Government suffers a shortfall of Rs 2,555 crore in dividend income from CPSEs in 2013-14

NEW DELHI: The Comptroller & Auditor General of India ( CAG) has pointed out that the government had to suffer a shortfall of Rs 2,555 crore in dividend income from central public sector enterprises ( CPSEs) in 2013-14.

In its audit report which was tabled in the Parliament on Tuesday, the CAG has noted that 19 CPSEs, including three listed firms, did not comply with the government directive while declaring dividend.

The largest offender, as mentioned in the report is, Nuclear Power Corporation of India Ltd ( NPCIL), where the shortfall in dividend paid is a staggering Rs1,345 crore, followed by Housing and Urban Development Corporation Ltd, where the dividend outgo was less by Rs 300 crore.

Among the listed firms, Satluj Jal Vidyut Nigam Ltd (SJVN) paid dividend less by Rs 421 crore, Rashtriya Chemicals and Fertiliser Ltd ( RCFL) by Rs 27 crore and IRCON International Limited dividend outgo was less by Rs 30 crore.

As per the existing guidelines, all profit-making CPSEs have to declare dividend payout of at least 20% of their profit after tax (PAT), while profit-making CPSEs in the oil and infrastructure sector declare dividend of 30% of PAT.

The dividend declared by 111 government companies and corporations in 2013-14 was Rs 66,051 crore of which Rs 41,482 was payable to the government, representing 17.06% return on the total investment by the government.

In its audit report for the year ending March 2014, CAG has further observed issues in corporate governance and corporate social responsibility (CSR) parameters.

“Representation of independent directors in some of the CPSEs was not adequate. There was no independent director in board of 18 CPSEs,” the report noted.

The report further points out that there was no whistle blower mechanism in in nine CPSEs and six companies had not formulated a CSR and sustainability policy.

The top auditor has also made a case for setting up a dedicated mechanism either in finance ministry or department of public enterprises (DPE) so that all issues of non-compliance are addressed through regular and critical review.

The report further states that equity investment in 67 out of 353 government companies has been completely eroded by their accumulated losses.

“The aggregate net worth of these companies had become negative to the extent of Rs 87,885 crore as on March 31, 2014,” the report said.