consumption of an industrial consumer availing Time of Day (ToD) tariff and having no disputed arrears with Board exceeded one million units per month, the consumer will get a rebate of one per cent on his energy bill (excluding fuel adjustment charges, demand charges, electricity duty etc.) for every one million units consumption above one million unit subject to maximum of five per cent. The rebate will be allowed only if the bill was paid within seven days (including the date of bill) from the date of the bill.

Audit scrutiny for 2000-03 revealed that 18 HT consumers of six circles were given bulk discount to the tune of Rs.45 lakh despite the fact that they had paid their bills with delays ranging from one to four days in excess of admissible time of seven days. This irregular discount was due to wrong coding of parameters and non incorporation of proper validation check in the HT billing system.

The Board stated (December 2002) that since November 2000 the date of issue of bill was being included in the seven days period for considering bulk discount and prior to November 2000, the date of issue of bill was excluded. The reply is not tenable as the date of issue of bill was to be included from May 2000 and not November 2000. Further, audit observed that bulk discount was granted to the ineligible HT consumers in question even after November 2000.

Irregular bulk discount to HT consumers

3.3.24 Para 49.2.2 of Part III of MERC order of 2000 (page 154/155) on “Bulk Discount” and Para 33.1.2 of MERC’s order 2002 (Page 184) on “Incentive and Disincentives” stipulated that any industrial consumer (availing TOD tariff and having no arrears with Board) whose consumption exceeds one million units per month, will get a rebate of one per cent of his energy bill restricted to a maximum of five per cent.

Tables containing temporary disconnection details were not maintained/ updated.


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Audit scrutiny revealed that seven HT consumers in four circles had arrears of additional security deposit (ASD) to the tune of Rs.3.53 crore. However, these HT consumers were given bulk discount to the tune of Rs.2.74 crore despite payment of ASD being in arrears. Evidently, no proper application controls, validation checks were programmed in the HT billing system incorporating the above business rules. This resulted in loss of Rs.2.74 crore to the Board, as the same had not been recovered from such ineligible consumers.

The Board stated (December 2002) that arrears of ASD was not in the scope of the above scheme. This reply is not tenable as MERC order of 2002 categorically specified that consumer availing bulk discount should have no arrears with the Board. The ASD has a direct relationship with the energy consumption and ASD arrears are within the scope of the scheme formulated by MERC.

Incorrect calculation of power factor (PF) incentive

3.3.25 Prior to January 2002, as per MERC's order, whenever the average power factor (PF) was more than 0.95, an incentive at the rate of one per cent of the amount of the monthly energy bills (excluding T&D loss charges, fuel and cost adjustment charges, demand charges, electricity duty) would be given for each one per cent increase in the power factor above 0.95 being equivalent to average of one month’s consumption.

Audit observed that due to incorrect calculation method adopted while coding the parameters in the HT billing system, excess incentive amounting to Rs.5.58 crore was given in consumer bills as detailed below:

P.F. No. of

consumer bills

Rebate due

(per cent)

Rebate given

(per cent)

Excess PF incentive (Rupees in crore)

0.96 11,111 1.00 1.053 0.19 0.97 14,145 2.00 2.105 0.58 0.98 20,070 3.00 3.158 1.58 0.99 17,232 4.00 4.210 2.00 1.00 11,909 5.00 5.263 1.23

Total 74,467 5.58

The Board stated that 0.95 was taken as the base for calculating PF incentive. This reply is not tenable. If 0.95 is used as base, the PF range limits would be 0.9595 for one per cent rebate, 0.9690 for two per cent rebate, 0.9785 for three per cent rebate, 0.9880 for four per cent rebate and 0.9975 for five per cent rebate. Since the PF values are restricted to 0.96, 0.97, 0.98, 0.99 and 1.00 the adoption of the above base of 0.95 is incorrect. Moreover, as per the incentive scheme an incentive at the rate of one per cent of the amount of the monthly energy bills for each one per cent increase in the power factor is to be given. The incentive system is therefore based on slabs. Hence, the incentives can be only one per cent, two per cent, three per cent, four per cent and five per cent and no intermediate values are envisaged.

Bulk discount of Rs.2.74 crore was given to HT consumers despite having arrears of additional security deposits.

Incorrect calculation of power factor incentive resulted in loss of revenue of Rs.5.58 crore.


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Lack of utilisation of the application as a tool for management information system (MIS)

3.3.26 One of the major advantages envisaged of the reengineered billing system was its ability to aid the Board in decision-making by timely generation of reports based on data analysis and generation of various management information system (MIS) reports for taking decision aimed at reducing arrears in revenue realisation. Audit noticed that the Board failed to utilise the full potential of the system as seen from the cases illustrated below:

Delay in issue of bills to HT consumers

3.3.27 Clause 4.2.2 of chapter-IV - Meter Reading of Code of Commercial Instructions, 1996 (page 60) provided that the meter reading of HT consumers having contract demand up to 3 MVA and above 3 MVA should be recorded by A.E.? / Dy.E.E. (O&M)? and E.E. (O&M)? respectively; and energy bills based on such readings must be generated and issued to HT consumers on a monthly basis.

Audit verification of HT consumers revealed that in respect of 16,123 HT consumer bills of Rs.839.38 crore, there was a delay in meter reading and consequent delay in issue of bills ranging from one-106 days during 1999-2003. The delay in issue of bills resulted in loss of interest of Rs.79.74 lakh.

The Board stated that necessary instructions were being issued to concerned, for timely recording of meter readings and issue of energy bills. Audit observed that there were no application controls incorporated in the HT billing system to generate list of consumers whose previous meter reading date/previous bill date exceeded 31 days. Such timely reporting to the circle office would facilitate the officials concerned to take immediate action for taking timely meter readings and generation of bills. Such reporting would also facilitate in identification of reasons viz. controllable/uncontrollable delay and for taking corrective action and fixing responsibility.

Non initiation of legal action for recovery of arrears

3.3.28 Clause 7.4.3 of chapter-VII - Legal Matters of the Code of Commercial Instructions, 1996 stipulated that in the event no payments were received from the consumers within six months from the date of temporary disconnection, it was necessary to verify the financial status of the HT consumers and initiate immediate legal action such as filing recovery suit, so as to safeguard the Board's dues.

? A.E. – Assistant Engineer. ? Dy.E.E. (O&M) – Deputy Executive Engineer (Operation and maintenance). ? E.E. (O&M) – Executive Engineer (Operation and maintenance).

Delay in issue of bills to HT consumers resulted in loss of interest of Rs.79.74 lakh.


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Audit scrutiny of HT consumers whose arrears were more than Rs.50,000 revealed that there were 186 HT consumers in eight circles, whose arrears to the tune of Rs.38.71 crore as on 31 March 2003 were pending for more than three years. Since there was no system of periodic report generation of such cases in the HT billing system, there was no effective follow-up.

In reply, the Board stated (December 2002) that necessary action would be taken in due course. Despite clear directions by the Board no proper implementation of the directives through follow-up/feed-back was maintained at various levels of hierarchy in the Board.

Receivables

3.3.29 Para 22.2 “Provision for Bad Debts” (page 56) of Part II of MERC's order of May 2000 stipulated that the Board shall ensure that its receivables at any point of time, shall not exceed 75 days. If the money was not recovered from the unit holder, immediate disconnection should be resorted to and steps to recover it legally should also be set in motion.

In January 2002, the MERC found that the Board had defaulted in complying with the above directives of May 2000 order and imposed a penalty of Rs.1 crore. The MERC further directed the Board to comply with tariff order of May 2000 by March 2002. The Board had neither disconnected the supply of defaulters (July 2003) nor had taken legal action to recover the same. As a result, the defaulters were not inclined to pay arrears. There were arrears to the tune of Rs.36.82 crore in respect of 135 HT consumers of seven circles (March 2003).

Top defaulters

3.3.30 Through clause no.14 of MERC order of January 2002 (page no.8), the Commission had directed the Board to disconnect power supply of all consumers whose names appeared in the defaulters’ list for the second time and submit the details of the same to the Commission along with the copy of the defaulters’ list.

Audit verification of HT consumers in order of highest arrears revealed that there were 159 HT consumers of four circles who were in arrears to the tune of Rs.39.87 crore and their names appeared in the defaulters’ list for the second time yet their connections were not disconnected as of July 2003.

The Board stated (December 2002) that majority of the top defaulters were Government departments. The reply is not tenable, as the Board did not take action to disconnect the power supply of the Government departments who showed no inclination to pay the arrears.

HT consumer bills not checked by competent authority

3.3.31 Clause 4.2.2 of chapter-IV (Page No.60) of Code of Commercial Instructions, 1996 clearly stipulated that “Meter reading of HT consumers having contract demand of 3 MVA and above should be recorded by the

Arrears to the tune of Rs. 38.71 crore were pending for more than three years.

The Board had neither disconnected the supply of defaulters nor had taken legal action to recover the same.

Majority of top defaulters were Government departments.


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Executive Engineer (O&M) and the HT meter reading bills of the above consumers should be checked/cross-checked by the Superintending Engineer/Chief Engineer”.

Audit verification revealed that during 2000-03, 154 HT consumers of 10 circles had a contract demand ranging from three to 135 MVA and their bills to the tune of Rs.4,937.62 crore were not checked/cross-checked either at the Superintending Engineer or Chief Engineer level, which was in contravention of the provisions stated above. Adhering to the prescribed process is important as it ensures that the source documents are properly prepared, complete in all respects, authorised by competent authority and there is adequate segregation of duties for ensuring integrity and reliability of data from the origin to the approval of the source document.

Non maintenance of register for reconciliation

3.3.32 The various testing divisions in the Board are responsible for recording the meter readings and also the multiplying factor (MF) in case of change of type of main / CTPT? meter. The information thus collected is sent to the concerned billing section, which after processing and verifying, in turn sends the data to concerned computer center for generation of bills.

In order to maintain proper co-ordination amongst testing divisions, billing sections and computer centers for noting the changes in MF, the Chairman of the Board instructed (1996) that registers must be kept by testing divisions, billing sections, and computer centers indicating clearly the name of consumer, consumer number, MF, date of advice by concerned testing division/billing section, and acknowledgement by the billing section/ computer center for updating the change in MF. The Chairman of the Board had also directed that the Superintending Engineer must inspect this register and non-observance of the above instruction should be dealt with severely.

As per clause 4.9.3 of Chapter-IV of Code of Commercial Instructions (1996) reconciliation between the testing divisions, billing sections and the computer centers should be done and a certificate be recorded to that effect in the register.

Audit scrutiny revealed that during 1999-2003, main/CTPT meters were replaced 10,628 times in respect of 6,931 HT consumers of ten circles. However, the testing divisions, billing sections, and computer centers did not maintain the registers as required under above provisions and no reconciliation was carried out between the testing divisions, billing sections and the computer centers. The Superintending Engineer had also not carried out inspection of the register.

In the HT billing system implementation, there are no inbuilt input controls for reconciling the updated MF in master data of HT consumers. In reply, the Board stated (December 2002) that the requisite registers would be maintained. ? Current Transformer / Potential Transformer.

Critical source documents were not checked by competent authority.


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The matter was reported to the Government (December 2002); the reply has not been received (November 2003).

Conclusion

The billing system has poor general information technology controls especially regarding the security features such as access controls, passwords, login attempts and security breach reports. Thus the system was vulnerable to unauthorised access and data manipulation.

The business rules in many cases were found to be improperly incorporated into the system along with insufficient application controls and validation checks resulting in revenue loss to the Board. Use of the system as an input to the management information system was virtually absent and there was poor coordination between the department of information technology/management information system and the user department.

There is an urgent need to incorporate security controls and proper application controls through validation checks in the software. The Board should formulate and document an information technology policy to delineate the responsibilities and interaction between the department of information technology and the user departments.

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Chapter-IV

4. Miscellaneous topics of interest relating to Government companies and Statutory corporations


City and Industrial Development Corporation of Maharashtra Limited

4.1 Loss of revenue

City and Industrial Development Corporation of Maharashtra Limited (Company) allots plots for residential, commercial, public utility services, common facilities like primary schools, secondary schools and higher educational institutions. Undue benefit of Rs.32.02 crore was extended to 18 allottees by collecting premium less than chargeable as discussed below:

Allotment of plots to educational institutions

4.1.1 Lokamanya Tilak Jankalyan Shikshan Sanstha, Navi Mumbai requested (July 2001) the Company for allotment of adjoining plots admeasuring 4,200 and 3,632 square metres for setting up an Engineering College. These plots were earmarked by the Company for residential and commercial purposes. After allotment of plots, the Sanstha requested (May 2002) the Company to apply the rate applicable for educational purpose instead of the rate applicable for commercial/residential purpose. Rightly, the Company did not agree. However, by accepting the request of then Minister of Labour (September 2002), the Company (November 2002) reduced the rate applicable in respect of plots admeasuring 6,432 square metres out of 7,832 square metres resulting in revenue loss of Rs.3.87 crore to the Company and benefit to the private party. The Company in its reply (October 2003) confirmed that the reduction in rates was done at the request of the then Minister of Labour, Government of Maharashtra.

4.1.2 The Company offered and issued a letter of intent (March 1993) for allotting plots admeasuring 40,993 square metres valued at Rs.2.07 crore to Terna Public Charitable Trust (Trust) for setting up an engineering college and hospital cum staff quarters at Nerul and Panvel respectively. As the reserve

The Company charged premium for residential and commercial plots at lower than applicable rates resulting in revenue loss of Rs.3.87 crore.

By charging lease premium less than prescribed rates, undue benefits of Rs.32.02 crore were passed on to educational institutions, newspapers groups and others.


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price prevailing at the time of allotment had gone up, the Trust was asked to pay additional premium of Rs.65.36 lakh based on the reserve price prevailing at the time of allotment in 1997. On being objected to by the trust, it was decided (February 1997) to charge the rate as given in the letter of intent of 1993 with payment of simple interest at the rate of 15 per cent per annum till payment of entire premium. The Company collected (October 1997) lease premium of Rs.3.32 crore including interest of Rs.1.24 crore. In March 2002, the Trust requested for allotment of additional land admeasuring 20,000 square metres behind the existing college at Nerul. The Company made the allotment at the rate of Rs.2,500 per square metre instead of prescribed rate of Rs.3,750 per square metres. However, after a meeting convened by the then Chief Minister, (May 2002) the price was further reduced to Rs.1,250 per square metre alongwith the adjustment of Rs.1.24 crore paid by the trust as interest in 1997.

The total benefit passed on to the private party due to deviation from the prescribed rate was Rs.6.24 crore including adjustment of interest of Rs.1.24 crore.

4.1.3 The Company allotted (1986-1999) plots admeasuring 21,032.70 sq.mtrs. to 10 educational institutions (as detailed in Annexure-22) for opening primary and secondary schools. In January 1998, the Company observed that the allottees used these plots to establish professional colleges. Due to change of the usage from running of schools to professional colleges, additional premium of 50 per cent of reserve price was chargeable. However, while regularising the misuse of plots, the Company as stated in its agenda note, as per directions of the then Chief Minister decided (March 2000) to reduce the premium. A benefit of Rs.27.25 lakh was thus passed on to the allottees who failed to set-up schools. The allottees received a further benefit of Rs.20.06 lakh due to the failure of the Company to fully recover the lowered premium. This resulted in loss of Rs.47.31 lakh to the Company.

Allotment of plots for newspaper groups

4.1.4 The Company allotted (July 1998-January 2002), five plots admeasuring 29,998.20 square metres in Vashi sector (Navi Mumbai) to five newspaper publishing groups at rates lower than applicable resulting in loss of Rs.21.25 crore detailed as below:

Area allotted (in square

metre)

Amount to be charged as per prescribed rate

Actual amount charged

Differ-ence

Sl. No.

Name of the allottee (Rupees in crore)

1 Prabhodhan Prakashan (Samana)

8,200.00 8.71 2.90 5.81

2 Bhartiya Vichar Dharshan (Tarun Bharat)

8,200.07 8.72 2.91 5.81

3 Hindustan Prakashan Sanstha (Vivek)

2,313.35 2.46 0.82 1.64

4 Prithvi Prakashan (Lokmat)

3,285.08 3.49 1.17 2.32

5 Dainik Pudhari 7,999.70 8.50 2.83 5.67 Total 29,998.20 31.88 10.63 21.25

Charging of premium at less than prescribed rate and non recovery thereof resulted in loss of Rs.47.31 lakh to the Company.

Benefit of Rs.6.24 crore was extended to a private party due to charging premium less than at prescribed rate.

The Company allotted five plots to publishing houses at lower than prescribed rate, resulting in revenue loss of Rs.21.25 crore.

Chapter-IV – Miscellaneous Topics of Interest

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The Company did not have an effective mechanism to ensure that the land was not used for a purpose other than the purpose for which the allotment was made. During a survey conducted in September 2002, the Company observed that in four (Sl.No.2-5) cases where allotment was done between 1998 and 2000, printing presses were not set up. Instead the plots had been exchanged with private builders for construction of houses which were being sold in the open market. Despite this, the Company failed to take action to resume the land in terms of the agreement with the publishing houses (April 2003).

Allotment of plots for weigh bridge/warehouse

4.1.5 The Company invited tenders (May 1999) for sale of plots in Dronagiri node for weigh bridge activity and the rate received was Rs.3,456 per square metre. However, the Company allotted (June 2001) plot No.20 at Sector 2 in the same node admeasuring 1,200 square metres to Standard Weigh Bridge for weigh bridge activity (500 square metres) and warehousing activity (700 square metres). Tenders were not invited for this allotment. The rate charged for weigh bridge activity was Rs.2,250 per square metre which was much lower than the rate of Rs.3,456 per square metre. Thus, benefit of Rs.19.16 lakh was passed on to the private party. Another concession given to the party was increase in floor space index (FSI) from 0.5 to 1.0.

The reply of the Company (June 2003) that the FSI allowed was 0.5 is not true as the allotment letter mentions FSI of one.

The matter was reported to the Government/Company in April-June 2003, but the replies of the Company in respect of three cases and replies from Government in respect of all five cases had not been received (November 2003).

Maharashtra Film, Stage and Cultural Development Corporation Limited

4.2 Under valuation of land

Maharashtra Film, Stage and Cultural Development Corporation Limited (Company) entered into (October 2000) a joint venture agreement (Whistling Woods International Private Limited) with Mukta Arts Limited, Mumbai (firm) to establish an integrated films and television training institute cum research and studio complex.

Audit observed the following:

? The decision was taken by the then Managing Director without inviting competitive bids/approval of Board of Directors.

Allotment of land at lower than the rate earlier obtained through tender resulted in loss of Rs.19.16 lakh.

The Company extended undue benefit to a private party by under valuation of land by Rs.28.20 crore.


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? Handing over of land was irregular since the Company was not the owner of land and had not taken Government's prior permission.

? The agreement envisaged that capital of the joint venture would be Rs.20 crore of which Rs.17 crore (85 per cent) was to be invested by the firm and rupees three crore (15 per cent) by the Company. Sharing of revenue was accordingly in the ratio 85:15. The value of the land admeasuring 20 acres (80,000 sq. mtrs.) which was handed over to the joint venture towards the Company's share of rupees three crore was wrongly shown as Rs.375 per square metre whereas the prevailing rate as notified by Bombay Municipal Corporation in that area was Rs.3,900 per square metre. The under valuation of land had two implications:

? The Company's contribution to capital is shown as rupees three crore instead of Rs.31.20 crore, thus under valuing land by Rs.28.20 crore.

? The revenue to be obtained by the Company would be 15 per cent instead of 64.73 per cent based on contribution.

In reply (July-August 2003) the management stated that it has been decided to renegotiate the agreement. However, the existing agreement has not been rescinded (September 2003). Action has also not been taken against officials responsible for the under valuation.

The matter was reported to the Government (June 2003); the reply had not been received (November 2003).

4.3 Undue benefit to a private party

Maharashtra Film, Stage and Cultural Development Corporation Limited (Company) was operating two studio cum makeup rooms which required repairs. On the plea of its bad financial health, the Company entered into an agreement (February 2000) with M/s. House of Cine Arts Enterprises (firm) for financing the structural and technical repair work of the studios. As per agreement, the firm was required to carryout the repairs at its own cost and the anticipated yearly earnings of Rs.1.50 crore from studios was to be shared between the Company and the firm in the ratio of 65:35 for a period of 15 years.


? Although, Chief Engineer, Maharashtra Industrial Development Corporation, based on a survey of the studio buildings informed the Company (November 1999) that no structural or construction defects exist in these buildings and the cost of repair works was estimated at Rs.80 lakh, an agreement was entered into (February 2000) with the firm providing for

Undue benefit of Rs.6.09 crore was extended to a private firm in repairs work of studios.

The Company passed on undue benefit to joint venture vendor by under valuing land by Rs.28.20 crore.


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a revenue sharing arrangement taking cost of repairs as rupees three crore. An amount of Rs.2.62 crore was stated to have been spent on repairs.

? The agreement stipulated that the firm was fully responsible for the repairs but a payment of Rs.20.47 lakh was made as architect’s fee by the Company.

?? The value of the studio was Rs.20 crore and firm was to spend rupees three crore on repairs for which the firm was allowed a disproportionately high share of 35 per cent of the anticipated yearly revenue of Rs.1.50 crore. During first 18 months, the Company paid Rs.97 lakh to the firm as its share of revenue. As stated by the Company (July 2003), the expenditure incurred by the firm was infact financed by the Company and hence the firm was not entitled for any revenue sharing. Thus, this resulted in undue benefit of Rs.97 lakh to the firm.

?? The Company had Rs.2.36 crore in fixed deposit and Rs.3.05 crore of cash balance as on 31 March 2000. It was, therefore in a position to finance the repairs on its own without entering into a revenue sharing agreement. Despite this, the work was carried out through a private firm.

?? As stated by the Company (July 2003), in addition to above, when the firm entered into revised memorandum of understanding with the Company the surrender value against his share of 35 per cent for prospective 15 years was considered as Rs.5.12 crore and the same was adjusted against loan and advances recoverable from the firm against other contracts. Thus, additional benefit of Rs.5.12 crore was extended to the firm.

Total undue benefit passed on to the firm in the repairs work of studios was Rs.6.09 crore.

The Company stated (July 2003) that the contract has been terminated (11 February 2003) and Financial Advisor and Chief Accounts Officer has been dismissed from service in June 2003. But no action has been taken against the then Managing Director.

The matter was reported to the Government (June 2003); the reply has not been received (November 2003).

4.4 Non-recovery of loan due to lack of security

Maharashtra Film, Stage and Cultural Development Corporation Limited (Company) entered (March 2002) into an agreement with Neelmudra Entertainment Limited (NEL) to provide financial assistance of Rs.1.70 crore to fill in the gap of seed capital for producing a bilingual feature film titled 'The Invaders'. The Company has terminated the agreement on

The Company’s dues of Rs.2.02 crore remained unrecovered due to disbursement of financial assistance without security.

Undue benefit of Rs.6.09 crore was extended to a private firm in the repairs work of studios.


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10 February 2003 and called for the refund of the whole amount of financial assistance and interest thereon.


? The agreement was entered into by the then Managing Director without approval of Board of Directors.

? Instead of obtaining bank guarantee at the time of release of loan (March-September 2002), the agreement stipulated furnishing of bank guarantee within two years (by March 2004) of release of financial assistance.

? The agreement provided for property worth rupees two crore being kept as guarantee in the event of default. However, it was observed (March 2003) that NEL owned assets worth Rs.2.64 lakh only.

? The Company advanced Rs.1.95 crore between March-September 2002 as against the stipulated advance of Rs.1.70 crore. As on 31 March 2003 dues of Rs.2.17 crore (principal: Rs.1.95 crore and interest: Rs.21.89 lakh) were recoverable from the firm.

The Company stated (July 2003) that an amount of Rs.15 lakh has been recovered from NEL and balance amount would be recovered after 150 days of termination of contract (10 February 2003). Although the stipulated period has elapsed on 10 July 2003 the balance amount of Rs.2.02 crore has not been recovered (August 2003) due to lack of safeguards in the grant of financial assistance. The reply was silent about the action being taken against officials responsible for the serious lapses in the matter.


Due to lack of safeguards in the grant of financial assistance, the Company’s dues of Rs.2.02 crore remained unrecovered.


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Statutory corporations


4.5 Implementation of information technology in stores management

Implementation of information technology in stores management did not yield the desired results as the systems developed by the Board were deficient.

The stores wing of the Maharashtra State Electricity Board (Board) is responsible for procurement, receipt, storage, and issue of stores and disposal of surplus or scrap materials. The functions of stores wing comprised both accounting of receipts, issues and stock as well as monitoring of supplies. The computerisation of these functions was accomplished during 1998 by implementing three applications viz. stores management system (SMS), project material stock status reporting system (PMS) and distribution material stock status report system (DMS). The Board invested Rs.33.97 lakh in development of software (Rs.15.97 lakh) and in hardware (Rs.18 lakh) for the three applications.

Audit observations on major applications are discussed in the succeeding paragraphs.

Stores management system (SMS)

4.5.1 The Board initially developed (1988-1991) SMS through Tata Consultancy Services (TCS) at a cost of rupees three lakh. The system was developed in COBOL? and was designed for batch mode operation at major stores only. The system was converted (1998) into an on line system in oracle? on Unix/ platform at a cost of Rs.4.80 lakh for implementation at store centre level. The information technology wing of the Board modified the system in September 2000 by changing the platform from Unix? to Windows NT. The same was implemented at 11 major stores and 32 store centres.

The main objectives of SMS are to computerise recording of stores transactions viz. receipts, issues and stocks and to generate stock ledger reports. Values of receipts and issues are generated from SMS and posted in a

? COBOL – Common business oriented language. ? Oracle – Programming language. ? Unix/Windows NT – Operating systems.


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separate financial accounting system, through journal vouchers prepared manually after verification. Data from SMS is also used as input for DMS.

Non-standardisation of units of measurement of stock

4.5.2 The units of measurement of stock in the ‘item master table’ of SMS at different store centres are not standardised. For example, kilometre is used as unit of measurement at one store centre while in another it is metre. Lack of standardisation of stock units in ‘item master’ table of SMS at different store centres under a major store resulted in difference of Rs.190 crore between stock as per consolidated stock ledger and stock ledger as per financial accounting system generated by major store at Nashik in March 2003. After being pointed out in Audit, (June 2003) the Board brought down the difference to Rs.27.56 lakh (June 2003).

Non-intimation of errors in data to store centres

4.5.3 Under the manual system, store centres were entering details of quantity received and issued in respective registers and sending the stores receipt note and material issue note to major stores. Details of prices were not available at store centres. Valuation of receipts and issues was done by major stores. In SMS, price details are entered by store centres and these are used by the system for valuation of receipts, issues and stocks. Audit scrutiny revealed following errors in data entry at store centres:

? Receipts, issues and stocks of certain specified items are to be valued at predetermined standard rates prescribed by Director of Accounts of the Board for the purpose of accounting. These standard rates are to be incorporated in the ‘item master’ table in SMS. Standard rates entered in the 'item master' table differed from the rates prescribed by Director of Accounts resulting in under valuation of stocks by Rs.58.40 crore in Aurangabad, Nashik and Pune major stores (June 2003).

? For valuation of receipts of specified items as above, on entry of relevant details such as item code, quantity etc., the system displays the standard rate as entered in the ‘item master’ table. Rate displayed is, however, allowed to be edited by the data entry operator. There is no need for allowing the standard rate to be edited as this leads to valuation at a rate different from that entered in the ‘item master’ table. Fifty one items were valued at a rate different from that entered in ‘item master’ table leading to under valuation of stock by Rs.12.99 crore in seven major stores? (June 2003).

? Aurangabad, Baramati, Kolhapur, Nanded, Nashik, Osmanabad and Pune.

Stocks were under valued by Rs.71.39 crore.


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? In respect of 336 items in stock (June 2003) a consolidated negative balance of Rs.115.48 crore was found in all the eight major stores taken up in audit. Audit observed that when the quantity issued is entered in the issue module, the system does not verify whether the quantity entered is more than quantity in stock. As such the system accepts entry of incorrect quantity in excess of quantity in stock leading to negative balances.

Errors in quantity or values noticed by major stores during verification are corrected manually in the printed documents before passing journal voucher and entry in the financial accounting system. However, such rectification is not being intimated to store centres for incorporating in SMS. There was difference of Rs.238.46 crore between stock as per SMS and as per financial accounting system as on 31 March 2003 in three major stores at Aurangabad, Nashik and Pune.

Need for automatic revision of standard rates

4.5.4 As per Electricity (Supply) (Annual Accounts) Rules, 1985, there should be a system for periodic revision of standard rates whenever significant variances are observed. Standard rates were last revised manually in April 2001. As standard rates and actual purchase rates are both stored in SMS, the system can be used to automatically revise the standard rates.

Adjustment to stock without authorisation

4.5.5 Adjustments to stock arise on account of entry of receipt/issue under wrong item code and errors in data entry relating to quantity/price. Such adjustments are required to be made only after authorisation and also after entry of adjusted figures in financial accounting system through journal vouchers. Audit observed that adjustments valuing Rs.141.89 crore were made to stock during September 2000-June 2003 by 20 store centres without written authorisation and also there was no corresponding adjustment journal voucher for such entries. Though data entry module for stock adjustments provide for mandatory entry of journal voucher number, dummy numbers were entered at store centres without actually passing journal vouchers. Audit observed that adjustment to stock was made to reconcile the stock in hand with manual bin cards. This resulted in difference between stock as per SMS and financial accounting system. Unauthorised adjustment to stock is fraught with the risk of manipulation of records.

Reporting of adjustment to stock on account of price variation

4.5.6 Price variation refers to variation in purchase rate of material due to changes in price of components calculated as per formula given in purchase order. Such price variation paid to supplier is required to be added to the cost of item if the same was in stock or to be passed on to the user units for accounting as consumption in case the item was already issued. Price variation module in SMS is not designed to segregate the proportionate variation to be added to stock and to be passed on to the units. The system also did not

Adjustment to stock was made to reconcile the stock in hand with manual bin cards.


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provide for reporting of adjustments to stock on account of price variation in stock ledger.

Audit observed that adjustment to stock on account of price variation is being done manually. It was further observed that price variation aggregating Rs.64.59 lakh for 2002-03 had remained to be accounted for by major stores at Nashik and Pune. There is need for modifying the price variation module to ensure proper segregation of such variation and reporting adjustment to stock so that manual adjustment to stock could be avoided.

Lack of audit trail

4.5.7 The financial accounting system gives the details of opening stock, receipts, issues and closing stock in value terms for each major store. Item-wise details of above details in terms of quantity and value are available in the stock ledger report generated from SMS. Every entry in SMS has a corresponding entry in financial accounting system through journal vouchers prepared manually. However, ‘audit trail’ linking the two systems through reference to journal vouchers is not provided for except in the case of stock adjustments. In the absence of such ‘audit trail’, item-wise break up of the difference of Rs.238.46 crore between stock as per SMS and as per financial accounting system as on 31 March 2003 in three major stores of Aurangabad, Nashik and Pune could not be ascertained in audit. There is need for incorporating journal voucher numbers in SMS for providing ‘audit trail’.

The Board stated (September 2003) that the feasibility of incorporating audit trail would be explored.

Adjustment to prior period after year end closing

4.5.8 SMS provides for year-end processing whereby closing stock at the end of each year is carried forward as opening stock of the next year. The system also accepts entry of data relating to prior period after carrying out year end processing. However, the system does not recalculate the opening balance by considering such data entered. This resulted in a consolidated difference of Rs.57.15 lakh between closing stock as on 31 March 2003 as per stock ledger generated for the month of March and opening stock as on 1 April 2003 in four major stores at Baramati, Kolhapur, Pune and Ratnagiri.

Need for system generated reports on delay in supplies and age wise analysis of inventory

4.5.9 SMS is designed to generate stock ledger reports and other management information system (MIS) reports such as materials pending inspection, division-wise issues and item-wise receipts and issues etc. However, MIS reports relating to delay in supplies, inventory carrying cost, expenditure details for budgetary control and age wise analysis of inventory are not being generated from the system. Audit observations based on analysis


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of data using ‘IDEA?’software, downloaded from SMS in 20 store centres are given below:

? There were delays in 4,901 out of 11,005 supplies during September 2000 to June 2003. Of these, 1611 supplies were delayed beyond 90 days. Evaluation of tender, inter alia, includes verification of the past performance of suppliers in delivering the materials within scheduled date. Details of orders placed on each supplier and delay in supplies are manually compiled at central purchase agency (CPA) of the Board. Data relating to purchase orders including scheduled date of delivery and actual date of receipt of materials is available in SMS. Report regarding delay in delivery of materials by suppliers should be generated from the system rather than through manual compilation.

? Store items (217) valuing Rs.4.45 crore received between September 2000 and June 2003 were in stock (June 2003) without any issues during this period. Of these, items (77) valuing Rs.1.62 crore were in stock for more than one year from the date of receipt without any issues being made. There is need for age wise analysis of stocks to identify slow moving and non moving inventory.

Lack of logical access mechanism and segregation of duties

4.5.10 SMS is designed to provide security levels to different categories of personnel by restricting access to each category of personnel to the extent required. For example, data entry operator would have access for only entering data and querying.

However, access to various categories of personnel is not being restricted. Thus, there is risk of unauthorised modification to program and editing of data directly in the tables.

The Board stated (September 2003) that the initial objective of SMS was to create computer awareness at the lowest levels and development of infrastructure for computerised stores management. The Board further stated that necessary action to standardise stock units, provide security features and modify the program to remove data errors would be taken.

Project material stock status reporting system (PMS)

4.5.11 The Board developed PMS in FoxPro? for Windows platform at a cost of Rs.0.90 lakh to provide monthly stock status of all project materials. Data relating to receipts, issues and stock is entered in PMS at store centres. The same is forwarded every month to stores management wing, which generates monthly stock status reports detailing scheme wise stock position for each

? Interactive data extraction and analysis software developed by CASEWARE IDEA INC. as a computer assisted auditing tool. ? Programming software.

There is need for age wise analysis of stocks.


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item and circulates them to CPA, transmission planning section and user divisions.

Identification of surplus stock after closure of a scheme

4.5.12 Project materials are indented and procured specifically for each scheme. A scheme is treated as closed after its commissioning. Materials in stock after closure of a scheme could be utilised for new schemes. Closure date of each scheme is therefore a vital input in PMS, but the closure date is not being entered. The monthly stock reports generated from the system showed only the scheme wise stock of each item without showing the surplus items in stock after closure of schemes. There were 320 items valuing Rs.21.20 crore in stock (June 2003) for more than three years as of June 2003 without issues. In the absence of closure date of schemes not being promptly entered in to the system, the Board is not aware of whether these items remained surplus after completion of schemes for which they were procured. Audit observed that materials valuing Rs.4.62 crore in respect of 30 schemes completed between 1998 and 2002 were in stock (June 2003). There is need for prompt entry of closure date of each scheme so that surplus materials could be identified and utilised for fresh schemes. Two instances of purchases made despite availability of materials in stock after completion of schemes are given below:

? ? In August 2001, there were 81 numbers of 198 Kv surge arrestors (item code: 19021203584) and 35 numbers of 120 Kv surge arrestors (item code: 19021103014) in stock (value: Rs.80.87 lakh). 18 schemes for which these surge arrestors were procured were already completed. The Board ordered (September 2001) 135 numbers of 198 Kv surge arrestors at Rs.77,546 each and 208 numbers of 120 Kv surge arrestors at Rs.39,434 each for fresh schemes without taking into account availability of existing stock. The Board stated (May 2003) that surge arrestors were important for protection to equipment against lightning and had to be kept in stock for maintenance as and when required. The fact remains that order was placed without taking into account the stock of closed schemes which indicate system deficiency.

? ? There were 7,140 numbers 11 Kv Anti fog disc insulators valuing Rs.27.04 lakh in stock at the end of year 2000. The scheme (Kharepatan-Finolex tap line) for which the insulators were procured was already completed. These insulators were therefore available for use against fresh schemes. Instead of utilising them for fresh schemes, the Board purchased additional 7,195 numbers of 11 Kv Anti fog disc insulators valuing Rs.27.25 lakh.

The Board stated (September 2003) that store centres do not know the dates of completion of schemes. There should be a process for promptly intimating date of completion of each scheme to the store centres.

Non updation of stock lying in closed schemes resulted in additional procurement.


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Thus, the systems developed by the Board were deficient as access to data modification is not being restricted to specific authorised personnel; there was difference between stock as per SMS and financial accounting system; system is not being used to track delays in supplies; and age wise analysis of inventory is not being carried out. The Board accepted (September 2003) that less reliance is placed on these IT applications.

The matter was reported to the Government (October 2003); reply was awaited (November 2003).

4.6 Avoidable expenditure on purchase of steel pipes

The Board procured 15,000 metres of MSERW pipes for Chandrapur thermal power station from Steel Authority of India Limited (SAIL) in November 2000 at the rate of Rs.2,557 per metre.


Instead of calling for competitive tenders, the order was placed on single quotation basis. The purchase price of the material was much higher than the rate of Rs.1,856 per metre charged by SAIL in August 1999 obtained through competitive tenders. Payment of increase in price by Rs.701 per metre within a time span of 16 months (August 1999-December 2000) was not justified as there was not much variation in raw material prices declared by SAIL during April 1997-November 2000. Consequently, extra expenditure of Rs.1.05 crore was incurred.

The Board replied (September 2003) that the order was placed on SAIL as per the specific demand from Technical Director (Generation O&M) and that the rates of MSERW pipes were dependent on market conditions.

The reply is not tenable as the price of Rs.2,557 per metre paid in November 2000 was far in excess of the rate of Rs.1,856 per metre charged by SAIL in August 1999 though there was no variation in price of the billet used for making the pipes.


Purchase of mild steel electric resistance welded (MSERW) pipes was made without calling for competitive tenders.


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4.7 Incorrect computation of penalty in a case relating to theft of energy

The Maharashtra State Electricity Board's (Board) inspection (23 January 1999) of electrical installations in the premises of Transauto and Mechaids Private Limited (TMPL), a high tension consumer, revealed that holes were drilled under the meter at all counters viz. KWH?, KVAH? and RKVAH?. The holes were situated in such a position that the working of meter could be stopped or slowed down by inserting thin wires through these holes. Since this was a meter which was transferred from another customer, there was a doubt whether the holes were existing at the time of installation at the premises of TMPL. It was confirmed by Chief Engineer, Bhandup zone that the meter was in proper condition without holes at the time of installation. On verification, it was found that the connected load was 1,290 KW. The existence of holes in meter constituted pilferage or dishonest abstraction of energy in terms of condition 31 (e) of the Conditions and Miscellaneous Charges for Supply of Electrical Energy. In such cases, the condition ibid provides that the consumer should be billed for demand and energy charges calculated on the basis of assessed demand, which should be the higher of contracted demand or 60 per cent of actual connected load at the time of inspection. The consumer was also liable to be charged 25 per cent of the bill as surcharge. Accordingly, the Board issued a bill (February 1999) for Rs.54.48 lakh including surcharge of Rs.10.90 lakh for the period March 1998-January 1999.

The consumer contended (May 1999) that his usage was only 600 KVA and the Board revised the bill to Rs.0.98 lakh including surcharge of Rs.0.20 lakh on the orders of Appeal Committee of the Board by taking the assessed demand as 600 KVA. The revision of bill was clearly in violation of the rules. The contracted demand was 800 KVA. The connected load was 1,290 KW and 60 per cent of connected load worked out to 774 KW. The assessed demand for the purpose of the bill would therefore be 800 KVA and not 600 KVA.

The irregular revision of bill in a case of theft, resulted in undue favour of Rs.53.50 lakh to the consumer with corresponding loss to the Board. The Board confirmed (October 2003) the facts and figures.

The matter was reported to the Government (May 2003); their reply had not been received (November 2003).

? KWH – Kilo watt hour. ? KVAH – Kilo volt ampere hour. ? RKVH – Rector kilo volt ampere hour.

Undue favour of Rs.53.50 lakh was extended to a consumer who tampered with the meter.

Irregular revision of bills in a case of theft of energy resulted in revenue loss of Rs.53.50 lakh to the Board.


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4.8 Short recovery of demand charges

Sterlite Industries (India) Limited (SIL), Aurangabad, a high tension consumer, requested (August 2000) the Board to enhance contract demand (CD) from 1,584 to 9,526 KVA and connected load (CL) from 1,800 to 10,209 KW. SIL paid the requisite charges of Rs.1.67 crore between September 2000-March 2001. Chief Engineer (Aurangabad zone) approved release of enhanced CD and CL on 21 April 2001. The same was actually released in May 2001. SIL was also billed (May 2001) for demand charges as per CD of 9,526 KVA. Subsequently, SIL requested (July 2001) revision in billing based on CD of 4,864 KVA up to October 2001, on 7,014 KVA up to April 2002 and on full CD of 9,526 KVA thereafter. The Board accepted (November 2001) the request and refunded demand charges of Rs.29.49 lakh collected up to October 2001. Revision in billing agreed to by the Board was not in order in view of the following:

??At the initial stage, SIL had requested for increased demand without any staggering. The sanction in September 2000 was not for increase of load in phases.

??Although in the letter dated 3 April 2001 the Company sought the increase in a phased manner, in the agreement signed thereafter on 16 April 2001, the load was to be increased in one stage and not in a staggered manner. The full enhanced CD and CL was released in May 2001.

Thus, subsequent revision of bills in November 2001, at the request of SIL, despite actual release of full CD of 9,526 KVA in May 2001 resulted in short recovery of demand charges amounting to Rs.52.23 lakh (including Rs.29.49 lakh collected and refunded).

The Board in its reply (August 2003) accepted that there was no clause in the agreement to release CD and CL in phases but due to the difficulties faced by the consumer in availing full load, the billing was revised and there was no intention to favour the consumer. The reply is not tenable as short recovery of demand charges was a benefit to the consumer.

The matter was reported to the Government (May 2003); the reply had not been received (November 2003).

The Board revised its billing for demand charges based on staggered contract demand after actual release of full CD in one stage resulting in short recovery of Rs.52.23 lakh.

Irregular benefit of Rs.52.23 lakh was extended to a consumer due to billing on staggered contract demand basis despite release of full contract demand in one stage.


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4.9 Avoidable payment of commitment charges

Power Finance Corporation Limited (PFC) sanctioned (December 1994 -July 1996) loan of Rs.45.10 crore for establishment of 132 and 220 KV sub-stations. As per the terms of sanction, the Board was liable to pay commitment charges at the rate of one per cent per annum on the unavailed loan till the actual drawal of loan.

The Board completed these schemes during 1997-99 by availing loans amounting to Rs.30.06 crore from PFC and the balance loan (Rs.15.04 crore) was not availed.

Due to delay in closure of loan accounts, the Board had to pay Rs.24.11 lakh towards commitment charges.

The Board replied that delay in closing of loan accounts was mainly due to procedure involved. The reply is not tenable as the Board delayed closure of the PFC loan accounts by periods ranging up to as much as 56 months from the date of completion of schemes due to delayed communication of completion of scheme by the projects.


4.10 Additional expenditure due to abnormal delay in finalisation of tender

The Board invited tenders (April 1999) for procurement of 36,075 MT rolled steel joists (RSJ) of four different sizes on biennial rate contract basis. The tender was opened on 30 June 1999 with validity up to 31 December 1999. Out of 15 offers received, 10 were found technically and commercially acceptable (7 past suppliers and 3 new suppliers).

Based on the recommendations of Committee on Public Undertakings, the Board had issued (April 1997) instructions to finalise tenders within the original validity period so as to avoid non extension of validity period by the competitive tenderers. It was also instructed that the tender finalisation should be completed in all respects within six months (180 days).

The Board asked the tenderers (December 1999) to extend the validity period of offer up to 29 February 2000. Tender was finalised (February 2000) after a delay of eight months from the date of opening (June 1999), even though six clear months were available to the Board. As a result, the lowest bidder

The Board paid commitment charges of Rs.24.11 lakh due to delay in closure of loan accounts of PFC after completion of schemes.

Due to non finalisation of tender within the validity period, the Board procured the material at higher rate which resulted in additional expenditure of Rs.24.35 lakh.

Due to delayed closure of loan accounts, the Board paid avoidable commitment charges of Rs.24.11 lakh.


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(Radhakrishna Steels Limited) refused to extend the validity period and the Board had to procure material (1,585 MT) at higher rates resulting in extra expenditure of Rs.24.35 lakh? .

The Board attributed (April 2002) the delay in finalisation of tenders to internal reasons. The delay was avoidable since clear period of six months was available to the Board for finalisation of tenders. It is also pertinent to point out that this delay occurred despite COPU's recommendation regarding finalisation of tenders within validity period.

The Board/Government stated (August/September 2003) that the loss was notional as the party was not financially sound to execute the order. The reply is not tenable as the party had capacity to supply 8,800 MT as per the factory inspection carried out by the Board at the time of evaluating the offers.

4.11 Irregular waiver of interest receivable

The Maharashtra State Electricity Board (Board) invested in the equity capital of Dabhol Power Company (DPC) through Maharashtra Power Development Corporation Limited (MPDCL), a deemed Government company, with all shares held by the Board. The Board advanced an amount of Rs.90.38 crore to enable MPDCL to provide liquidity support to DPC in the form of LLC? . In terms of provisions of amended and restated Trust and Retention Agreement, DPC was to reimburse the above amount to MPDCL with interest thereon at the rate of 17 per cent per annum and the cost of maintaining the LLC towards liquidity support. The interest on LLC loan up to 31 March 2002 worked out to Rs.15.36 crore and income tax deducted at source thereon was Rs.3.13 crore but Board waived interest on the loan. The waiver of interest has also resulted in a loss of Rs.3.13 crore to the exchequer.

The Board stated (July 2003) that power purchase agreement with DPC was already rescinded and the likelihood of receiving any amount from DPC appeared very bleak. The waiver of interest was done keeping in view overall development on DPC front.

The reply is not acceptable since waiver of interest is detrimental to the Board's future claims on DPC which are not fully settled till date.

? The value of material procured (1,585 MT) was Rs.273.32 lakh (1,105 MT at the rate of Rs.17,524 per MT and 480 MT at the rate of Rs.16,600 per MT). The value as per L-1 rate of Rs.15,708 per MT was Rs.248.97 lakh. Extra expenditure of Rs.24.35 lakh (Rs.273.32 lakh – Rs.248.97 lakh). ? LLC –Letter of credit opened by MPDCL in favour of DPC to provide liquidity support as per provision of trust and retention agreement.

Failure of the Board to finalise the tender within validity period resulted in additional expenditure of Rs.24.35 lakh.

The Board irregularly waived the interest of Rs.12.23 crore on liquidity letter of credit (LLC) loan.

Due to irregular waiver of interest on LLC loan, the Board suffered loss of Rs.12.23 crore.


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4.12 Avoidable extra expenditure

Maharashtra State Electricity Board (Board) invited (April 2001) open tenders for procurement of 520 MT of hi-chrome grinding balls for coal mills.

Tenders were opened on 7 June 2001 and offers of four firms (one from BHEL and three from new firms) were found technically and commercially acceptable. All the firms offered entire tendered quantity of 520 MT.

The rates offered by three firms? were Rs.31,160, (L-1) Rs.34,311.85 (L-2) and Rs.44,398 per MT (L-3). While submitting the tender, L-2 agreed to match the rates of the lowest acceptable tenderer i.e. Rs.31,160 per MT. But L-3 refused to match the L-1 price. No order, therefore, should have been placed on L-3. But the Board procured 40 per cent quantity (208 MT) from L-3 at the rate of Rs.44,398 i.e. Rs.13,238 per MT higher than the lowest rate of Rs.31,160 per MT offered by the two other firms. This resulted in avoidable expenditure of Rs.27.54 lakh.

The Board stated (May 2003) that since L-3 had supplied the material through BHEL as mandatory spares, it had proven its performance with the Board and, therefore, more business was allotted to it. The reply was not tenable, as both the parties L-1 and L-2 were technically acceptable and L-3 had refused to match L-1.

The matter was reported to the Government (April 2003); the reply had not been received (November 2003).

? L-1–Welcase Steel Limited, Bangalore, L-2–Ball and Cylpebs Limited, Jhansi, L-3 – AIA Engineering Private Limited, Ahmedabad.

Due to procurement of material at rates higher than L-1, the Board incurred avoidable expenditure of Rs.27.54 lakh.

Procurement of grinding balls at rates higher than the lowest acceptable rate resulted in avoidable extra expenditure of Rs.27.54 lakh.


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4.13 Release of payment despite short receipt of material

Maharashtra State Road Transport Corporation (Corporation) procures Aluminium rolled products (sheets) from Bharat Aluminium Company Limited (BALCO) through yearly rate contracts (RCs).

It was noticed in audit scrutiny of receipt of aluminium sheets at Nagpur workshop of the Corporation that 8,691 sheets were short received during 1998-2000. Corresponding weight of these sheets was worked out to 20.068 MT valued at Rs.66 lakh based on the prevailing rate of RCs. Two cases illustrating the shortage are given below:

Challan No. and

Date

No. of sheets as per challan

Weight as per challan

No. of sheets actually received

Weight of material received

No. of sheets short

received

Value of shortages

(Rupees in lakh)

(i) (ii) (iii) (iv) (v) (vi) (vii)

5,188 7-9-1998

354

9.171

305 9.171 49 1.43

5,983 30-9-1998

343

8.912

303 8.912 40 1.17

?? In the two consignments it is not clear how the weight of material received and the weight of material as per challan was same despite shortages in the number of sheets.

? The Corporation was very much aware of the short receipt of material as early as October 1998 but made no efforts to investigate the matter. Stores section did not intimate Accounts section about the shortage of material. Consequently, full payment was made to BALCO. The Corporation did not indicate short receipt of material on the lorry receipt which was the basis on which BALCO paid the transporters.

? As per the terms of RC, complaint regarding shortages in quantities received was to be intimated to the supplier within 15 days of receipt of material for further necessary action. However, the Corporation lodged claims on BALCO for Rs.73 lakh on account of shortages noticed during 1997-2002 only in July-September 2002. The claims were rejected by BALCO being time barred. Thus, delay in lodging the claims rendered them time barred and irrecoverable.

The Corporation/Government while accepting the fact of overpayment stated (June/August 2003) that police complaint has been lodged and departmental action against defaulting officials had been initiated.

Full payment despite short receipt of material resulted in over payment of Rs.73 lakh to the supplier.


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4.14 Blocking of funds

Maharashtra State Road Transport Corporation (Corporation) acquired (December 1989-June 1991) leasehold land admeasuring 2,45,535.68 sq. mtrs. from Maharashtra Industrial Development Corporation (MIDC) during for construction of divisional workshops, depots, bus stations, tyre retreading plants etc. as detailed below:

Location Area in sq. mtrs. Date of possession Amount of lease premium paid

(Rupees in crore) Dombivali 41,917.00 5 June 1991 1.05 Bhosari 44,462.00 17 March 1990 0.67 Osmanabad 26,931.68 11 October 1990 0.03 Solapur 97,800.00 4 December 1989 0.29 Ambad 34,425.00 24 January 1991 0.28 245,535.68 2.32

The Corporation has spent Rs.2.32 crore. More than 12 years have lapsed and the land remains unutilised resulting in blocking up of funds and loss of interest of Rs.3.74 crore. In addition Rs.23.67 lakh has been paid as open land tax to the local authorities for Dombivli plot. Since the agreement with MIDC stipulated levy of additional premium in the event of non construction within a period of 18 months, the possibility of this liability arising in the future cannot be ruled out.

The Corporation/Government stated (June/July 2003) that the financial position of the Corporation was reasonably good till 1995 and thereafter it started incurring losses. Hence there was no alternative but to postpone construction activities.

The reply is not acceptable as there was no construction due to lack of firm construction plans even when the Corporation’s financial health was good. It remains doubtful as to whether land acquired on lease basis would be utilised.

4.15 Extra expenditure

In November 2000, Corporation decided to purchase 200 Mini buses with 20 seats capacity. Departing from the prevailing procedure of purchasing chassis and getting the body building done at its central workshops, the

The decision of the Corporation to purchase fully fabricated 200 mini buses instead of purchasing the chassis and getting the body building done at its central workshops resulted in extra expenditure of Rs.1.94 crore.

Blocking of funds of Rs.2.32 crore in unutilised leasehold land resulted in loss of interest of Rs.3.74 crore.

An amount of Rs.2.32 crore remained blocked in acquiring of land which was not utilised for 12 years. The loss of interest on blocking of funds was Rs.3.74 crore.


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Corporation chose to purchase fully fabricated buses. This resulted in extra expenditure of Rs.1.94 crore? .

The Corporation/Government stated (May/August 2003) that purchase of private buses was made in view of urgency for introduction of mini buses. It also stated that some time would be required for manufacture of prototype, fixation of norms to prepare specification for materials and spares, to plan material procurement and development of jigs and fixtures for fabricating bus body components of mini buses etc. if buses were to be built in its own workshops. If the cost of design and development of jigs, fixtures, etc. was included in the cost of estimate for inhouse fabrication, the estimated fabrication cost of Rs.2.36 lakh would have exceeded the price of Rs.2.46 lakh paid to the body builder of TELCO. The cost of in-house fabrication was stated to be marginally lower only by Rs.10,000.

The reply is not tenable as the difference in cost was not Rs.10,000 but was much higher, as out of the in-house fabrication cost of Rs.2.36 lakh, only the material cost of Rs.1.49 lakh would have been incurred resulting in saving of Rs.0.97 lakh per bus. Further, the bodybuilding is not a technically complex item of work that would require time for standardisation and fixation of norms. The construction of mini buses would not have affected normal workshop operations since this was included within Corporation’s annual fleet replacement plan. Since the monthly capacity of the three central workshops is 153 buses, the full requirement of 200 buses could have been met within a time span of about 40 days.

4.16 Loss due to procurement at higher rate

Maharashtra State Road Transport Corporation (Corporation) invited limited tenders (April 2002) for procurement of (September 2002) 40,500 nylon tyres. The details of offers received are as follows:

Sl. No.

Name of the supplier

Cost of tyres (Rupees)

Past performance (kms. per tyre)

Cost per km. (CPKM) (in paise)

1 Wearwell 4,874.25 45,005 10.83 2 M.R.F. 5,081.14 47,283 10.75 3 Vikrant 5,149.64 47,334 10.88 4 J.K. Tyres 5,035.21 45,407 11.09 5 Apollo 5,231.25 44,184 11.84 6 Goodyear 5,461.83 45,918 11.89 7 Ceat 5,062.50 41,532 12.19 8 Birla 5,766.75 46,535 12.39

? Per bus saving in inhouse construction was Rs.0.97 lakh (Rs.2.46 lakh – 1.49 lakh) x 200 buses.

Extra expenditure of Rs.13.80 lakh was incurred due to procurement at higher rates.


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Orders were placed with M.R.F. (24,300 tyres), Vikrant (12,150 tyres) and Apollo (4,050 tyres).

Audit observed the followings:

? Though the CPKM in respect of tyres offered by J.K. Industries was lower than that of Apollo Tyres Limited, no orders were placed on J.K. Industries on the ground that its past performance was poor and the two firms, J.K. Industries and Vikrant tyres were the same. It was also observed that an order was placed on Apollo tyres for 4,050 tyres though the firm had offered to supply 1,500 tyres

The rejection of offer of J.K. Industries was not correct as its past performance was better than that of Apollo tyres and Vikrant tyres & J.K. Industries were two different firms.

This resulted in extra expenditure of Rs.13.80 lakh? taking into account the better mileage given by J.K. Industries. In reply (July 2003), the Corporation stated that the performance of J.K. Industries Limited was not good. The reply is not borne by facts.

? In order to have transparency in procurement of tyres, the orders should be placed strictly on the basis of cost/performance as measured by CPKM. The number of parties and the allocation of quantity should be decided before opening of price bids. The present procedure prescribes only the allocation of quantities but does not provide for determining the number of parties before opening of the price bids.

? No orders were placed on Wearwell tyres (L-1) on the ground that its past performance was not satisfactory. As the procurement made was through limited tender, rejection of a party after opening of price bids was against the norm of transparency.

The matter was reported to the Government (June 2003); the reply has not been received (November 2003).

? Difference in rates Rs.5,231.25 (Apollo) (-)Rs.5,035.21 (J.K. Industries) per tyre is Rs.196.04 per tyre. Totalling 4,050 tyres procured = Rs.7.94 lakh. Difference in milage per tyre 45,407(J.K. Industries) – 44,184 (Apollo) x 4,050 tyre = 49,53,150 kms. Total value of 112 tyres x Rs.5,231.25 = 5.86 lakh.

Rejection of the economical offer of a firm resulted in extra expenditure of Rs.13.80 lakh.


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Maharashtra State Financial Corporation

4.17 Loss due to inadequate security

Maharashtra State Financial Corporation (Corporation) sanctioned and disbursed (March 1996) a short term loan (STL) of rupees one crore to Shan Interwell (India) Private Limited, Thane (Unit), a medium scale industry to meet its working capital requirements. STL was repayable in 11 monthly instalment with interest at the rate of 23 per cent? per annum.

Audit analysis revealed that the Corporation disbursed the STL without obtaining proper security and made poor efforts in enforcing recovery as discussed below:

? The disbursement was made by taking 5.5 lakh shares as security for value of Rs.2 crore. When the party defaulted on repayment, the value of shares had declined rapidly and their worth was only Rs.4.4 lakh. Clearly shares were not effective security for advancing a loan.

? The personal guarantees provided by the directors proved to be very ineffective in recovering the dues when the party defaulted.

? The post dated cheques given by the Company proved to be ineffective security in enforcing recoveries.

? The post dated cheques given by unit as security were dishonored by bank from July 1997 onwards. However, the Corporation failed to take any action against the unit under section 138 of Negotiable Instrument Act, 1938 for dishonour of cheques.

? As far as personal guarantee of directors is concerned, the Corporation filed petition in form of miscellaneous application under 31(1)(aa) of State Financial Corporations Act, 1951 in district court, Thane only in March 1999. The case was pending (August 2003) in Court of Law.

Due to lapses at the stage of disbursement of loan and again after default of dues by the loanee, the Corporation has not been able to recover the principal of Rs.88.80 lakh and interest of Rs.15.70 crore up to February 2003.

The matter was reported to the Government/management (May 2003); the reply had not been received (November 2003).

? In case of default, penal interest at the rate of two per cent per month was leviable on the defaulted amount for defaulted period.

Sanction of loan without adequate security and delayed action for recovery resulted in non recovery of dues of Rs.16.59 crore.


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4.18 Irregular disbursement of loan

Maharashtra State Financial Corporation (Corporation) sanctioned (September-November 1991) two loans to Krishna Medicare Private Limited for Rs.90 lakh to be used for installation of electro medical equipment. The outstanding dues against the unit (November 1999) was Rs.1.89 crore (principal: Rs.77 lakh : interest and expenditure: Rs.1.12 crore) Audit observations with reference to above transactions are as follows:

? The terms of sanction clearly stipulated that the unit was to raise paid-up capital of Rs.49 lakh and pledge the shares with the Corporation as security before disbursement of loan. But loan was disbursed without this vital condition being fulfilled.

? The Corporation released (June 1992) payments of Rs.85 lakh to M/s.WIPRO GE medical systems (Supplier) on the basis of pro forma invoices. The supplier supplied only one machine to the unit though the amount paid was for two machines. Disbursement of money merely on the basis of pro forma invoices in the absence of prior verification of advance payment to the supplier by the loanee was in contravention of the laid down procedure.

? In the letter dated 18 June 1992, it was clearly stated that the entire medical equipment was to be supplied to the loanee within 15 days. The Corporation should have ascertained the status of supply of equipment promptly and initiated criminal action against supplier for non delivery/ return of amount advanced. The post disbursement inspection was carried out only in September 1998, after a delay of six years. Due to the enormous delay, the Corporation could sell the machine in June 2002 for a meagre price of Rs.15 lakh.

As a result of these irregularities, an amount of Rs.1.74 crore (principal: Rs.77 lakh : interest: Rs.97 lakh) remained unrecovered (September 2003).

The Corporation stated (August 2003) that the payment was released on pro forma invoice based on the certificate of a Chartered Accountant that machinery had been acquired and installed. The reply is not tenable as the required verification should have been carried out by the Corporation itself instead of relying merely on the certificate of a Chartered Accountant.


Payment was made to the equipment supplier without ensuring that advance payment was made by the loanee.

Corporation failed to verify receipt of machine after disbursement of money to the supplier.

Loss of Rs.1.74 crore was incurred due to non observance of vital pre disbursement conditions and failure to undertake verification of receipt of machinery.


109

4.19 Disbursement of loan to an unviable project

The Corporation sanctioned (July 1994) a term loan of Rs.90 lakh to Sarnobat Chemicals (unit) for setting up a plant to manufacture Sodium Hydro Sulphate (Chemicals) used in textile and jaggery industries. The Corporation disbursed (February/March 1995) loan of Rs.88 lakh to the unit. The unit started production in 1995 and stopped production within a month i.e. April 1995. The total outstanding dues as on August 2000 was Rs.2.35 crore (principal: Rs.88 lakh and interest: Rs.1.47 crore).

The scrutiny of above loan transaction revealed the following:

? At the time of release of loan, the Corporation was clearly aware that most of the units manufacturing the product were either in the medium or large scale sector and small scale units were not successful. Given the serious reservations it had on the viability of the project in the small scale sector, the Corporation rightly stipulated a condition in the sanction that disbursement would be made only after successful production of proposed product of required quality at rated capacity for two months. However, without this vital clause being fulfilled, the disbursement was made. The unit stopped production in April 1995 i.e. within one month of commissioning.

? Though the unit became a defaulter within six months of availing of loan, the Corporation delayed taking action by four years (November 1999) by which time the value of assets offered as security and collateral security declined from Rs.1.22 crore to Rs.61.38 lakh.

? In violation of own guidelines for one time settlement, (OTS) the Corporation accepted (July 2001) the unit’s offer of Rs.61.38 lakh under OTS which was lesser than the outstanding principal by Rs.26.62 lakh.

The Corporation while accepting the facts stated (February 2003) that recovery proceedings were time consuming and hence OTS was accepted considering that the promoter had lost considerable amount in the project. The fact remains that the Corporation had financed a project which was unviable and non recovery of the full amount on the ground that the promoter had lost money is not tenable.


Loan was disbursed to a technically unviable project and was settled for part of the disbursed amount resulting in loss of Rs.1.74 crore.

Disbursement of loan for a project, which was not technically sound and settlement of dues for only part of disbursed amount resulted in loss of Rs.1.74 crore.


110

4.20 Sanction of loan without adequate safeguards

The Corporation sanctioned and released (October 1995) Rs.1.10 crore to Mayo India Limited (MIL) after deducting Rs.40 lakh in respect of earlier outstanding loan as short term loan (STL) which was repayable in 11 monthly instalments alongwith 22 per cent interest. MIL paid Rs.33.43 lakh towards principal up to July 1996 and defaulted in payment of both principal and interest thereafter. The total dues recoverable (March 2003) from MIL was Rs.5.13 crore (principal: Rs.1.16 crore, interest and expenditure: Rs.3.97 crore).

Audit observed following irregularities with reference to above mentioned transaction:

? Loan was disbursed without any charge on the assets. As a result, the Corporation was unable to take action when the party defaulted in repayment.

? STL was released against the pledge of 3.05 lakh shares of Nath Pulp and Paper Mills Limited (NPML), Aurangabad and 0.99 lakh shares of Nath Seeds Limited (NSL), Aurangabad, without having a transfer deed executed in its favour.

? Even if the title deed was executed, the shares would have turned out to be ineffective security as the value of shares rapidly declined to Rs.13.41 lakh in February 2003. There is a need to have a re-look at the practice of taking shares as security.

Due to disbursement of loan without following the vital procedure of obtaining adequate security, the Company has been unable to fully recover the loan advanced.

The matter was reported to the Government/Corporation (April 2003); the reply had not been received (November 2003).


4.21 Idle outlay in millennium business park

Maharashtra Industrial Development Corporation (Corporation) decided (1995-96) to construct millennium business park (MBP), at Trans Thane Creek (TTC) industrial area to house heavy and light engineering, garment and leather industries. Analysis in audit revealed the following irregularities:

Recovery of loan became doubtful due to inadequate securities and decline in share value.

The dues of Rs.5.13 crore became irrecoverable due to inadequate securities with the Corporation.

The construction of galas and recreation centre in millennium park despite decline in demand resulted in idle outlay of Rs.163.32 crore on unsold galas.

The dues of Rs.5.13 crore became irrecoverable due to inadequate securities with the Corporation.


111

? Though tenders were invited in May 1995 for design and construction of these buildings, final decision was taken in January 1998. The Corporation constructed (June 2001) 1,326 galas at a cost of Rs.264.49 crore. The demand from entrepreneurs had declined between 1995-1998 and many of the existing industries in TTC industrial area were closed down due to industrial recession. The Corporation had not carried out market survey to ascertain extent of demand. The Corporation should have taken up the project on experimental basis with limited buildings.

As a result, the Corporation could lease out only 894 galas by relaxation in conditions such as handing over possession on payment of 20-30 per cent of premium, payment of balance premium in 28 instalments with interest at 17.5 per cent per annum and moratorium period of two years.

Consequently, apart from reduced revenues in respect of the 894 galas, 432 galas costing Rs.161.17 crore have remained idle for more than two years.

? The Corporation decided to construct a recreation centre (clubhouse) with provision for facilities like medical centre, food kiosks, restaurant, recreation and fitness centre. The Corporation had neither ascertained before hand the extent of possible need/utilisation of such a recreation centre by the intended buyers nor had it firmed up the modalities for running the centre. As a result, the recreation centre constructed in June 2001 at a cost of Rs.2.15 crore remained idle. Efforts to lease/hire out the building have not been successful so far. The possible need/utilisation of such a recreation center should have been ascertained before undertaking construction.

? The work of providing, erecting and commissioning of a 22/11KV sub-station in millennium business park was awarded to Alstom Limited at a cost of Rs.1.94 crore. The scope of work awarded to Alstom Limited included the liasioning/ coordination of sub-station work. But the Corporation paid Rs.12.08 lakh as coordination charges at the rate of six per cent of the cost of works to B.G. Shirke which was awarded civil and allied work.

The Corporation accepted (August 2003) the fact of idle galas in millennium business park and clubhouse and stated that efforts were being made to sell the galas and the clubhouse.


4.22 Investment in common effluent treatment plant

The Corporation constructed (May 1999) at a cost of Rs.11.82 crore a common effluent treatment plant (CETP) with a capacity of 11.5 million litre per day (MLD) in Ranjangaon Industrial Area (May 1999).

The construction of galas in millennium business park despite decline in demand resulted in idle outlay of Rs.161.17 crore in unsold galas.

The construction of recreation centre without proper demand survey resulted in idle outlay of Rs.2.15 crore.

Unwarranted payment of Rs.12.08 lakh as coordination charges was made to another contractor.

Investment of Rs.11.82 crore in common effluent treatment plant remained grossly under utilised.


112

Scrutiny in audit revealed the following:

? Despite the enormous capacity created, only a meagre quantity of 0.08 MLD of effluent from one unit was treated at CETP.

? The construction of CETP involving a huge expenditure of Rs.11.82 crore should not have been undertaken without ensuring that the industrial units would discharge their effluents to CETP.

The Corporation stated (August 2003) that it has been made compulsory to connect to CETP from June 2003 and Maharashtra Pollution Control Board (MPCB) has been requested to issue consent to the plot holder with the condition that plot holder should connect his factory to CETP. The Government stated (September 2003) that the Corporation has been instructed to incorporate suitable clause in the allotment letter and obtain firm commitment from the entrepreneurs to make use of CETP. The fact remains that failure to obtain firm commitment from industries for use of CETP resulted in gross under utilisation (99.3 per cent) and avoidable idle outlay of Rs.11.82 crore. Loss of interest at the rate of 12.5 per cent (based on borrowing rate from SIDBI) on the idle outlay worked out to Rs.5.91 crore for four years up to May 2003.

4.23 Irregular appointment of an intermediary

The Corporation obtained (May 2001) loan of Rs.70 crore from ICICI Limited. The loan was secured by charge on trust retention account, water collection account and mortgage of present and future movable and immovable assets at Kuber Chambers, Pune. The Corporation also agreed to provide additional security as may be acceptable to ICICI in the event of security provided becoming inadequate. The Corporation paid (January 2003) Rs.1.07 crore as arrangers fee and commission to SICOM Limited on the above loan. As the loan was obtained only from one source, which did not require administrative or financial services of an intermediary, the payment of Rs.1.07 crore to SICOM was avoidable.

The Corporation stated (July 2003) that SICOM was engaged to mobilise funds from market. The Government endorsed (October 2003) the reply of the Corporation. The reply is not tenable as the Corporation was a statutory body with sound financial position and the agreement was executed directly between the Corporation and ICICI with the Corporation providing all the securities for repayment as described above. The appointment of an intermediary and payment of fee/commission was irregular since the loan was arranged on the strength of Corporation's financial position and security offered. The payment of Rs.1.07 crore was avoidable.

The failure of the Corporation to obtain firm commitment from industries for use of CETP resulted in gross under utilisation.

Avoidable payment of Rs.1.07 crore was made to an intermediary.


113

4.24 Undue benefit to a private firm

The Corporation allotted (June 2000) 5,05,875 square metre of land at Patalganga to Reliance Patalganga Power Limited (RPPL) for proposed power project on the total premium of Rs.23.34 crore. The Corporation received (February 2000) advance amount of rupees four crore before allotment.

As per Rule 12 of MIDC Disposal of Land Regulations, 1975, the allottee has to pay the balance land premium within 30 days from the date of receipt of allotment letter. In violation of the rule, the allotment letter issued by the Corporation wrongly stipulated that balance premium was payable on the date of taking possession. The possession of the land has not been taken by RPPL so far (September 2003). Had the Corporation followed Rule 12, it could have earned interest of Rs.11 crore on balance premium (Rs.19.34 crore) for the period July 2000 to September 2003.

The Government while endorsing the views of the Corporation stated (August 2003) that allotment by deferred payment was accepted considering huge outlay in power sector. The fact remains that benefits have been extended to a private commercial firm in violation of the rules.

MUMBAI (G. N. SUNDER RAJA) Accountant General The (Commercial Audit), Maharashtra

Countersigned

NEW DELHI (VIJAYENDRA N. KAUL) Comptroller and Auditor General of India The

Due to inclusion of a clause in the agreement in violation of rules, undue benefit of interest of Rs.11 crore was extended to a private commercial firm.

ANNEXURES

117

Annexure-1

Statement showing particulars of up-to-date paid-up capital, equity, loans received out of budget and loans outstanding as on 31 March 2003 in respect of Government companies and Statutory corporations

(Referred to in paragraphs No.1.3,1.4,1.5,1.17) (Figures in columns 3(a) to 4(f)

Paid-up capital as at the end of the current year Equity/Loans received out of

Budget during the year

Loans @

Outstanding at the close of 2002

Sl.No.

Sector and name of the Company

State Govern-

ment

Central Govern-

ment

Holding Companies

Others Total

Equity Loans

Other loans

received during the

year Govern-ment

Others

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

A. Working Government companies:

AGRICULTURE & ALLIED SECTOR

1 Maharashtra Agro Industries Development Corporation Limited

300.00 250.00 --- --- 550.00 --- --- --- --- --

2 Maharashtra Insecticides Limited

--- --- 100.00 --- 100.00 --- --- --- --- 2.24

3 Mafco Limited 503.57 --- --- --- 503.57 --- --- --- 363.15 ---

4

The Maharashtra Fisheries Development Corporation Limited

171.94 --- --- --- 171.94 30.73 --- --- 109.85 ---

5 Maharashtra Mendhi Va Sheli Vikas Mahamandal Limited

138.33 270.66 --- --- 408.99 --- --- --- --- ---

6 Maharashtra Land Development Corporation Limited

300.00 100.00 --- --- 400.00 --- --- --- 2677.56 165.36

7 Maharashtra State Farming Corporation Limited

275.00 --- --- --- 275.00 --- --- --- 4405.68 ---

@ Loans outstanding at the close of 2002-03 represents long-term loans only.


118

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

8 Maharashtra Co-operative Development Corporation Limited

285.00

--- --- 273.16

74.27*

558.16 74.27*

--- --- --- --- ---

TOTAL 1973.84

620.66 100.00 273.16

74.27*

2967.66 74.27*

30.73 --- --- 7556.24 167.60

INDUSTRY SECTOR

9 Sant Rohidas Leather Industries and Charmakar Development Corporation of Maharashtra Limited

2321.00 --- --- --- 2321.00 200.00 --- ---- --- ---

10 Leather Industries Corporation of Marathwada Limited

--- --- 63.50 --- 63.50 --- 21.92 --- --- 484.49

11 Maharashtra Small Scale Industries Development Corporation Limited

931.03

47.88*

--- --- --- 931.03

47.88*

47.88 --- --- 135.88 ---

12 Maharashtra Petrochemicals Corporation Limited

895.66 --- --- --- 895.66 --- --- --- --- ---

TOTAL 4147.69

47.88*

--- 63.50 --- 4211.19

47.88*

247.88 21.92 --- 135.88 484.49

ELECTRONICS SECTOR

13 Maharashtra Electronics Corporation Limited

968.60 --- --- --- 968.60 --- 554.15 --- 2992.00 323.00

TOTAL 968.60 --- --- --- 968.60 --- 554.15 --- 2992.00 323.00

TEXTILES SECTOR

14 Devgiri Textiles Mills Limited --- --- 1469.27 --- 1469.27 --- --- --- --- 3857.17

15 Kalameshwar Textiles Mills Limited

--- --- 1635.59 --- 1635.59 --- --- --- --- 677.64

16 Godavari Garments Limited --- --- 24.00 --- 24.00 --- --- --- --- 405.01

17 Maharashtra State Textile Corporation Limited

23615.75 --- --- --- 23615.75 --- 10800.00 --- 27231.01 ---

18 Maharashtra State Powerlooms Corporation Limited

1123.30 --- ---- --- 1123.30 --- --- --- 6.00 --

119

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

19 Pulgaon Cotton Mills Limited 50.00 --- 2168.52 --- 2218.52 --- --- --- --- 829.04

TOTAL 24789.05 --- 5297.38 --- 30086.43 --- 10800.00 --- 27237.01 5768.86

HANDLOOM AND HANDICRAFTS SECTOR


1321.98 189.69 --- --- 151 1.67 --- --- --- 3048.37 ---

TOTAL 1321.98 189.69 --- --- 1511.67 --- --- --- 3048.37 ---

FOREST SECTOR

21 Forest Development Corporation of Maharashtra Limited

2766.49 --- --- --- 2766.49 --- 38.00 --- 16222.74 ---

TOTAL 2766.49 --- --- --- 2766.49 --- 38.00 --- 16222.74 ---

MINING SECTOR

22 Maharashtra State Mining Corporation Limited

206.69 --- --- --- 206.69 --- --- --- 457.46 ---

TOTAL 206.69 --- --- --- 206.69 --- --- --- 457.46 ---

CONSTRUCTION SECTOR

23 Maharashtra State Police Housing and Welfare Corporation Limited

795.91 --- --- --- 795.91 --- --- --- --- 12301.00

24 Maharashtra State Road Development Corporation Limited

500.01 --- --- --- 500.01 --- --- --- --- ---

25 City and Industrial Development Corporation of Maharashtra Limited

395.00 --- --- --- 395.00 --- --- --- 5961.42 72676.27

26 Shivshahi Punarvasan Prakalp Limited

--- 11500.00*

--- --- --- --- 11500.00*

--- --- --- --- 5666.57

27 Maharashtra Urban Infrastructure Development Company Limited

5.00 --- --- --- 5.00 --- --- --- --- ---


120

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

28 Maharashtra Urban Infrastructure Fund Trustee Company Limited

5.00 --- --- --- 5.00 --- --- --- --- ---

TOTAL 1700.92 11500.00*

--- --- --- 1700.92 11500.00*

--- --- --- 5961.42 90643.84

AREA DEVELOPMENT SECTOR

29 Development Corporation of Konkan Limited

880.99 --- --- --- 880.99 --- --- --- 615.73 ---

30 Development Corporation of Vidarbha Limited

716.84 --- --- --- 716.84 --- --- --- 376.98 ---

31 Marathwada Development Corporation Limited

1016.94 --- --- --- 1016.94 --- 31.81 --- 3881.41 0.02

32 Western Maharashtra Development Corporation Limited

305.77 --- --- --- 305.77 --- --- --- --- ---

TOTAL 2920.54 --- --- --- 2920.54 --- 31.81 --- 4874.12 0.02

DEVELOPMENT OF ECONOMICALLY WEAKER SECTION SECTOR

33 Lokshahir Annabhau Sathe Development Corporation Limited

1490.03 33.95 --- --- 1523.98 -- --- --- --- 681.63

34 Mahatama Phule Backward Class Development Corporation Limited

5537.16 4776.14 --- --- 10313.30 --- --- --- 2033.15 ---

35 Vasantrao Naik Vimukta Jatis and Nomadic Tribes Development Corporation Limited

2000.00 --- --- --- 2000.00 --- 63.93 --- 102.27 168.00

36 Maharashtra Rajya Itar Magas Vargiya Vitta Va Vikas Mahamandal Limited

1087.95 --- --- --- 1087.95 425.25 --- --- --- ---

37 Anna Saheb Patil Arthik Magas Vikas Mahamandal Limited

500.00 --- --- --- 500.00 --- --- --- --- ---

38 Shabari Adivashi Vitta Va Vikas Mahamandal Limited

1500.00 --- --- --- 1500.00 --- --- --- --- 599.00

121

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

39 Maulana Azad Alpansankyak Arthik Vikas Mahamandal Limited

---

750.00*

--- --- --- ---

750.00*

--- --- --- --- ---

40 Maharashtra State Handicapped Finance and Development Corporation Limited

70.00 --- --- --- 70.00 --- --- --- --- ---

TOTAL 12185.14 750.00*

4810.09 --- --- 16995.23 750.00*

425.25 63.93 --- 2135.42 1448.63

TOURISM SECTOR

41 Maharashtra Tourism Development Corporation Limited

1492.38

--- --- --- 1492.38

--- --- --- 440.30 --

TOTAL 1492.38

--- --- --- 1492.38

--- --- --- 440.30 ---

DRUGS, CHEMICALS AND PHARMACEUTICALS SECTOR

42 Haffkine Bio-Pharmaceuticals Corporation Limited

862.91 --- --- --- 862.91 5.00 --- --- --- ---

43 Haffkine Ajintha Pharmaceuticals Limited

--- --- 13.65 4.00 17.65 --- --- --- --- 65.00

TOTAL 862.91 --- 13.65 4.00 880.56 5.00 --- --- --- 65.00

MISCELLANEOUS SECTOR

44 Krupanidhi Limited 0.62 0.24 --- 0.14 1.00 --- --- --- --- ---

45 Kolhapur Chitranagri Mahamandal Limited

323.64 --- --- --- 323.64 --- --- --- --- ---

46 Mahila Arthik Vikas Mahamandal Limited

182.28 46.65 --- 1.00 229.93 --- --- --- --- ---

47 Maharashtra Film, Stage and Cultural Development Corporation Limited

462.64 --- --- --- 462.64 --- --- --- 56.47 2000.00


122

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

48 Maharashtra Patbandhare Vittiya Company Limited *

--- --- --- --- --- --- --- --- --- ---

TOTAL 969.18 46.89 --- 1.14 1017.21 --- --- --- 56.47 2000.00

Total A (All sector - wise Government companies)

56305.41 12297.88*

5667.33 5474.53 278.30 74.27*

67725.57 12372.15*

708.86 11509.81 --- 71117.43 100901.44

B. Working Statutory corporations

POWER SECTOR 1 Maharashtra State Electricity

Board 346462.00 --- --- --- 346462.00 --- 17964.00 --- 323246.00 698273.00

TOTAL 346462.00 --- --- --- 346462.00 --- 17964.00 --- 323246.00 698273.00

TRANSPORT SECTOR 2 Maharashtra State Road

Transport Corporation 47936.74 5677.43 --- --- 53614.18 --- -- -- -- 15328.40

TOTAL 47936.74 5677.43 --- --- 53614.18 --- --- --- --- 15328.40

FINANCING SECTOR 3 Maharashtra State Financial

Corporation 3427.69 --- --- 2835.81 6263.50 -- -- -- -- 71587.52

TOTAL 3427.69 --- --- 2835.81 6263.50 --- --- --- --- 71587.52

AGRICULTURE AND ALLIED SECTOR

4 Maharashtra State Warehousing Corporation

435.56 --- --- 435.56 871.12 -- -- -- -- --

TOTAL 435.56 --- --- 435.56 871.12 --- --- --- --- ---


5 Maharashtra Industrial Development Corporation

--- --- --- --- ---? --- --- --- --- 13110.00

TOTAL --- --- --- --- --- --- --- --- --- 13110.00

TOTAL B (all sector wise Statutory corporations)

398262.00 5677.43 --- 3271.37 407210.80 --- 17964.00 --- 323246.00 798298.92

Grand total (A+B) 454567.41 12297.88*

11344.76 5474.53 3549.67 74.27*

474936.37 12372.15*

708.86 29473.81 ---- 394363.43 899200.36

* Information awaited

? There is no investment of State Government by way of share capital, however, the land acquired by the State Government and handed over to MIDC for development activities

123

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

C. Non-working companies


1 Dairy Development Corporation of Marathwada Limited

--- 20.00*

--- 18.00 --- 18.00 20.00*

--- --- --- --- 186.31

2 Ellora Milk Products Limited --- --- 5.00 --- 5.00 --- --- --- --- 107.00

3 Irrigation Development Corporation of Maharashtra Limited #

1992.64 --- --- --- 1992.64 --- --- --- --- ---

4 Konkan Sea Foods Limited --- --- 24.99 --- 24.99 --- --- --- --- ---

5 Parbhani Krishi Gosamvardhan Limited

--- --- 14.00 5.00 19.00 --- --- --- --- 164.64

6 Vidarbha Quality Seeds Limited --- --- 10.00 --- 10.00 --- --- --- --- 27.71

TOTAL 1992.64 20.00*

--- 71.99 5.00 2069.63 20.00*

--- --- --- --- 485.66

INDUSTRY SECTOR

7 Abhijat Samayadarshika (Maharashtra) Limited

--- --- 12.50 --- 12.50 --- --- --- --- 202.50

8 Kinwat Roofing Tiles Ltd. --- --- 19.00 --- 19.00 --- --- --- --- 123.56

9 Marathwada Ceramic Complex Limited

--- --- 68.00 --- 68.00 --- --- --- --- 534.52

10 Sahyadri Glass Works Limited #

--- --- 45.14 --- 45.14 --- --- --- --- 866.84

11 The Gondwana Paints and Minerals Limited

--- --- 9.97 --- 9.97 --- --- --- --- 95.02

12 Vidarbha Tanneries Limited --- --- --- 10.00 10.00 --- --- --- --- ---

TOTAL --- --- 154.61 10.00 164.61 --- --- --- --- 1822.44


124

(1) (2) 3(a) 3(b) 3(c) 3(d) 3(e) 4(a) 4(b) 4(c) 4(d) 4(e)

ELECTRONIC SECTOR

13 Meltron Instrumentation Limited

--- ---- 57.00 --- 57.00 --- --- --- --- 355.82

TOTAL --- --- 57.00 --- 57.00 --- --- --- --- 355.82

TEXTILES SECTOR

14 Textile Corporation of Marathwada Limited

30.00 --- 140.00 40.00 210.00 --- 2148.00 --- 11230.32 199.68

15 The Pratap Spinning Weaving and Manufacturing Company Limited

--- --- 2316.73 --- 2316.73 --- --- --- --- 2312.15

TOTAL 30.00 --- 2456.73 40.00 2526.73 --- 2148.00 --- 11230.32 2511.83

CONTRUCTION SECTOR

16 Maharashtra State Housing Corporation Limited

1.00 --- --- --- 1.00 --- --- --- --- ---

TOTAL 1.00 -- --- --- 1.00 --- --- --- --- ---


17 Maharashtra Rural Development Corporation Limited

5.00 --- --- --- 5.00 --- --- --- --- ---

TOTAL 5.00 --- --- --- 5.00 --- --- --- --- ---


18 The Overseas Employment and Export Promotion Corporation

of Maharashtra Limited #

12.23 --- --- --- 12.23 --- --- --- 57.90 ---

TOTAL 12.23 --- --- --- 12.23 --- --- --- 57.90 ---

Grand Total-C (all sector wise Government companies)

2040.87 20.00*

--- 2740.33 55.00 4836.20 20.00*

--- 2148.00 --- 11288.22 5175.75

Grand Total (A+B+C) 456608.28 12317.88*

11344.76 8214.86 3604.67 74.27*

479772.57 12392.15*

708.86 31621.81 --- 405651.65 904376.11

Note: Except in respect of companies which finalised their accounts for 2002-03 (Sl. Nos. A-14, 15, 17, 19, 22, 32, 40, 44, B-2, 3, 4, 5 and C-14, 15) figures are provisional and as given by the companies/corporations.

# Under liquidation. * Represent share application money. .

125

Annexure - 2 Summarised financial results of Government companies and Statutory corporations for the latest year for which accounts we

(Referred to in paragraphs No.1.6, 1.7, 1.8, 1.10, 1.11,1.13,1.19,1.20 and 1.23) (Figures in columns 7 to

Sl No.

Sector and name of the company

Name of Department

Date of Incorpora-

tion

Period of

accounts

Year in which

accounts finalised

Net Profit or Loss (-)

Net impact of Audit comm-

ents

Paid-up capital

Accumula-ted

profit/ loss(-)

Capital employed

(A)

Total return on capital employed

Percentageof total

returncapital

employed

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

A. Working Government companies

AGRICULTURE & ALLIED SECTOR


Agriculture, Animal Husbandry and Dairy Development

1965 2001-02 2002-03 162.43 --- 550.00 0.28 6789.88 230.16 3.39

2 Maharashtra Insecticides Limited


1984 2001-02 2002-03 80.16 --- 100.00 1195.92 1364.88 81.62 5.98

3 MAFCO Limited Agriculture, Animal Husbandry and Dairy Development

1970 2001-02 2002-03 (-) 261.13 --- 503.57 (-) 257.13 700.78 (-) 233.14 ---

4 The Maharashtra Fisheries Development Corporation Limited

Fisheries, Animal Husbandry & Dairy Development

1973 1994-95 1999-2000 (-) 18.34 --- 93.01 (-) 216.04 (-) 40.97 (-) 13.55 ---

5 Maharashtra Mendhi Va Sheli Vikas Mahamandal Limited


1978 1999-2000

2003-04 (-) 11.26 --- 282.63 (-) 13.18 342.16 (-) 10.23 ---


Irrigation 1973 2001-02 2002-03 (-) 1.30 --- 400.00 (-) 1771.92 3614.99 12.21 0.34


Revenue and Forest 1963 1998-99 (June

ending)

2003-04 (-) 467.86 --- 275.00 (-) 3816.78 719.28 (-) 219.92 ---

8 Maharashtra Co-operative Development Corporation Limited (New Company w.e.f. 28-8-2000)

Co-operation and Textile

2000 2001-02 2002-03 (-) 214.54 5.92 585.44 (-) 252.90 10526.75 1142.71 10.86

TOTAL (-) 731.84 --- 2789.65 (-) 5131.75 24017.75 989.86 ---

INDUSTRY SECTOR


Social Welfare Cultural affairs Sports and Tourism

1974 1994-95 2003-04 18.52 --- 361.31 (-) 66.76 316.19 22.95 7.26

10 Leather Industries Corporation of Marathwada Limited

Industries, Energy and Labour

1974 1999-2000

2003-04 (-) 26.73 --- 63.50 (-) 468.95 5.82 (-) 31.08 ---


126

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

11 Maharashtra Small Scale Industries Development Corporation Limited

Trade and Commerce

1962 2001-02 2003-2004

(-) 413.85 --- 931.03 (-) 11.01 4172.22 (-) 7.80 ---

12 Maharashtra Petrochemical Corporation Limited


1981 2001-02 2002-03 64.18 --- 895.66 394.37 1391.94 64.18 4.61

TOTAL (-) 357.88 --- 2251.50 (-) 152.35 5886.17 48.25 ---

ELECTRONICS SECTOR

13 Maharashtra Electronics Corporation Limited


1978 2001-02 2002-03 (-) 1742.20 (-) 40.00 968.60 (-) 8815.12 1053.93 (-) 600.15 ---

TOTAL (-) 1742.20 --- 968.60 (-) 8815.12 1053.93 (-) 600.15 ---

TEXTILE SECTOR

14 Devgiri Textile Mills Limited Co-operation and Textile

1976 2002-03 2003-04 (-) 643.76 --- 1469.27 (-) 5878.45 (-) 530.61 (-) 143.85 ---

15 Kalmeshwar Textile Mills Limited


1979 2002-03 2003-04 (-) 1988.82 --- 1635.59 (-) 3841.81 (-) 1170.18 (-) 1903.16 ---

16 Godavari Garments Limited Industries, Energy and Labour

1977 1997-98 2001-02 (-) 3.50 --- 24.00 (-) 272.21 17.58 2.37 13.48



1966 2002-03 2003-04 (-) 15064.22 --- 23615.75 (-) 45471.66 (-) 2099.75 (-) 11758.60 ---



1972 1998-99 2003-04 (-) 28.18 --- 1103.30 (-) 1048.44 362.68 7.28 2.01

19 Pulgoan Cotton Mills Limited Co-operation and Textile

1938 2002-03 2003-04 (-) 636.83 --- 2218.52 (-) 3938.45 (-) 582.15 (-) 490.38 ---

TOTAL (-) 18365.31 --- 30066.43 (-) 60451.02 (-) 4002.43 (-) 14286.34 ---

HANDLOOM AND HANDICRAFT SECTOR



1971 2000-01 2002-03 (-) 1051.91 68.52 1426.67 (-) 6001.93 (-) 1326.55 (-) 618.87 ---

TOTAL (-) 1051.91 --- 1426.67 (-) 6001.93 (-) 1326.55 (-) 618.87 ---

FOREST SECTOR


Revenue and Forest 1974 2001-02 2002-03 1765.23 (-) 1645.00 2766.49 12107.14 45012.31 2133.02 4.74

TOTAL 1765.23 --- 2766.49 12107.14 45012.31 2133.02 ---

MINING SECTOR


Trade and Commerce

1973 2002-03 2003-04 (-) 60.42 --- 206.69 (-) 640.60 260.45 (-) 60.33 ---

TOTAL (-) 60.42 --- 206.69 (-) 640.60 260.45 (-) 60.33 ---

CONSTRUCTION SECTOR


Home 1974 2001-02 2002-03 --- --- 795.91 --- --- --- ---

127

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)


Public Works 1996 2000-01 2002-03 (-) 6335.22 (-) 462.51 500.01 (-) 6266.25 331915.57 30138.62 9.08


Urban Development 1970 2001-02 2003-04 808.85 --- 395.00 8941.83 110985.47 1763.97 1.59


Housing and Special Assistance

1998 First accounts awaited

from 25.09.98

--- --- --- --- --- --- --- ---

27 Maharashtra Urban Infrastructure Development Company Limited

Urban Development 2002 First accounts awaited

from 9-8-2002

--- --- --- --- --- --- --- ---

28 Maharashtra Urban Infrastructure Fund Trustee Company Limited

Urban Development 2002 First accounts awaited

from 9-8-2002

--- --- --- --- --- --- --- ---

TOTAL (-) 5526.37 --- 1690.92 2675.58 442901.04 31902.59 ---


29 Development Corporation of Konkan Limited


1970 1995-96 2000-01 14.74 --- 880.99 (-) 692.78 2288.28 14.16 0.62



1970 1997-98 2002-03 (-) 45.35 (-) 22.87 716.84 (-) 554.61 447.83 (-) 43.47 ---

31 Marathwada Development Corporation Limited


1967 2001-02 2002-03 (-) 103.64 362.48 1016.94 (-) 864.10 3474.72 (-) 98.62 ---



1970 2002-03 2003-04 (-) 432.68 --- 305.77 (-) 1137.06 2161.26 (-) 333.92 ---

TOTAL (-) 566.93 --- 2920.54 (-) 3248.55 8372.09 (-) 461.85 ---

DEVELOPMENT OF ECONOMICALLY WEAKER SECTION SECTOR

33 Lokshahir Annabhau Sathe Development Corporation Limited

Social Welfare 1985 1989-90 2002-03 (-) 0.73 --- 61.12 (-) 34.40 60.73 (-) 0.73 ---

34 Mahatma Phule Backward Class Development Corporation Limited

Social Welfare 1978 1988-89 2002-03 28.66 22.05 826.42 (-) 25.51 1020.24 40.29 3.95

35 Vasantrao Naik Vimukta Jatis and Nomadic Tribes Development Corporation Limited

Social Welfare 1984 1992-93 2002-03 (-) 30.12 --- 339.95 (-) 135.27 411.28 (-) 30.12 ---

36 Maharashtra Rajya Itar Magas Vargiya Vitta Ani Vikas Mahamandal Limited

Vimukta Jatis Nomadic Tribes other backward class special backward classes welfare

1999 2000-01 2002-03 (-) 1.12 --- 559.00 (-) 13.67 382.59 (-) 1.12 ---


128

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

37 Anna Saheb Patil Arthik Magas Vikas Mahamandal Limited (New Company w.e.f. 27-11-98)

Employment and Self-Employment

1998 First accounts awaited

from 27-11-98

--- --- --- --- --- --- --- ---

38 Shabri Adivasi Vitta Va Vikas Mahamandal Limited

Tribal Development

1999 First account awaited

from 15.01.99

--- --- --- --- --- --- --- ---


Employment and self-employment

2000 2000-01 2003-04 (-) 8.57 --- 50.00 (-) 8.57 50.00 (-) 8.57 ---

40 Maharashtra State Handicapped Finance and Development Corporation Limited

Social Justice, Cultural Affairs, Sports and Special assistance

2002 2002-03 2003-04 (-) 14.75 --- 70.00 (-) 14.75 70.00 (-) 14.61 ---

TOTAL (-) 26.63 --- 1906.49 (-) 232.17 1994.84 (-) 14.86 ---

TOURISM SECTOR


Home (Tourism) 1975 1998-99 2002-03 51.32 (-)62.06 1423.24 (-) 1073.88 2036.44 65.90 3.24

TOTAL 51.32 --- 1423.24 (-) 1073.88 2036.44 65.90 ---

DRUGS, CHEMICALS AND PHARMACEUTICALS SECTOR

42 Haffkine Bio-Pharmaceuticals Corporation Limited

Medical Education and Drugs

1974 2001-02 2002-03 538.03 --- 857.91 2049.34 3810.21 599.53 15.73

43 Haffkine Ajintha Pharmaceuticals Limited

Medical Education and Drugs

1977 2001-02 2002-03 (-) 48.08 --- 17.65 142.71 455.78 (-) 50.22 ---

TOTAL 489.95 875.56 2192.05 4265.99 549.31 ---


44 Krupanidhi Limited Trade and Commerce

1964 2002-03 2003-04 --- --- 1.00 --- --- --- ---

45 Kolhapur Chitranagri Mahamandal Limited

Cultural Affairs 1985 1996-97 1999-00 (-) 16.75 --- 267.77 (-) 129.41 159.40 (-) 16.47 ---


Women and Children Welfare

1975 1990-91 1998-99 7.78 --- 117.28 (-) 24.78 216.05 8.90 4.12

47 Maharashtra Film, Stage and Cultural Development Corporation Limited

Cultural Affairs 1977 2000-01 2001-02 102.34 (-) 104.95 462.64 (-)226.69 2767.55 240.19 8.68

48 Maharashtra Pathbandhare Vittiya Company Limited

Planning 2002 First accounts awaited

from 16-10-02

--- --- --- --- --- --- ---

TOTAL 93.37 --- 848.69 (-) 380.88 3143.00 232.62 ---

Total – A (Working Government companies) (-) 26029.62 --- 50141.47 (-) 69153.48 533615.03 19879.15 ---

129

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

B. Working Statutory Corporations

POWER SECTOR

1 Maharashtra State Electricity Board

Industries, Energy and Labour (Energy)

1960 2001-02 2002-03 (-) 53946.00 (-) 234.30 346462.00 (-) 30066.00 1556089.00 61512.00 3.95

TOTAL (-) 53946.00 --- 346462.00 (-) 30066.00 1556089.00 61512.00 ---

TRANSPORT SECTOR

2 Maharashtra State Road Transport Corporation

Home (Transport) 1961 2002-03 Provisional

2003-04 (-) 8337.20 759.90 53614.19 (-) 75730.16 15423.78 (-) 3366.64 ---

TOTAL (-) 8337.20 --- 53614.19 (-) 75730.16 15423.78 (-) 3366.64 ---

FINANCING SECTOR

3 Maharashtra State Financial Corporation

Industries, Energy and Labour (Industries)

1962 2002-03 2003-04 (-) 5372.65 434.63 6263.51 (-) 47519.27 85860.79 3319.04 3.87

TOTAL (-) 5372.65 --- 6263.51 (-) 47519.27 85860.79 3319.04 ---


4 Maharashtra State Warehousing Corporation


1960 2002-03 2003-04 962.00 --- 871.12 --- 12761.00 608.00 4.76

TOTAL 962.00 --- 871.12 --- 12761.00 608.00 ---


5 Maharashtra Industrial Development Corporation

Industries, Energy and Labour (Industries)

1962 2002-03 2003-04 18.42 --- --- 469.71 14177.00 182.25 1.29

TOTAL 18.42 --- --- 469.71 14177.00 182.25 ---

Total – B (Working Statutory corporations) (-) 66675.43 --- 407210.82 (-) 152845.72 1684311.57 62254.65 ---

Grand Total (A + B) (-) 92705.05 --- 457352.29 (-) 221999.20 2217926.60 82133.80 ---

C. Non-working companies


1 Dairy Development Corporation of Marathwada Limited


1974 2001-02 2002-03 (-) 16.16 --- 38.00 (-) 228.23 1.16 (-) 17.35 ---

2 Ellora Milk Products Limited Industries, Energy and Labour

1985 1999-00 2002-03 (-) 7.07 --- 5.00 (-) 119.61 (-) 28.38 (-) 1.03 ---

3 Irrigation Development Corporation of Maharashtra Limited

Irrigation 1973 2001-02 2002-03 (-) 0.28 --- 1992.64 (-) 2029.62 (-) 36.98 (-) 0.28 ---

4 Konkan Sea Foods Limited Industries, Energy and Labour

1977 1996-97 2002-03 0.03 --- 24.99 (-) 86.01 0.06 0.03 50.00

5 Parbhani Krishi Gosamvardhan Limited


1977 2001-02 2002-03 (-) 12.30 --- 19.00 (-) 195.53 12.23 (-) 12.29 ---

6 Vidarbha Quality Seeds Limited


1973 1999-00 2000-01 (-) 0.04 --- 10.00 (-) 38.67 3.85 (-) 0.04 ---

TOTAL (-) 35.82 --- 2089.63 (-) 2697.67 (-) 48.06 (-) 30.96 ---


130

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

INDUSTRY SECTOR

7 Abhijat Samayadarshika (Maharashtra) Limited


1978 2001-02 2002-03 (-) 3.11 0.50 12.50 (-) 208.49 7.73 7.52 97.28

8 Kinwat Roofing Tiles Limited Industries, Energy and Labour

1977 2001-02 2002-03 (-) 2.01 --- 19.00 (-) 167.74 (-) 24.02 (-) 2.01 ---

9 Marathwada Ceramic Complex Limited


1981 2001-02 2002-03 (-) 30.77 (-) 16.72 68.00 (-) 618.01 (-) 4.48 (-) 30.62 ---

10 Shahyadri Glass Works Limited


1974 1993-94 1995-96 (-) 41.44 --- 45.14 (-) 921.74 (-) 247.52 (-) 38.19 ---



1979 1996-97 1997-98 (-) 1.37 --- 9.97 (-) 96.93 7.12 (-) 1.37 ---

12 Vidarbha Tanneries Limited Industries, Energy and Labour

1973 1998-99 2003-04 0.42 --- 10.00 (-) 119.38 0.63 0.42 66.67

TOTAL (-) 78.28 --- 164.61 (-) 2132.29 (-) 260.54 (-) 64.25 ---

ELECTRONICS SECTOR

13 Meltron Instrumentation Limited


1981 2000-01 2003-04 (-) 72.30 --- 57.00 (-) 741.62 (-) 308.82 (-) 21.22 ---

TOTAL (-) 72.30 --- 57.00 (-) 741.62 (-) 308.82 (-) 21.22 ---

TEXTILE SECTOR 14 Textile Corporation of

Marathwada Limited Co-operation and Textile

1970 2002-03 2003-04 (-) 1856.13 --- 210.00 (-) 11817.25 (-) 169.22 (-) 1847.28 ---

15 The Pratap Spinning, Weaving and Manufacturing Company Limited


1906 2002-03 2003-04 (-) 363.41 --- 2316.73 (-) 5648.11 (-) 1004.29 (-) 10.78 ---

TOTAL (-) 2219.54 --- 2526.73 (-) 17465.36 (-) 1173.51 (-) 1858.06 ---

CONSTRUCTION SECTOR 16 Maharashtra State Housing

Corporation Limited Housing and Special assistance

1974 1991-92 2003-04 10.98 --- 1.00 12.02 13.03 13.15 100.92

TOTAL 10.98 --- 1.00 12.02 13.03 13.15 ---AREA DEVELOPMENT SECTOR 17 Maharashtra Rural

Development Corporation Limited

Rural Development 1982 1985-86 1993-94 0.17 --- 5.00 0.70 5.28 0.17 3.22

TOTAL 0.17 --- 5.00 0.70 5.28 0.17 ---

MISCELLANEOUS SECTOR 18 The Overseas Employment

and Export Promotion Corporation of Maharashtra Limited

Education and Employment

1979 1989-90 1990-91 (-) 11.35 --- 12.23 (-) 30.51 75.85 (-) 6.81 ---

TOTAL (-) 11.35 --- 12.23 (-) 30.51 75.85 (-) 6.81 ---

Total – C (-) 2406.14 --- 4856.20 (-) 23054.73 (-) 1696.77 (-) 1967.98 ---D. Non-working Statutory corporations ------ NIL ------ Grand Total (C + D) (-) 2406.14 --- 4856.20 (-) 23054.73 (-) 1696.77 (-) 1967.98 ---

Grand Total (A + B + C + D) (-) 95111.19 --- 462208.49 (-) 245053.93 2216229.83 80165.82 ---

A - Capital employed represents net fixed assets (including capital works-in-progress) plus working capital except in case of finance companies/corporations where the capital employed is worked out as a mean of aggregate of the opening and closing balances of paid up capital, free reserves, bonds, deposits and borrowings (including refinance).

131

Annexure - 3 Statement showing grants and subsidy received/receivable, guarantees received, waiver of dues, loans on which moratorium allowed and

loans converted into equity during the year and guarantees outstanding at the end of March 2003(Referred to in Paragraph No.1.5 and 1.17)

(Figures in column 3(a) to 7 are in Rupees in lakh)

Subsidy and grants received during the year

Guarantees received during the year and outstanding at the end of the year

Waiver of dues during the year

Sl. No

Name of the Public Sector Undertaking

Central Government

G *

S$

State Government

G S

Others

G S

Total

G S

Cash Credit from banks

Loans from other

sources

Letters of credit

opened by banks in

respect of imports

Payment obligation

under agreement

with foreign

consultant or

contracts

Total Loans repayment written off

1 2 3(a) 3(b) 3(c) 3(d) 4(a) 4(b) 4(c) 4(d) 4(e) 5(a)

A Working Government companies


--- --- --- --- --- --- --- --- --- ---

(12.10)

--- --- ---

(12.10)

---


--- --- --- --- --- --- --- --- --- 7500.00

(1617.66)

--- --- 7500.00

(1617.66)

---


--- --- --- 363.21 --- --- --- 363.21 --- ---

--- --- ---

---


--- --- --- --- --- --- --- 886.00

(58.18)

365.00

(0.84)

50.00

--- 1301.00

(59.02)

---

5 Pulgaon Cotton Mills Limited

--- --- --- --- --- --- --- --- 275.00 (51.87)

--- --- --- 275.00 (51.87)

---


--- --- --- --- --- --- --- --- 400.00 (408.00)

350.00 (357.00)

--- --- 750.00 (765.00)

---


9.26 --- 61.29 --- --- --- 70.55 --- --- --- --- --- --- ---

* G - Represents Grants.0

$ S - Represents Subsidy.


132

1 2 3(a) 3(b) 3(c) 3(d) 4(a) 4(b) 4(c) 4(d) 4(e) 5(a)


--- --- 61500.00 --- --- --- 61500.00 --- --- --- (255206.00)

--- --- --- (255206.00)

--


--- --- --- --- --- --- --- --- --- --- (23065.52)

--- --- --- (23065.52)

---


--- --- --- --- --- --- --- --- --- --- (53.51)

--- --- --- (53.51)

---

11 Maharashtra State Police Housing Corporation Limited

--- --- --- --- --- --- --- --- --- --- (399.24)

--- --- --- (399.24)

---

12 Mahatma Phule Backward Class Development Corporation Limited

--- 892.17 387.56 --- --- ---- 387.56 892.17 --- --- (3742.82)

--- --- --- (3742.82)

---

13 Maharashtra Rajya Itar Magas Vargiya Vitta Ani Vikas Mahamandal Limited

--- --- --- --- --- --- --- --- --- --- (940.24)

--- --- --- (940.24)

---

14 Shabri Adivasi Vitta Va Vikas Mahamandal Limited

--- --- --- 22.00 --- --- --- 22.00 --- 2500.00 (5.80)

--- --- 2500.00 (5.80)

---


1101.31 --- 842.75 --- 14.00 --- 1958.06 --- --- --- --- --- --- ---


127.29 --- 100.00 --- --- --- 227.29 --- --- --- --- --- --- ---

17 Maharashtra Film Stage and Cultural Development Corporation Limited

--- --- --- --- --- --- --- --- --- 35.60 (2000.00)

--- --- 35.60 (2000.00)

---

18 Lokshahir Annabahu Sathe Development Corporation Limited

--- --- --- 899.11 --- 112.00 --- 1011.11 --- ---

(2772.85)

--- --- ---

(2772.85)

---


--- --- --- --- --- --- --- --- --- 200.00 --- --- 200.00 ---

20 Maharashtra State Handicapped Finance Development Corporation Limited

--- --- --- --- --- --- --- --- --- 1000.00

(1000.00)

--- --- 1000.00

(1000.00)

---

Total – A 1237.86 892.17 62891.60 1284.32 14.00 112.00 64143.46 2288.49 1561.00 (518.05)

11950.60 (291173.58)

50.00 --- 13561.60 (291691.63)

---

133

1 2 3(a) 3(b) 3(c) 3((d) 4(a) 4(b) 4(c) 4(d) 4(e) 5(a)

B. Working Statutory corporations

1. Maharashtra State Electricity Board

--- --- 73409.00 --- --- --- 73409.00 --- 9168.00 184724.04 (936707.61)

--- --- 193892.04 (936707.61)

---

2 Maharashtra State Road Transport Corporation

--- --- 12087.36 --- --- --- 12087.36 --- --- --- --- --- --- ---


--- --- --- --- --- --- --- --- --- 3080.33 (63788.62)

--- --- 3080.33 (63788.62)

---

Total-B --- --- 85496.36 --- --- --- 85496.36 --- 9168.00

187804.37

(1000496.23)

--- 196972.37 (1000496.23)

---

Grand Total (A+B) 1237.86 892.17 148387.96 1284.32 14.00 112.00 149639.82 2288.49 10729.00 (518.05)

199754.97 (1291669.81)

50.00 --- 210533.97 (1292187.86)

---

C. Non-working Government companies

1 Textile Corporation of Marathwada Limited

--- --- --- --- --- --- --- --- --- (5.69)

--- --- --- --- (5.69)

---

2 Marathwada Ceramics Complex Limited

--- --- --- --- --- --- --- --- --- (78.17)

--- --- --- --- (78.17)

---

Total – C --- --- --- --- --- --- --- --- --- (83.86)

--- --- --- --- (83.86)

---

D. Non-working Statutory corporations ------------------------ NIL ---------------- --

Grand Total (C+D) --- --- --- --- --- --- --- --- --- (83.86)

--- --- --- --- (83.86)

---

Grand Total (A+B+C+D)

1237.86 892.17 148387.96 1284.32 14.00 112.00 149639.82 2288.49 10729.00 (601.91)

199754.97 (1291669.81)

50.00 --- 210533.97 (1292271.72)

---

Note : Figures in brackets indicate guarantees outstanding at the end of the year.


134

Annexure - 4

Statement showing financial position of working Statutory corporations (Referred to in paragraph No.1.7)

(Rupees in crore) 1. Maharashtra State Electricity Board

Particulars 1999-2000 2000-2001 2001-2002

A. Liabilities

Equity capital 1478.62 3464.62 3464.62

Loans from Government 4606.04 2630.94 3052.88

Other long-term loans (including bonds) 7556.76 7054.10 7386.82

Deposits from public 5.32 5.41 5.07

Reserves and surplus 5592.37 3047.24 3120.90

Current liabilities and provisions 6488.23 7654.61 8081.55

Total-A 25727.34 23856.92 25111.84

B. Assets

Gross fixed assets 20251.77 22600.20 23727.07

Less: Depreciation 7923.60 9281.32 10739.31

Net fixed assets 12328.17 13318.88 12987.76

Capital works-in-progress 2942.39 1669.50 1666.94

Deferred cost 59.14 42.71 27.84

Current assets 6543.13 7745.75 8987.74

Subsidy due from State Government 2744.91 -- --

Investments 1064.32 1012.64 1055.48

Miscellaneous expenditure 45.28 67.44 85.42

Deficits -- -- 300.66

Total – B 25727.34 23856.92 25111.84

C. Capital employed? 15325.46 15079.52 15560.89

? Capital employed represents net fixed assets (including works-in-progress) plus working capital. While working out working capital the element of deferred cost and investments are excluded from current assets.

Annexure-4

135

(Rupees in crore)


Particulars 2000-2001 2001-2002 2002-2003 (Provisional)

A. Liabilities

Capital (including capital loan and equity capital)

300.91 415.27 536.14

Borrowings (Government) -- -- ---

(Others including deposits) 236.99 281.27 259.98

Funds/Reserves and surplus* 94.31 108.99 119.86

Trade dues and other current liabilities (including provisions)

475.13 385.73 303.60

Total 1107.34 1191.26 1219.58

B. Assets

Gross block 1476.70 1562.45 1658.64


Net fixed assets 252.13 228.81 189.65

Capital works-in-progress (including cost of chassis)

24.60 36.77 42.52

Investments 0.03 20.03 4.44

Current assets, loans and advances 209.23 228.92 225.67

Accumulated losses 621.35 676.73 757.30

Total 1107.34 1191.26 1219.58


* Excluding depreciation funds and including Reserves and surplus and capital grant. ?Capital employed represents net fixed assets (including works-in-progress) plus working capital excluding gratuity provision.


136

(Rupees in crore)


Particulars 2000-2001 2001-2002 2002-2003

A. Liabilities

Paid-up capital 61.40 62.81 62.64

Share application money 1.45 -- --

Reserve fund and other reserves and surplus

41.73 41.73 41.73

Borrowings:

(i) Bonds and debentures 406.50 408.95 385.57

(ii) Fixed Deposits 2.66 1.77 0.13

(iii) Industrial Development Bank of India and Small Industries Development Bank of India

-- -- --

(iv) Reserve Bank of India -- -- --

(v) Loan towards share capital

(a) State Government 2.06 2.06 2.06

(b) Industrial Development Bank of India

2.05 2.05 2.05

(vi) Others (including State Government)

392.58 353.49 350.17

Other Liabilities and provisions 60.92 32.13 33.67

Total - A 971.35 904.99 878.02

B. Assets

Cash and bank balances 21.09 42.64 51.96


Loans and advances 805.67 378.27 294.22

Net fixed assets 2.85 2.35 1.98

Other assets 37.90 46.47 50.75

Profit and loss account 98.46 429.96 475.19

Total - B 971.35 904.99 878.02

C. Capital employed$ 856.69 627.44 858.61

$Capital employed represents the mean of the aggregate of opening and closing balances of paid-up capital, reserves (other than those which have been funded specifically and backed by investments outside), loans in lieu of capital, seed money, debentures, bonds, deposits and borrowings (including refinance) and excluded amount of dividend of Rs.3.72 crore for 1999-2000 from reserves.

Annexure-4

137

(Rupees in crore)



A. Liabilities

Paid-up capital 8.71 8.71 8.71

Reserves and surplus 91.37 99.75 118.91

Borrowings

- (Government) -- -- --

- (Others) -- -- --

Trade dues and current liabilities (including provision)

11.73 13.82 14.50

Total - A 111.81 122.28 142.12

B. Assets

Gross block 73.05 80.04 83.99


Net fixed assets 57.19 62.40 64.17

Capital works-in-progress 1.82 2.84 33.78



Profit and loss account -- -- --

Total - B 111.81 122.28 142.12


?Capital employed represents net fixed assets (including capital works-in-progress) plus working capital excluding provision for gratuity.


138

(Rupees in crore)


Particulars 2000-01 2001-02 2002-03

A. Liabilities

Loans - Issue of Bonds 84.18 143.23 131.10

Reserves and surplus/funds 66.06 66.26 66.45

Deposits 2745.74 2973.96 3238.84

Current liabilities and provisions 55.73 136.98 136.06

Total - A 2951.71 3320.43 3572.45

B. Assets

Gross fixed assets 312.66 352.17 367.14


Net fixed assets 232.67 260.53 264.91

Other assets 1935.13 2148.92 2283.44

Investments 72.61 89.70 81.24


Total - B 2951.71 3320.43 3572.45


? Capital employed represents the mean of the aggregate of opening and closing balances of long term loans (including bonds), Development Rebate Reserves and other free reserves and surplus (excluding sinking and Assets Replacement Fund).

Annexure-5

139

Annexure - 5

Statement showing working results of working Statutory corporations (Referred to in paragraph No.1.7)

(Rupees in crore) 1. Maharashtra State Electricity Board

Sl. No.

Particulars 1999-2000 2000-2001 2001-2002

1. (a) Revenue receipt 11131.19 12261.55 12702.33 (b) Subsidy/Subvention from

Government 2084.19 (-)373.85? --

Total 13215.38 11887.70 12702.33 2. Revenue expenditure (net of

expenses capitalised) including write off of intangible assets but excluding depreciation and interest

10185.26 11372.86 10840.12

3. Gross surplus (+)/deficit(-) for the year (1-2)

3030.12 514.84 1862.21

4. Adjustments relating to previous years

(-) 279.89 (-) 859.52 190.53

5. Final gross surplus(+)/deficit(-) for the year (3 + 4)

2750.23 (-) 344.68 2052.74

6. Appropriations (a) Depreciation (less capitalised) 1219.44 1328.49 1437.62 (b) Interest on Government loans 555.06 446.09 343.57 (c) Interest on other, bonds,

advance, etc. and finance charges 810.50 883.89 912.13

(d) Total interest on loans and finance charges (b+c)

1365.56 1329.98 1255.70

(e) Less: Interest capitalized 237.88 161.64 101.12 (f) Net interest charged to revenue

(d-e) 1127.68 1168.34 1154.58

(g) Total appropriations (a+f) 2347.12 2496.83 2592.20 7. Surplus(+)/deficit(-) before

accounting for subsidy from State Government {5 - 6(g) - 1(b)}

(-) 1681.08 (-) 2467.66 (-) 539.46

8. Net surplus(+)/deficit(-) {5 - 6(g)} 403.11 (-) 2841.51 (-) 539.46 9. Total return on capital employed T 1530.79 (-) 1673.17 615.12 10. Percentage of return on capital

employed 10.00 -- 3.95

? No subsidy received during the year and as State Government approved only 3 per cent surplus on net fixed assets under section 59 of Electricity (Supply) Act, 1948, MSEB withdrew the earlier subsidy accounted for considering 4.5 per cent surplus. Hence, the minus balances. TTotal return on capital employed represents net surplus/deficit plus total interest charged to profit and loss account (less interest capitalised).


140

(Rupees in crore)



Operating :-

(a) Revenue 2480.61 2589.31 2673.74

(b) Expenditure 2592.06 2669.27 2760.59

(c) Surplus (+)/deficit (-) (-) 111.45 (-) 79.96 (-) 86.85

Non-operating :-

(a) Revenue 51.25 52.18 51.72

(b) Expenditure 39.93 41.75 48.25

(c) Surplus (+)/deficit (-) 11.32 10.43 3.47

Total:-

(a) Revenue 2531.86 2641.49 2725.46

(b) Expenditure@ 2631.99 2696.87 2806.04

(c) Net profit (+)/loss (-) (-) 100.13 (-) 55.38 (-) 80.58

Interest on capital and loans 38.64 40.39 46.91

Total return on Capital employed* (-) 61.49 (-) 14.99 (-) 33.67

@ Including prior period adjustments. *Total return on capital employed represent net surplus/deficit plus total interest charged to profit and loss account (less interest capitalised).

Annexure-5

141

(Rupees in crore)


Sl. No.

Particulars 2000-2001 2001-2002 2002-2003

1. Income

(a) Interest on loans 88.49 78.64 47.96

(b) Other income 8.64 6.13 5.46

Total - 1 97.13 84.77 53.42

2. Expenses

(a) Interest on long term and short term loans

112.50 82.85 80.95

(b) Provision for non performing assets

-- -- --

(c) Other expenses 22.12 19.80 26.19

Total - 2 134.62 102.65 107.14

3. Profit before tax (1-2) (-) 37.49 (-) 17.88 (-) 53.72

4. Provision for tax -- -- --

5. Other appropriations -- 313.63 (-) 8.5

6. Amount available for dividend# (-) 37.49 (-) 331.50 (-) 45.22

7. Dividend paid/payable -- -- --

8. Total return on capital employed 75.01 (-) 248.65 33.19

9. Percentage of return on capital employed

8.8 -- 3.87

#Representing profit of current year available for dividend after considering the specific reserves and provision for taxation.


142

(Rupees in crore)


Sl. No.


1. Income (a) Warehousing charges 37.21 34.44 37.15 (b) Other income 17.32 21.74 17.68 Total - 1 54.53 56.18 54.83

2. Expenses (a) Establishment charges 14.79 17.69 17.95 (b) Other expenses 24.58 29.24 27.26 Total - 2 39.37 46.93 45.21

3. Profit (+)/loss (-) before tax 15.16 9.25 9.62 4. Provision for tax -- -- 3.54 5. Prior period adjustments (-) 1.45 (+) 0.86 -- 6. Other appropriations 11.83 8.37 -- 7. Amount available for dividend 1.88 1.74 1.74 8. Dividend for the year? 1.88 1.74 1.74

9. Total return on capital employed 13.75 10.12 6.08 10. Percentage of return on capital

employed 13.53 9.17 4.76

(Rupees in crore)


Sl. No.

Particulars 2000-2001 2001-2002 2002-2003

1. Income 195.11 205.88 185.28 2. Expenditure 195.03 205.67 185.09 3. Surplus 0.08 0.21 0.18 4. Interest charged to income and

expenditure account 2.37 1.67 1.64

5. Return on capital employed (3 + 4) 2.45 1.88 1.82 6. Percentage of return on capital

employed 3.1 1.6 1.29

? Including Tax on dividend.

Annexure-6

143

Annexure - 6 Statement showing operational performance of working Statutory corporations

(Referred to in paragraph No.1.12)

1. Maharashtra State Electricity Board Particulars 1999-2000 2000-2001 2001-2002

Installed capacity - (MW) (a) Thermal 6005 6425 6425 (b) Hydro 2180 2430 2434 (c) Gas 912 912 912 (d) Other -- -- --

Total 9097 9767 9771 Normal maximum demand on the system (MW) 11023 12702 12917 Power generated (MKWH) (a) Thermal 37675.839 38718.764 41650.576 (b) Hydro 3970.600 3738.436 3675.181 (c) Gas 3935.650 3473.124 3691.750 (d) Other --- --- ---

Total 45582.089 45930.324 49017.507 Less: Auxiliary Consumption (a) Thermal 3296.329 3327.256 3674.540 (percentage) (96.67) (96.87) (97.03) (b) Hydro 22.367 22.905 23.928 (percentage) (0.66) (0.67) (0.63) (c) Gas 91.196 84.484 88.691 (percentage) (2.67) (2.46) (2.34) (d) Other --- --- --- (percentage) --- --- ---

Total 3409.892 3434.645 3787.159 Net power generated (a) 42172.197 42495.679 45230.348 Power purchased (MKWH) a) Within the State 7162.221 5855.466 4216.585 b) Other States 894.054 1377.145 1845.230 c) Central Grid 10230.480 12381.767 12789.180 Total power purchased (b) 18286.755 19616.378 18850.995 Total power available for sale (a + b) 60458.952 62112.057 64081.343 Power sold a) Within the State 41349.100 39817.550 38673.033 b) Outside the States 632.400 176.000 62.000 Transmission and distribution losses 18477.452 22118.507 25346.310 Plant load factor (percentage) 71.77 72.78 74.34 Percentage of transmission and distribution losses to total power available for sale

30.56 34.79 39.55


144

Particulars 1999-2000 2000-2001 2001-2002

Number of villages/towns electrified 39413 40685 40687

Number of pump sets/wells energised 2275531 2327716 2367075

Number of sub-stations 1476 1512 1592

Transmission/distribution lines (in kms.)

(a) High/medium voltage 230194.5 233615.5 238003.3

(b) Low voltage 427190.5 433504.2 438261.8

Connected load (in MW) 25955 24549 27490

Number of consumers (in lakh) 129.83 129.73 130.43

Number of employees 111724 111660 111653

Consumer/employees Ratio 116:1 116:1 117:1

Total expenditure on staff during the year (Rupees in crore)

1576.53 1659.52 1769.67

Percentage of expenditure on staff to total revenue expenditure

12.58 10.99 12.87

Units sold (MKWH)

(a) Agriculture 10293 9502 8310

(percentage of share to total units sold) (24.51) (23.76) (21.46)

(b) Industrial 16393 15487 14678

(percentage of share to total units sold (39.05) (38.72) (37.89)

(c) Commercial 1382 1473 1636


(d) Domestic 6455 6750 7282


(e) Others 7459 6782 6829


Total 41982 39994 38735

(Paise per KWH)

(a) Revenue (excluding subsidy from Government)

265 306.58 327.93

(b) Expenditure? 305.19 368.29 341.86

(c) Profit (+)/loss (-) (-) 40.04 (-) 61.71 (-) 13.93

(d) Average subsidy claimed from Government (in Rupees)

0.50 (-) 0.09 --

(e) Average interest charges (in Rupees) 0.32 0.33 0.32

? Revenue expenditure includes depreciation but excludes interest on long-term loans.

Annexure-6

145


Particulars 2000-2001 2001-2002 2002-2003

Average number of vehicles held 16916 16794 16522

Average number of vehicles on road 15920 15804 15513

Percentage of utilisation of vehicles 94.11 94.11 93.90

Number of employees 111598 108946 107783

Employee vehicle ratio 7.01 6.49 6.95

Number of routes operated at the end of the year 19679 19429 18838

Route kilometres (in lakh) 13.57 13.44 13.08

Kilometres operated (in lakh)

(a) Gross 18116.49 17993.76 17812.66

(b) Effective 17943.64 17826.66 17656.39

(c) Dead 172.85 167.10 156.27

Percentage of dead kilometres to gross kilometres 0.95 0.94 0.88

Average kilometres covered per bus per day 308.80 310.77 311.82

Average operating revenue per kilometre (paise) 1382.44 1452.50 1514.32

Increase over previous year's income (per cent) 9.38 5.06 4.26

Average expenditure per kilometre (paise) 1444.56 1497.35 1563.50

Increase in operation expenditure per kilometre over previous year's expenditure (per cent)

4.66 3.65 4.42

Loss(-) per kilometre (paise) (-) 62.12 (-) 44.85 (-) 49.18

Number of operating depots 243 243 242

Average number of break-down per lakh kilometers

3.60 3.09 3.09

Average number of accidents per lakh kilometres 0.23 0.21 0.20

Passenger kilometre operated (in crore) 5671.70 5595.83 5405.65

Occupancy ratio 59.75 60.05 58.99

Kilometres obtained per litre of

(a) Diesel oil 4.66 4.70 4.76

(b) Engine oil 599 660 723


146

(Amount: Rupees in crore) 3. Maharashtra State Financial Corporation

1999-2000 2000-2001 2001-2002 Particulars Number Amount Number Amount Number Amount

Applications pending at the beginning of the year

27 15.65 21 11.50 28 21.17

Applications received 267 76.19 396 116.01 193 34.83

Total 294 91.84 417 127.51 221 56.00

Applications sanctioned 227 56.00 320 78.28 156 23.62

Applications cancelled/ withdrawn/rejected/reduced

46 22.70 69 23.48 54 22.84

Applications pending at the close of the year

21 11.50 28 21.17 11 6.87

Loans disbursed -- 46.66 -- 50.49 -- 30.35

Loans outstanding at the close of the year

-- 1199.89 15686 1240.68 14866 1273.77

Amount overdue for recovery at the close of the year

(a) Principal -- 345.17 -- 367.78 382.31

(b) Interest -- 389.82 -- 509.12 625.50

(c) Expenses -- 4.57 -- 5.74 6.91

Total -- 739.56 -- 882.64 1014.72

Percentage of default to total loans outstanding

61.60 71.14 79.70



Number of stations covered 152 156 157

Storage capacity created up to the end of the year (tonne in lakh)

(a) Owned 9.24 9.48 9.51

(b) Hired 0.77 0.94 0.68

Total 10.01 10.42 10.19

Average capacity utilised during the year (tonne in lakh) 7.93 7.51 7.19

Percentage of utilisation 81 74 71

Average revenue per metric tonne per year (in Rupees) 687.28 748.44 762.59

Average expenses per metric tonne per year (in Rupees) 496.18 625.24 628.79

Annexure-6

147


Particulars 1999-2000 2000-2001 2001-2002

A. Area (area in hectares)

Area planned for development 90786 87246 87634

Area acquired 51412 52173 52223

Area plotted 19807 20199 20621

Area allotted 17543 17840 18076

Area not allotted 2264 2359 2545

Percentage of : (per cent)

- area acquired to area planned for development

56.6 59.7 59.6

- area plotted to area acquired 38.5 38.7 39.5

- area allotted to area plotted 88.5 88.3 87.7

- area allotted to area acquired 34.1 34.2 34.6

B. Sheds and flatted factory buildings (in numbers)

Constructed 5058 5118 6023

Allotted 4481 4522 4970

Not allotted 577 596 1053

(per cent) Percentage of sheds and flatted factory buildings allotted to sheds constructed

88.6 88.4 82.5


148

Annexure - 7

Statement showing the department-wise outstanding inspection reports (IRs) (Referred to in paragraph No.1.39)

Sl. No.

Name of Department Number of PSUs

Number of outstanding

I.Rs

Number of outstanding paragraphs

Years from which paragraphs outstanding

A. Working Companies and Corporations 1. Industries, Energy and Labour i) Energy 2 425 1918 1991-92 to 2002-03

ii) Industries 8 18 72 1991-92 to 2002-03

2. Agriculture and Anima l Husbandry

7 12 87 1993-94 to 2002-03

3. Co-operation and Textile

i) Co-operation 1 4 11 1998-99 to 2002-03

ii) Textile 4 11 46 1994-95 to 2002-03

4. Social Welfare, Cultural Affairs and Sports

8 20 104 1990-91 to 2002-03

5. Medical Education and Drugs

2 6 21 1992-93 to 2002-03

6. Trade, Commerce and Mining

1 4 16 1994-95 to 2002-03

7. Home

i) Transport 1 38 175 1999-00 to 2002-03

ii) Others 2 6 16 1997-98 to 2002-03

8. Public Works 1 4 35 1998-99 to 2002-03

9. Urban Development 1 4 37 1996-97 to 2002-03

10. Housing and Special Assistance

1 2 11 1998-99 to 2002-03

11 Revenue and Forest

i) Revenue 1 2 7 1998-99 to 2002-03

ii) Forest 2 4 11 1989-90 to 2002-03

12. Irrigation 1 2 7 1996-97 to 2002-03

13. Woman and Child Welfare

1 4 13 1994-95 to 2002-03

Total : A 44 566 2587

B. Non-working companies

1. Industries, Energy and Labour

5 6 11 1989-90 to 2002-03

2. Agriculture & Allied 3 4 9 1990-91 to 2002-03

Total : B 8 10 20

Grand Total : (A + B) 52 576 2607

Annexure-8

149

Annexure – 8 Statement showing the department wise draft paragraphs/reviews replies

to which were awaited (Referred to in paragraph No.1.39)

Sl. No.

Name of Department Number of draft paragraphs

Number of reviews

Period of issue

1. Industries, Energy and Labour (Energy)

6 3 December 2002 and March to June 2003

2. Industries, Energy and Labour (Industries)

5 -- March to June 2003

3. Home (Transport) 1 -- March to June 2003

4. Co-operation and Textile

-- 1 April 2003

5. Urban Development 1 -- April to June 2003

6. Cultural Affairs 3 -- June 2003

Total 16 4


150

Annexure - 9

Statement showing paid-up capital, investment and summarised working results of 619-B companies as per their latest finalised accounts

(Referred to in paragraph No.1.41)

(Figures in columnEquity by Loans by Grants by Total investment by way of equity,

loans and grantsSl. No.

Name of company

Status (work-

ing/ non-

work-ing)

Year of account

Paid-up capital

State Goverm-

memt

State Govern-

memt ccmpani

es

Central Govern-

ment and their

compan-ies

State Govern-

ment

State Govern-

ment compan-

ies

Central Govern-

ment and

their compan

-ies

State Govern-

ment

State Govern-

ment compan

-ies

Central Govern-

ment and

their compan

-ies

State Govern-

ment

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 1. Maharashtra

State Seeds Corporation Limited

Work-ing

2002-03 418.44 205.00

(48.99)*

65.11 (15.56)

148.33 (35.45)*

500.00 --- 64.33 841.55

---

286.81

1546.55

2. Maharashtra Power Development Corporation Limited

Work-ing

2002-03 45.13 --- 45.13 (100)*

--- --- 91475.93 (MSEB)

--- --- --- --- ---

3. Maharashtra Vikrikar Rokhe Pradhikaran Limited New Co., 14 June 2001

Work-ing

2001-02 5.00 --- 5.00 (100)

--- --- --- --- --- --- --- ----

* Figures in brackets indicate percentage.

Annexure-10

151

Annexure–10 Financials Results of Maharashtra Electricity Regulatory Commission

(Referred to in Paragraph No.1.15) (Rupees in lakh)

Sr. No.

Name of the Corporation Year of Accounts

Corpus Fund by MSEB

Net Profit(+)/ Loss(-)

1. Maharashtra Electricity Regulatory Commission

2001-02 136.33 25.92


152

Annexure – 11 Statement showing Remarks regarding internal audit in the Supplementary Audit

Report 619(3) of the Companies Act, 1956 by Statutory Auditors. (Referred to in Paragraph No. 1.37)

Sr. No.

Name of the Company

Year of Accounts

Name of the Statutory Auditor

Internal audit conducted by

Remarks

1 MAFCO Limited 2001-02 M/s. M.A. Shah and Co.,

Internal Agency Internal audit system needs to be improved/ strengthened in certain areas. Scope and coverage need to be increased.


2000-01 M/s. S.K. Shetty and Co.,

Internal Agency The company has not conducted internal audit during the year.


1998-99 M/s. Gala and Gala External Agency

Scope and responsibility of internal auditors needs to be clearly defined. System to be strengthened.


2001-02 M/s. Loonkar and Co.,

External Agency

Internal audit system does not commensurate with the size of the company and nature of the business.


2001-02 M/s. Nerlikar and Associates

Internal Agency There is no formal internal audit system framed in the company.


1998-99 M/s. D.K. Surana and Associates

Internal Agency Internal audit system were not adequate and does not commensurate with the size and nature of company.


2001-02 M/s. Rodi Dabir and Co.,

Internal Agency Internal audit system should be further strengthened by increasing scope of work.


1997-98 M/s. Khatri Iyer and Co.,

Internal Agency No internal audit system was adopted by the company.


1997-98 M/s. Khatri Iyer and Co.,

Internal Agency The company does not have any separate internal audit system.


2001-02 M/s. M.G. Shah and Associates

Internal Agency Internal audit system needs to be strengthened.


2000-01 M/s. Natvarlal and Vepani

External Agency

Scope of internal audit is required to be enhanced.


1998-99 M/s. N.B. Shetty and Co.,

Internal Agency The internal audit system needs significant improvement to commensurate with the size and nature of business.

Annexure-11

153

Sr. No.

Name of the Company

Year of Accounts

Name of the Statutory Auditor

Internal audit conducted by

Remarks

13 Maharashtra Electronics Limited

2001-02 M/s. Borkar and Muzumdar

External Agency Scope of internal audit needs to be strengthened

14 Maharashtra State Seeds Corporation Limited

2001-02 M/s. Ratan Chandak and Co.,

Internal Agency Scope of the work of internal audit needs to be further enhanced to cover operational areas.


2001-02 M/s. E.S. Venkataraman and Associates

Internal Agency Internal audit to be conducted in frequent intervals for effective and efficient system.


1998-99 M/s. Khandelwal Jain and Associates

Internal Agency Internal audit should be strengthened


2002-03 M/s. Khandelwal Jain and Associates

External Agency Frequency of internal audit should be increased to quarterly and it should cover the information system audit.


154

Annexure–12 Statement showing the financial position of Maharashtra State Handlooms

Corporation Limited (Referred to in paragraph No.2.7)

(Rupees in lakh)

Particulars 1998-99 1999-2000 2000-01 2001-02? (provisional)

Liabilities

A Paid-up capital (including share application money)

1,300.17 1,300.17 1,426.67 1,491.67

B Reserves and surplus 5.03 5.03 5.03 5.03

C Borrowings Term loan Deposit Cash credit

1,950.87

115.22 316.71

2,229.36

117.74 420.79

2,683.10

156.38 409.94

3,048.38

126.77 426.00

Total 2,382.80 2,767.89 3,249.42 3,601.15

D Current liabilities and provisions

1,555.80 2,063.74 2,852.91 3,436.55

Total 5,243.80 6,136.83 7,534.03 8,534.40

B Assets

A Gross value of assets 176.32 176.86 168.02 181.58

Less: Depreciation 132.80 136.85 130.01 133.01

Net fixed assets 43.52 40.01 38.01 48.57

B Investment 5.69 5.69 5.69 5.69

C Current assets, loans and advances.

1,095.07 1,140.68 1,488.35 1,654.03

D Miscellaneous expenditure 0.79 0.42 0.05 4.77

E Accumulated losses 4,098.73 4,950.03 6,001.93 6,821.34

Total 5,243.80 6,136.83 7,534.03 8,534.40

Capital employed? -417.21 -883.05 -1,326.55 -1,733.95

Net worth? -2,794.32 -3,645.25 -4,570.28 -5,329.41

? The figures for 2002-2003 not compiled by the Company. ? Capital employed represents net fixed assets including capital work in progress plus working capital. ?Net worth represents paid-up capital plus reserves and surplus less intangible assets (Miscellaneous expenditure and accumulated losses).

Annexure-13

155

Annexure-13 Statement showing the working results of Maharashtra State Handlooms

Corporation Limited (Referred to in paragraph No.2.8)

(Rupees in lakh)

Particulars 1998-99 1999-2000 2000-01 2001-02? (Provisional)

A) Income Sale 737.53 871.53 1,042.70 1,061.15 Closing stock 470.65 422.24 403.20 405.91 Interest income 9.70 7.96 5.90 9.86 grant-in-aid 17.01 39.15 -- -- Other income 2.49 21.10 60.88 94.86 Total 1,237.38 1,361.98 1,512.68 1,571.78 B) Expenditure Opening stock 720.78 470.66 422.24 403.20 Purchase of finished goods 49.71 157.86 549.55 698.20 Raw materials consumed 212.22 249.37 175.23 113.42 Manufacturing expenditure 139.55 173.56 149.43 136.05 Salaries and allowances 302.16 351.96 384.89 289.77 Interest on loans 337.75 398.20 433.03 526.78 Depreciation 4.58 4.05 3.43 3.81 Other expenses 374.31 407.62 446.79 219.96

Total 2,141.06 2,213.28 2,564.59 2,391.19 C) Profit/loss before prior period adjustment (A-B)

-903.68 -851.30 -1,051.91 -819.41

? The figures for 2002-2003 not compiled by the Company.


156

Annexure-14

Maharashtra State Handlooms Corporation Limited Contribution from sales depots (Referred to in paragraph No.2.21)

(Rupees in lakh)

Sl.No. Sales depot 1998-99 1999-2000 2000-01 2001-02 2002-03

1 Akola 4.52 1.33 (-)0.60 0.59 (-)0.97

2 Amravati (-)0.56 (-)2.10 0.30 (-)0.66 (-)0.60

3 Aurangabad (-)9.20 (-)9.10 (-)4.72 (-)4.32 (-)2.71

4 Bhandara (-)0.90 0.34 0.44 0.48 (-)1.12

5 Buldhana - (-)0.12 0.06 (-)0.59 (-)0.85

6 Chandrapur (-)1.26 (-)0.51 0.82 0.53 (-)0.86

7 Dattawadi - - - (-)2.47 7.49

8 Dhantholi - - - - (-)0.25

9 Gondiya (-)1.80 (-)3.12 (-)4.00 (-)1.45 (-)1.52

10 Jalgaon 1.85 5.59 6.67 0.77 17.13

11 Kala chowki (-)0.43 0.84 1.29 (-)0.68 (-)0.44

12 Kamptee 3.15 8.86 2.51 2.04 (-)1.38

13 Lalbaug 16.90 (-)20.23 (-)10.95 (-)5.06 (-)7.64

14 Nagpur - - 0.46 1.38 1.25

15 Nanded 1.26 (-)3.05 (-)0.80 (-)0.20 0.31

16 Nerul 9.47 4.70 (-)3.60 (-)1.70 (-)1.39

17 Parbhani 0.06 0.41 (-)0.39 (-)0.54 (-)0.17

18 Pune (-)2.88 20.64 (-)1.69 (-)0.93 (-)0.63

19 Ramtek 0.85 0.42 0.35 (-)0.31 (-)0.22

20 Solapur 0.30 (-)2.83 1.57 (-)2.87 (-)2.16

21 Umred (-)64.20 (-)11.61 4.56 (-)3.27 19.70

22 Yeotmal 5.62 (-)1.85 0.51 (-)1.72 (-)1.97 Note: i) Contribution = Sales minus expenditure. ii) (-) indicates negative contribution

Annexure-15

157

Annexure–15 Maharashtra State Electricity Board

Statement showing the category-wise metered consumers (Referred to in paragraph No.3.1.4)

Number of consumers as on 31 March of Category

1998 1999 2000 2001 2002

Low tension

Residential 83,79,435 88,16,647 92,58,154 92,86,465 93,49,683

Commercial 10,72,212 11,22,806 11,53,044 10,66,669 10,56,211

Street light 51,180 52,800 54,448 54,994 58,783

Total single phase consumers

95,02,827 99,92,253 1,04,65,646 1,04,08,128 1,04,64,677

Industrial 3,00,424 3,14,229 3,13,430 3,11,572 2,97,612

Agricultural/Irrigation 3,46,010 3,45,346 3,17,708 3,31,612 3,72,358

Public Water Works 18,041 18,153 15,939 12,358 18,669

Total three phase consumers

6,64,475 6,77,728 6,47,077 6,55,542 6,88,639

Total–Low tension 1,01,67,302 1,06,69,981 1,11,12,723 1,10,63,670 1,11,53,316

High tension

Industrial 9,350 9,651 9,467 9,005 8,770

Agricultural/Irrigation 22 32 31 66 193

Public Water Works 1,411 1,424 468 511 507

Total–High tension 10,783 11,107 9,966 9,582 9,470

Others

(Railways,

Military.

Licensees

879

933

1,101

1,048

986

Total-Others 879 933 1,101 1,048 986

Total metered consumers

1,01,78,964 1,06,82,021 1,11,23,790 1,10,74,300 1,11,63,772


158

Annexure–16 Maharashtra State Electricity Board

Statement showing the category-wise unmetered consumers (Referred to in paragraph No.3.1.4 )

Number of consumers as on 31 March of Category

1998 1999 2000 2001 2002

Agricultural/ Irrigation (LT)

17,54,370 18,12,611 18,26,653 18,63,261 18,50,845

Public Water Works (LT & HT)

24,646 26,157 31,170 33,965 26,949

Agricultural/ Irrigation (HT)

1,411 1,371 1,166 1,147 955

Total-unmetered 17,80,427 18,40,139 18,58,989 18,98,373 18,78,749

Annexure-17

159

Annexure-17

Maharashtra State Electricity Board Statement showing the percentage of utilisation of meter testing benches

(Referred to in paragraph No.3.1.15)

Percentage of utilisation of meter

testing benches


testing benches

Sl. No.

Name of the division

Single phase

Three phase

Sl. No.


Single phase

Three phase

1 Achalpur 53 21 30 Dharangaon 170 64

2 Ahmdnagar (R) 72 54 31 Dhule (R) 77 47

3 Ahmdnagar (U) 45 19 32 Dhule (U) 57 39

4 Akola (R) 72 77 33 Dombivli 77 88

5 Akola (U) 86 60 34 Dondaicha 48 08

6 Allapalli 24 06 35 Gadhinglaj 74 66

7 Amaravati (R) 40 50 36 Gandhibag 115 ?

8 Amaravati (U) 107 33 37 Goregaon 52 43

9 Ambejogai 30 13 38 Hinganghat 35 42

10 Arvi 40 13 39 Ichalkaranji 65 61

11 Aurangabad (R) 83 42 40 Islampur 137 55

12 Ballarsha 66 ? 41 Jaisingpur 55 51

13 Band Garden 20 10 42 Jalgaon (U) 36 26

14 Baramati 73 74 43 Kalwa 98 37

15 Barshi 39 11 44 Kalyan (R) 40 100

16 Beed 45 21 45 Kalyan (U) 91 114

17 Bhandara 70 99 46 Karad 96 73

18 Bhandup 70 97 47 Katol 36 41

19 Bhiwandi I 34 ? 48 Kolhapur (R-I) 97 112

20 Bhiwandi II 17 28 49 Kolhapur (U) 108 87

21 Bhokar 57 ? 50 Latur 66 19

22 Bhosari 95 84 51 Malegaon (R) 24 ?

23 Bhusawal UCR 62 105 52 Malegaon (U) 53 45

24 Brahmapuri 57 50 53 Malkapur 47 20

25 Buldhana 74 29 54 Morshi 64 25

26 Chalisgaon 131 ? 55 Mulund 93 156

27 Chandrapur 63 61 56 Nagpur I 40 21

28 Chandwad 24 05 57 Nagpur II 37 82

29 Congress Nagar 23 ? 58 Nasik (R) 80 30

? This denotes that the divisions had no three-phase meter testing bench.


160

(Annexure-17 continued)


testing benches


testing benches

Sl. No.


Single phase

Three phase

Sl. No.


Single phase

Three phase

59 Nasik I 66 107 78 Savada 42 44

60 Nasik II 207 64 79 Shahada 44 ?

61 Nilanga 68 ? 80 Shivajinagar 129 58

62 Osamnabad 81 70 81 Solapur (R) 95 105

63 P’kwada 98 05 82 Solapur (U) 42 44

64 Pachora 49 18 83 Thane (U) 55 15

65 Padmavati 93 62 84 Tuljapur 77 15

66 Palghar 73 62 85 Udgir 19 07

67 Pandharpur 62 24 86 Ulhasnagar I 76 66

68 Panvel (R) 58 15 87 Ulhasnagar II 115 124

69 Panvel (U) 62 54 88 Vita 78 18

70 Parvati 41 ? 89 Wagle Estate 116 24

71 Pune 48 30 90 Wai 60 52

72 Pusad 100 100 91 Wardha 122 32

73 Rajgurunagar 120 43 92 Warora 74 43

74 RST 52 44 93 Washi 53 17

75 Sangamner 80 48 94 Washim 92 18

76 Sangli (R) 85 41 95 Yavatmal 120 26

77 Sangli (U) 90 75

Average utilisation of meters testing benches of all divisions. 67 41

Annexure-18

161

Annexure-18

Maharashtra State Electricity Board Details of negative energy loss at express feeders


Sl. No.

Name of the feeder

Consumption recorded at substation

(Mus)

Consumption recorded at

consumer end (Mus)

Energy loss (Mus)

Percentage of loss

A 2001-02

1 22 KV PIECO 0.67560 0.77679 -0.10119 -14.98

2 22 KV NAD 12.29636 12.54574 -0.24938 -2.03

3 22 KV ONGC 0.80320 0.85000 -0.04680 -5.83

4 22 KV CAPI (TIFIL) 6.06672 6.09855 -0.03183 -0.52

5 22 KV CABOT 2.82716 2.86432 -0.03716 -1.31

6 22 KV PNL ONGC 5.56448 5.71146 -0.14698 -2.64

7 22 KV Dharve 2.19440 2.30057 -0.10617 -4.84

8 22 KV Technova 6.15789 6.26580 -0.10791 -1.75

9 22 KV MWSSB 18.19720 18.37470 -0.17750 -0.98

10 22 KV TMC 3.90860 4.04520 -0.13660 -3.49

11 22 KV PISE Standby (I/II) 1.78200 1.87570 -0.09370 -5.26

12 22 KV RLY 1.09000 1.13000 -0.04000 -3.67

13 22 KV Jambul W W 87.11468 88.07381 -0.95913 -1.10

14 22 KV BPCL 5.21440 5.27472 -0.06032 -1.16

15 100 KV Reliance I & II 13.61089 13.69832 -0.08743 -0.64

16 22 KV Vinyl Chemicals 1.41900 1.57782 -0.15882 -11.19

17 22 KV Vinati Organic 2.01350 2.03533 -0.02183 -1.08

18 22 KV Sudarshan Chemicals 6.97073 7.04765 -0.07692 -1.10

19 220 KV Kokan Synthetics 32.07875 32.92265 -0.84390 -2.63

20 22 KV Global Board 1.46960 1.54236 -0.07276 -4.95

21 22 KV E B Pearl 3.44080 3.45811 -0.01731 -0.50

22 22 KV Sudarshan Chem (Roha) 16.20450 16.45320 -0.24870 -1.53

23 22 KV H & R Johnson 25.24940 25.46160 -0.21220 -0.84

24 22 KV Indorama Cement 16.46770 16.62068 -0.15298 -0.93

25 220 KV HOC 12.99969 13.44950 -0.44981 -3.46

26 132 KV Gholwad I & II 16.30470 16.99081 -0.68611 -4.21

27 11 KV HAL Ozar MIG 9.45520 9.53928 -0.08408 -0.89

28 11 KV Township Ozar 5.51280 5.54689 -0.03409 -0.62


162


Sl. No.

Name of the feeder


(Mus)


consumer end (Mus)

Energy loss (Mus)

Percentage of loss

29 11 KV MES Ozar 3.51480 3.55031 -0.03551 -1.01

30 11 KV Bhagavati 17.85468 18.00418 -0.14950 -0.84

31 33 KV Hogans 7.93200 8.08290 -0.15090 -1.90

32 33 KV Paper Plant 5.67868 5.74164 -0.06295 -1.11

33 11 KV Ordinance Factory 1.54786 1.60992 -0.06206 -4.01

34 33 KV Auto Riders 0.64853 0.65176 -0.00323 -0.50

35 33 KV A. G. Gold 0.59272 0.59684 -0.00413 -0.70

36 11 KV Dudh Sangh 0.80076 0.81099 -0.01023 -1.28

37 11 KV Kay Paper Mill 0.47540 0.52518 -0.04978 -10.47

38 11 KV Alpha Laval 0.15883 0.16013 -0.00130 -0.82

39 33 KV Associated Capsules 2.89980 2.92197 -0.02217 -0.76

40 33 KV Pearl 8.49561 8.69743 -0.20182 -2.38

41 33 KV Pakani 0.76548 0.78981 -0.02433 -3.18

42 22KV Telco Chincwad 52.17533 52.81140 -0.63607 -1.22

43 22 KV E.E. MIDC W/W 4.74255 4.99931 -0.25676 -5.41

44 22 KV SKF 24.46000 24.87378 -0.41378 -1.69

45 22 KV HAL 76.32980 78.79292 -2.46312 -3.23

46 22 KV Bajaj Tempo 4.29244 4.37928 -0.08684 -2.02

47 22 KV PCMC 18.44400 18.63198 -0.18798 -1.02

48 22 KV Finolex 0.67840 0.74055 -0.06215 -9.16

49 22 KV KOEL 11.02642 11.10475 -0.07833 -0.71

50 11 KV OBRD 4.33428 4.38296 -0.04868 -1.12

51 22 KV Bajaj Tempo 0.40912 0.41451 -0.00539 -1.32

52 22 KV Indrayani 2.14120 2.24928 -0.10808 -5.05

53 11 KV Mahavir 5.60800 5.66700 -0.05900 -1.05

54 11 KV Durgapur Open Cast 6.88300 7.27800 -0.39500 -5.74

55 22 KV MEL 227.10400 228.52000 -1.41600 -0.62

56 66 KV Noble Explochem, Hingani 2.18730 2.21435 -0.02705 -1.24

57 11 KV Lloyd Steel 0.06920 0.07613 -0.00693 -10.01

58 220 KV Nippon Denro 11.55100 11.71900 -0.16800 -1.45

59 220 KV Indorama 7.58500 7.80300 -0.21800 -2.87

60 220 KV INOX 31.02500 31.21400 -0.18900 -0.61

Annexure-18

163


Sl. No.

Name of the feeder


(Mus)


consumer end (Mus)

Energy loss (Mus)

Percentage of loss

61 33 KV Jaiswal Nieco 5.78400 5.81400 -0.03000 -0.52

62 220 KV SUNFLAG 102.53440 103.16440 -0.63000 -0.61

63 132 KV UF I 119.42960 120.92330 -1.49370 -1.25

64 11 KV Premium Silicarb (5 Con.) 3.62900 3.65000 -0.02100 -0.58

65 132 KV Vishnupuri 4.47900 4.68600 -0.20700 -4.62

66 33 KV Simbhora W/W 14.19900 14.34700 -0.14800 -1.04

67 11 KV Amba Feeder 0.02100 0.02300 -0.00200 -9.52

Total 1,109.57714 1,125.15451 -15.57737 -1.40


164


Loss below ( - ) 0.5 per cent during 2002-03


(Mus)

Energy loss (Mus)

Sl. No. Name of the feeder Consumption recorded at substation

(Mus) consumer end

Percentage of loss

B 2002-03

1 100 KV Mukund Iron 52.16176 53.17660 -1.01483 -1.95

2 22 KV Technova 10.49657 10.56732 -0.07075 -0.67

3 100 KV PISE Panjapur 81.41630 82.10000 -0.68370 -0.84

4 22 KV TMC 8.69260 8.96670 -0.27410 -3.15

5 22 KV Pise Standby (I/II) 0.63600 0.74060 -0.10460 -16.45

6 22 KV BPCL 5.64480 5.73093 -0.08613 -1.53

7 220 KV Kokan Synthetics 36.13000 36.60023 -0.47022 -1.30

8 22 KV Sudarshan Chemicals 14.18028 14.28284 -0.10256 -0.72

9 22 KV Vinati Organics 3.67450 3.72029 -0.04579 -1.25

10 22 KV Sudarshan Chem (Roha) 14.01825 14.29783 -0.27958 -1.99

11 220 KV H.O.C 33.09470 33.42950 -0.33480 -1.01

12 22 KV Uttam Steel 5.35636 5.38582 -0.02946 -0.55

13 11 KV MES Ozar 4.65465 4.70705 -0.05240 -1.13

14 33 KV Sagar Distillers 2.46948 2.49563 -0.02616 -1.06

15 11 KV VIR Alloys 12.12996 12.25324 -0.12329 -1.02

16 33 KV Jafpa Obaroi 1.28985 1.30160 -0.01175 -0.91

17 33 KV Paper Plant SSK 1.56930 1.57830 -0.00900 -0.57

18 11 KV Murari Paper Mill 0.22344 0.22700 -0.00356 -1.59

19 33 KV Priyadarshini SSK (Sut GM) 20.24427 20.47491 -0.23064 -1.14

20 33 KV Tapi Express 1.72810 1.75209 -0.02398 -1.39

21 33 KV Starch 6.17940 6.21986 -0.04046 -0.65

22 33 KV Mohite Textile 14.63683 14.84163 -0.20480 -1.40

23 11 KV Dudh Sangh 1.27697 1.30308 -0.02611 -2.04

24 33 KV Kirloskarwadi 5.39614 5.45204 -0.05590 -1.04

25 11 KV Ebara 0.40829 0.41404 -0.00575 -1.41

26 220 KV Kalyani Seamless 16.95800 17.07340 -0.11540 -0.68

27 33 KV Associated Capsules 11.69620 11.89299 -0.19678 -1.68

28 22 KV SKF 25.30389 25.86849 -0.56459 -2.23

29 22 KV HAL 77.36400 80.00818 -2.64418 -3.42

Annexure-18

165

Annexure-18 continued) Loss below ( - ) 0.5 Per cent during 2002-03


(Mus)

Energy loss (Mus)

Sl. No. Name of the feeder Consumption recorded at substation

(Mus) consumer end

Percentage of loss

30 22 KV Bajaj Tempo 6.06592 6.23224 -0.16632 -2.74

31 22 KV PCMC 11.48080 11.71948 -0.23868 -2.08

32 22 KV NIC 1.09408 1.14795 -0.05387 -4.92

33 11 KV AFK 20.17466 20.31942 -0.14476 -0.72

34 22 KV KOEL 11.41144 11.50109 -0.08965 -0.79

Total B 519.25778 527.78234 -8.52457 -1.64

Grand Total 1628.83492 1652.93685 -24.10194 -1.48


166

Annexure-19 Maharashtra State Electricity Board

Statement showing the operational performance of four units of Khaperkheda thermal power station

(Refered to in Paragraph No.3.2.24)

Sl. No.

Particulars Units 1998-99 1999*-00 2000-01 2001-02 2002-03

1 2 3 4 5 6 7 8

1 1,839.6 1,844.6 1,839.6 1,839.6 1,839.6 2 1,839.6 1844.6 1,839.6 1,839.6 1,839.6 3 - - 1,068.4 1,839.6 1,839.6

Generating Capacity (MUs) (365X24= 8760X.21) *(366X24=8784X.21)

4 - - - 1,839.6 1,839.6

2 Total available hours in a year (per unit)

17,520 [8,760]

17,568 [8,784]

22,608 [8,760]

(5,088 for U-3)

35,040 [8,760]

35,040 [8,760]

1 29 3,782 286 41 1,047 2 1,078 86 1,025 313 34 3 - - 856 1,557 58

Outage hours i) Planned

4 - - - 404 1,023 1 837 408 448 871 307 2 190 311 617 294 310

3 - - 564 554 119

3

ii) Forced

4 - - - 549 285

1 7,894 4,594 8,026 7,848 7,406

2 7,492 8,387 7,118 8,153 8,416

3 - - 3,668 6,649 8,583

Net available hours after excluding planned /forced outages.

4 - - - 7,807 7,452

4

Total 15,386 12,981 18,812 30,457 31,857

1 90.11 52.30 91.62 89.59 84.54

2 85.53 95.48 81.26 93.07 96.07 3 - - 72.09 75.90 97.98

5 Percentage of plant availability factor (unitwise) (4/2)

4 - - - 89.12 85.07

6 Percentage of plant availability factor

87.82 73.89 81.66 86.92 90.92

1 7,894 4,594 8,026 7,848 7,406 2 7,492 8,387 7,118 8,153 8,416 3 - - 3,668 6,649 8,583

7 Actual running hours

4 - - - 7,807 7,452

Total 15,386 12,981 18,812 30,457 3,1857

Annexure-19

167


Sl. No.

Particulars Units 1998-99 1999*-00 2000-01 2001-02 2002-03

1 2 3 4 5 6 7 8

1 1,657.76 964.77 1,685.59 1,648.20 1,555.26 2 1,573.31 1,761.36 1,494.73 1,712.21 1,767.36 3 - - 770.28 1,396.29 1,802.43

Possible generation of power with reference to hours actually Operated(Mus) (7X0.21)

4 - - - 1,639.47 1,564.92

8

Total 3,231.07 2,726.13 3,950.60 6396.17 6,689.97

1 1,520.87 864.90 1,519.71 1,479.13 1,408.75 2 1,430.36 1,614.49 1,360.00 1,513.47 1,498.54

3 - - 612.57 1,145.64 1,757.40

Actual generation (MUs)

4 - - - 1,371.30 1,488.18

9

Total 2,951.23 2,479.39 3,492.28 5,509.54 6,152.87

1 136.89 99.87 165.88 169.07 146.51 2 142.95 146.87 134.73 198.74 268.82 3 - - 157.71 250.65 45.03

10 Shortfall (8-9) actual generation to possible generation

4 - - - 268.17 76.74

1 318.730 979.700 319.890 360.470 430.850 2 409.240 230.110 479.600 326.130 341.060 3 - - 455.830 693.960 82.200

11 Shortfall in possible generation for total hours operated(1-9)

4 - - - 468.300 351.420

1 82.67 46.89 82.61 80.40 76.58 2 77.75 87.53 73.93 82.27 81.46

3 - - 57.34 62.28 95.53

12 Plant load factor(Plant load factor represents the percentage of actual power generation to generation capacity) (percent) (9/1X100)

4 - - - 74.54 80.90

1 91.74 89.65 90.16 89.74 90.58 2 90.91 91.66 90.99 88.39 84.79

3 - - 79.53 82.05 97.50

13 Capacity utilisation for actual hours worked (9/8 X 100 )

4 - - - 83.64 95.10


168

Annexure-20


Statement showing cost of generation


Particulars 1998-99 1999-00 2000-01 2001-02 Sl.

No. (Values are in paise/KWH)

1. Fuel cost 79.14 71.67 64.27 79.49 2. Operating expenditure 01.00 00.83 00.64 00.71

3. Repair and maintenance 03.54 04.16 05.47 02.51 4. Employees cost 04.81 06.20 05.43 03.85

5. Administration and general expenses

07.12 04.24 39.44 13.00

6. Depreciation 17.85 21.32 15.54 28.17 7. Interest and other

charges 15.20 16.14 41.23 27.96

8. Total cost of generation 128.66 124.56 172.02 155.69

9. Cost of generation at Bus Bar (after excluding auxiliary consumption)

140.24 136.66 187.66 170.76

Annexure-21

169

Annexure-21 Maharashtra State Electricity Board

Statement showing average calorific value of Coal Stipulated heat rate, Standard consumption of coal, actual and excess consumption of coal at

Khaperkheda thermal power station


Sl. No.

Particulars Unit No.

1998-99 1999-2000 2000-01 2001-02 2002-03 Total

1 2 3 4 5 6 7 8

1 Average calorific value of coal (K cal/kg.)

3131 3407 3365 3318 3054

U1&2 1970 1970 1970 1970 2 Stipulated heat rate as per standard (Kcal/ KWH) U3&4 - - 1939 1939

1970 1939

3 Stipulated heat rate at 86.61 percent for U1&2 boiler efficiency and 86.80 per cent for U3&4 (Kcal/KWH) (2X100) / 86.61 U1&2

U1&2 2275 2275 2275 2275

86.80 U 3&4 U3&4 - - 2234 2234

2275

2234

U1&2 726.60 667.74 676.08 685.65 744.92

4 Standard consumption of coal for generation per KWH (3/1X1000) (gms)

U3&4 - - 663.89 673.30 731.50

U1&2 2951.23 2479.39 2879.71 2992.60 2907.29

5 Actual Generation (in MUs)

U3&4 612.57 2516.95 3245.58

U1&2 21.44 16.56 19.47 20.52 U3&4 - - 4.07 16.95

21.66 23.74

6 Standard consumption of coal for actual generation in lakh (MTs) (4X5)

23.54 37.47 45.40

7 Actual consumption of coal (in lakh MTs)

26.32 18.95 26.12 41.50 48.95

8 Excess consumption of coal (in lakh MTs)

4.88 2.39 2.58 4.03 3.55 17.43 lakh MT

9 Average cost of coal (per MT) 885.04 928.87 915.89 998.02 1027.04 -

10 Cost of excess coal consumed (Rupees in crore)

43.19 22.20 23.63 40.22 36.46 165.70 crore

11 Percentage of excess consumption of coal to standard norms 8/6x100

22.76 14.43 10.96 10.75 7.82 -


170

Annexure-22 City and Industrial Development Corporation of Maharashtra Limited

Statement showing allotments of plots to 10 educational institutions (Referred to paragraph 4.1.3)

Sl. No.

Name of the educational institutions

Date of allotment of land

Purpose of

allotment

Actual use of land

Area misused

(sq. mtrs.)

Total LP ?

levied (per sq. mtrs.)

Total LP

leviable (per sq. mtrs.)

Difference being LP

less charged (Column 8-7x6)

(Rupees in lakh)

Amount remained to be

recovered from LP charged.

(Rupees in lakh)

1 2 3 4 5 6 7 8 9 10

1(a) Lokmanya Tilak Jankalyan Shikshan Sanstha, P-17, Sector-4, Koperkhairane

20 March 1992 Primary school

College 2,264.13 240 400 3.62 Nil

1(b) Lokmanya Tilak Jankalyan Shikshan Sanstha, P-18, Sector-4, Koperkhairane

16 November 1995 Secondary school

College 3,457.37 720 900 6.22 Nil

2 Jawaharlal Nehru Institute of Technology Research Centre

16 July 1998 Preprimary and

Primary school

College 2,702.72 828 1,035 5.59 Nil

3 Anjuman-E-Islam Trust

16 November 1998 Urdu Medium school

B.Ed. College

500 1,288 1,610 1.61 Nil

4 Jawhar Education Society

1 October 1991 Primary and

Secondary school

College 3,237.48 280 350 2.27 Nil

5 Manjara Charitable Trust

30 December 1991 Secondary school

College 3,671 300 375 2.75 8.26

6 Terana Charitable Trust

26 September 1991 Preprimary and

Primary school

College 2,900 320 400 2.32 6.96

7 MGM Education Trust

7 January 1988 Primary school

College 600 160 225 0.39 0.81

8 Terana Charitable Trust

8 May 1990 Primary school

College 400 270 375 0.42 0.90

9 People Education Society

27 August 1991 Primary school

College 300 45 75 0.09 0.13

10 Sudhagad Education Society

26 May 1986 Primary school

College 1,000 303 500 1.97 3.00

TOTAL 27.25 20.06

? LP-Lease premium.

Audit Report (Commercial)-Government of Maharashtra 2002-03


172

© Comptroller and Auditor General of India

2004

173

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