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Analysis of Performance for the period of
1999-2000 to 2003-04

There were 48 State Level Public Enterprises (SLPEs) in Assam during the period of review. The Industries & Commerce Department administered 15 of the enterprises, the Co-operation Department administered 8 enterprises, the WPT & BC Department administered 3 enterprises, the Agriculture, Handloom Textile & Sericulture and Urban Development Departments administered 2 enterprises each and there were one public enterprise each under the administrative control of Power, Home, Transport, Finance, Cultural Affairs, Public Works, Hill Areas, Fisheries, Animal Husbandry & Veterinary, Tourism, Education, Mines & Minerals, Information Technology, Soil Conservation, Irrigation and Welfare of Minorities & Development Departments. 34 of there enterprises were registered as Companies, 6 as Statutory Bodies and under the Co-operative Sector, there were 8 SLPEs. Objective-wise, 3 of the SLPEs were in the public utility services, 5 in trading activities, 22 in the production line and 3 in the housing & construction activities

The SLPEs were created to exploit the natural resources of the State, to produce goods & services and to implement developmental programs for the weaker sections of the society, for the overall economic up-liftment of the State. Unfortunately, the overall rate of return of the SLPEs had been negative over the years. Of all the enterprises, around 30% became non-operative during last few years because of various reasons. Out of 3 SLPEs handed-over to private sector under lease/ Memorandum of Understanding (MoU), only 1 is in operation.

FINALIZATION OF ACCOUNTS

The finalization of accounts of most of the enterprises was in huge arrears and this became a matter of great concern. This inhibited adoption of appropriate measures in respect of such enterprises. Lots of persuasive actions were taken to expedite finalization of accounts. M/S Assam Gas Company Ltd. (AGCL), Assam Petrochemicals Ltd (APCL), Ashok Paper Mills (Assam) Ltd (APM), Assam Co-operative Jute Mills Ltd. (ACJM) were the only enterprises, which updated their accounts up to 2003-04. Since however many of the enterprises lag far behind, greater emphasis from all quarters is necessary not only to avoid penal actions, but also to determine the financial health of the enterprises. The status of accounts of the enterprises on the basis of which this report is prepared is given in Table-1.

Table - 1
Number of Enterprises with 1999-00 2000-01 2001-02 2002-03 2003-04
Audited accounts 13 10 9 6 4
Provisional accounts 21 22 19 18 15
No accounts 10 12 16 10 14
No information 4 4 4 14 15
T O T A L 48 48 48 48 48

INVESTMENTS

The capital investment in the forty Eight State Level Public Enterprises (SLPEs), comprising of equity from Govt. of Assam, Govt. of India, Other State Governments, Co-operative Societies, Individuals, Financial Institutions, Banks etc.; Term loan from Govt., Financial Institutions, Banks et., Bonds; Capital subsidy; Grant-in-aid etc. increased from year to year, but marginally. The growth rates in State Government investment were also marginal. During 2002-2003 however, the investments were higher primarily because of large-scale investments in implementing Voluntary Retirement Scheme (VRS), e.g. in Assam State Transport Corporation (ASTC). The contribution of equity from other than State Governments, which was around Rs.25 Crore, did not increase substantially during the period of review. The rate of growth in Institutional Loan was also marginal. The position is evident from Table-2. In short, increase in investments in the SLPEs during the period of review was not substantial.

Table - 2
Rupees in Crore Capital Investment State Govt. Investment State Govt. equity Total equity State Govt. Loan Institutional loan
Amount %age increase over previous year Amount %age increase/ (decrease) over previous year Amount %age increase over previous year Amount Equity from other than State Govt. Amount %age increase/ (decrease) over previous year Amount %age increase/ (decrease) over previous year
1999-00 4400 - 3314 - 1823 - 1847 24.50 1375 - 1005 -
2000-01 4546 3.32 3405 2075 1825 0.11 1850 24.75 1454 5.75 1055 4.98
2001-02 4760 4.71 3606 5.90 1834 0.49 1859 24.92 1564 7.57 1057 0.19
2002-03 5116 7.48 3939 9.23 1835 0.05 1860 24.92 1894 21.10 1073 1.51
2003-04 5346 4.50 4154 5.46 1835 0.00 1860 24.92 2106 11.19 1095 2.05

The following enterprises had Capital Investment exceeding Rs.100 Crore.

  1. Assam State Electricity Board (ASEB)
  2. Assam State Transport Corporation (ASTC)
  3. Assam Urban Water Supply and Sewerage Board (AUWS&SB)
  4. Assam Tea Corporation Ltd. (ATC)
  5. Assam Industrial Development Corporation Ltd (AIDC)

The Table – 3 indicates the share of these enterprises in total Capital Investment, Paid-up Capital, State Govt. Investment & Institutional Loans in the 48 SLPEs.

Table - 3
Rupees in Crore Capital Investment Paid-up Capital State Govt. Investment Institutional loan
Amount % share Amount % share Amount % share Amount % share
Year Year Year Year
ASEB 3241 680.09 1350 72.63 2559 70.95 683 64.58
2001-02 2001-02 2001-02 2001-02
ASTC 826 15.45 168 9.02 826 19.88 0 0
2003-04 2003-04 2003-04 2003-04
AUWS&SB 192 3.59 0 0 123 2.95 69 6.33
2003-04 2003-04 2003-04 2003-04
ATC 133 2.49 28 1.48 54 1.31 79 7.20
2003-04 2003-04 2003-04 2003-04
AIDC 141 2.63 92 4.96 109 2.62 31 2.85
2003-04 2003-04 2003-04 2003-04

These make it evident that ASEB enjoyed the maximum input from both State Govt. & Financial Institutions, followed by ASTC from the State Govt. Substantial investments were made in AIDC, ATC & AUWS&SB also. The equity & loan investments in rest of the 43 enterprises from the end of State Govt. was of the order of 12% only and 21% in case of Institutional finance.

The increase/(decrease) in Capital Investments, Paid-up Captal, State Govt. Investment & Institutional Loan in these 5 enterprises, over the years are indicated in Table-4.

Table - 4
Rupees in Crore 1999-00 Increase/(decrease) over previous year
2000-01 2001-02 2002-03 2003-04
ASEB

CI 3050.70 60.00 130.77 NA NA
PUC 1350.00 0.00 0.00 NA NA
GI 2344.32 52.80 161.67 NA NA
IL 706.38 7.20 (30.90) NA NA
ASTC CI 282.85 15.37 19.02 316.77 191.83
PUC 167.73 0.00 0.00 0.00 0.00
GI 282.85 15.37 19.02 316.77 191.83
IL 0.00 0.00 0.00 0.00 0.00
AUWS&SB CI 122.07 39.75 10.49 0.75 1.85
PUC 0.00 0.00 0.00 0.00 0.00
GI 94.69 7.99 4.50 5.88 9.48
IL 27.38 31.76 5.99 4.22 0.00
ATC CI 63.31 12.93 20.52 17.45 18.92
PUC 27.54 0.00 0.00 0.00 0.00
GI 31.64 0.00 8.40 4.90 9.38
IL 31.67 12.93 10.12 12.54 11.56
AIDC CI 135.43 2.28 0.20 0.75 1.85
PUC 90.54 1.24 0.00 0.53 0.02
GI 104.22 2.28 0.20 0.75 1.85
IL 31.21 0.00 0.00 0.00 0.00
CI=Capital Investment, PUC=Paid-up Capital, GI=State Govt. Investment, IL=Institutional Loan, NA=Data not made available by SLPEs

It is evident from Table – 4 that there were substantial growths in Capital Investments in these SLPES except in AIDC. It is also evident that Institutional loan liability in ASEB decreased in 2001-02.

Out of around 50000 employees in the State Public Sector, the following 4 enterprises had workforce exceeding 1000 numbers.

  1. Assam State Electricity Board (ASEB)
  2. Assam State Transport Corporation (ASTC)
  3. Assam State Co-operative Marketing & Consumers Federation Ltd.(STATFED)
  4. Assam Tea Corporation Ltd. (ATC)

Over the years, the number of employees in the SLPEs decreased, including these enterprises with exception in ATC.

The rate of decrease is worked-out in Table – 5.

Table - 5
  1999-00 2000-01 2001-02 2002-03 2003-04
Nos. Nos. %age increase/ (decrease) over previous year Nos. %age increase/ (decrease) over previous year Nos. %age increase/ (decrease) over previous year Nos. %age increase/ (decrease) over previous year
TOTAL 53982 53065 (1.70) 50903 (5.70) 50528 (6.40) 48930 (9.36)
ASEB 18787 18196 (3.15) 17418 (7.29) NA - NA -
ASTC 5292 5181 (2.10) 4070 (23.09) NA - 2837 (46.39)
STATFED 1819 1796 (1.26) 1777 (2.31) 1740 (4.34) 1685 (7.37)
ATC 16842 19909 0.40 16898 0.33 16874 0.19 16854 0.07
Others 11242 10983 (2.30) 10740 (4.47) 10426 (7.26) 10136 (9.84)

N.A : Data not made available by SLPEs

The over all decrease in the strength of employees in the State Public Sector was primarily due to implementation of Voluntary Retirement Scheme (VRS) in some of the enterprises.

BUSINESS

The turnovers of all enterprises were not comparable in a uniform scale. While for manufacturing enterprises, the net sales, which include cost of inputs like raw-materials, utilities, labor, depreciation, interest, marketing expenses etc., as per commercial costing are the turnover, for the enterprises with refinancing activities, the turn over is interest receivable from the beneficiaries, on the loan disbursed, only. Therefore, ratio of turnover to investments differs between categories of services rendered.

The increase/(decrease) in business turnover of the enterprises with capital investment exceeding Rs.100 Crore in relation to the turnover of 1999-2000 are indicated in Table-6. The turnovers in the State Public Sector as a whole were increasing from year to year during the period of review. While in Assam State Electricity Board (ASEB), it had an upward trend, in Assam State Transport Corporation (ASTC) it declined in 2000-01, but increased in subsequent years. The turnover in Assam Tea Corporation Ltd. (ATC) declined from year to year, but increased in 2003-04.

Table - 6
Rupees in Crore 1999-00 2000-01 2001-02 2002-03 2003-04
Amount Amount %age growth over previous year Amount %age growth over previous year Amount %age growth over previous year Amount %age growth over previous year
TOTAL 987.83 1063.19 7.63 1098.92 11.25 1113.77 12.75 1133.69 14.77
ASEB 534.09 627.68 17.52 645.03 22.77 NA - NA -
ASTC 13.18 7.31 (44.54) 14.96 13.51 21.33 61.84 26.30 99.54
AUWS&SB 2.75 6.66 142.18 NA - 4.52 64.36 5.34 94.18
AIDC 4.61 3.87 (16.05) 4.69 1.74 4.31 (6.51) 3.34 (27.55)
AIDC 47.03 34.38 (26.90) 21.11 (55.11) 5.83 (87.60) 11.49 (75.57)
ATC 47.03 34.38 (26.90) 21.11 (55.11) 5.83 (87.60) 11.49 (75.57)

N.A : Data not made available by SLPEs

The contributions of these enterprises towards the total turnover of the 48 SLPEs are as indicated in Table – 7.

Table - 7
% over total turnover 1999-00 2000-01 2001-02 2002-03 2003-04
ASEB 54.07 59.04 58.70 NA NA
ASTC 1.33 0.69 1.36 1.92 2.32
AUWS&SB 0.28 0.63 NA 0.41 0.47
AIDC 0.47 0.36 0.43 0.39 0.29
ATC 4.76 3.23 1.92 0.52 1.01
Others 39.09 36.05 36.99 38.85 39.00
N.A : Data not made available by SLPEs

From Table-8 it is evident that the overall Turnover : Capital Investment ratio were not worth appreciation.

Table - 8
% of Turnover to Capital Investment 1999-00 2000-01 2001-02 2002-03 2003-04
ASEB 17.51 21.58 19.90 NA NA
ASTC 4.66 2.45 4.72 3.36 3.18
AUWS&SB 2.25 4.12 NA 2.48 2.78
AIDC 3.40 2.81 3.40 3.10 2.38
ATC 74.29 45.09 21.82 5.10 8.63
Others 51.81 50.28 51.16 53.75 54.41
N.A : Data not made available by SLPEs

RETURN ON INVESTMENT

The meager profits earned or estimated by a few enterprises during the period of review were eroded by the enormous losses, resulting in huge net losses. This is exhibited in Table-9. The major contributor towards these losses was Assam State Electricity Board (ASEB). Assam Tea Corporation Ltd. (ATC) & Assam State Transport Corporation (ASTC) also contributed substantially towards the overall losses.

Table - 9
Rupees in Crore 1999-00 2000-01 2001-02 2002-03 2003-04
Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs
Profit 7.99 6 20.18 7 25.98 4 25.62 6 28.45 7
Loss 806.93 42 818.85 41 782.2 44 792.7 42 759.6 41
Net-loss 798.94 48 798.94 48 756.25 48 767.11 48 732.16 48

The alarming increase in losses, particularly in 1999-2000 and 2000-2001, inflated the already accumulated losses in the enterprises.

The contribution of the resourceful enterprises towards these accumulated losses are evident in Table – 10.

Table - 10
Rupees in Crore 1999-00 2000-01 2001-02 2002-03 2003-04
Amount % share Amount % share Amount % share Amount % share Amount % share
ASEB 3124 77.1 3795 78.0 4439 79.8 NA - NA -
ASTC 325 8.0 365 7.5 317 5.7 334 5.3 260 5.1
AUWS&SB 4 0.01 24 0.49 29 0.52 34 0.54 33 0.46
AIDC 73 1.8 78 1.6 83 1.5 83 1.3 85 1.2
ATC 62 1.5 85 1.7 123 2.2 168 2.6 199 2.8
Others 464 11.5 521 10.7 574 10.3 647 10.2 708 9.96
N.A: Data not made available by SLPEs

The consequence of inflation of accumulated loss @ 12 – 20 % every year and insignificant increase in equity contribution caused the negative net-worth to soar from year to year. In 1999-2000, there were 16 enterprises with positive net-worth (+ve NW), which reduced to 13 enterprises in 2003-2004. On the other hand, the negative net-worth (-ve NW) of 32 enterprises in 1999-2000 increased to 35 enterprises in 2003-2004. Table-11 indicates the year-wise positions.

Table - 11
Rupees in Crore 1999-00 2000-01 2001-02 2002-03 2003-04
Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs Amount No. of SLPEs
+ve NW 110 16 112 15 125 13 138 13 144 13
-ve NW 2141 32 2933 33 3659 35 4435 35 5151 35
Net (-ve NW) 2031 48 2821 48 3534 48 4927 48 5008 48
% increase in net (-ve) NW over previous year - 48 38.90 48 25.27 48 39.42 48 1.64 48

Dividend was declared by only 4 enterprises, during the period of review as shown in Table-12.

Table - 12
Rupees in Lakh 1999-00 2000-01 2001-02 2002-03 2003-04
AGCL 72 100 126 127 127
APCL 0 55 0 68 89
ACJM 0 0 0 33 0
AFC 42 43 43 43 43
Total 114 198 109 217 259

In fact, the real dividends declared out of profits were by AGCL, APCL & ACJM only. The dividends declared by AFC were under compulsion, as per Act, even though the enterprise was incurring losses.

The returns on equity investments have therefore been too poor in all the SLPEs except AGCL, APCL & ACJM. It is essential to ensure greater nursing of AGCL, APCL & ACJM to bring-up these enterprises further.

About 50% of the enterprises had contributions to the exchequer in form of interest on Government loan, excise duty, taxes etc., which however were too low. Further, the interest on Government loans were mostly due and were not transferred to the exchequer due to liquidity crisis of the SLPEs. The Table-13 gives a total picture on contribution to the exchequer.

Table - 13
Rupees in Crore 1999-00 2000-01 2001-02 2002-03 2003-04
Interest on Govt. loan 7.30 10.42 7.90 8.51 11.35
Excise Duty 9.20 9.90 9.83 12.30 8.51
Taxes (AFST etc.) 5.10 5.43 5.34 5.13 6.57
Royalty 1.25 1.30 1.51 1.40 1.49
Corporate Tax 3.09 3.29 9.25 10.66 8.53
Others 2.63 2.72 2.16 2.20 2.24
Total 28.57 33.06 35.99 40.20 38.69

CONSTRAINTS & REMEDIES

  • Though each of the SLPEs had its own problems, overstaffing was the one, which generally caused poor financial performance in the enterprises. Voluntary Retirement Scheme (VRS) was implemented in some of the enterprises, depending on availability of fund for the purpose. Special allocation of fund for rationalization of human resource will have to be sought for SLPEs to be revived, the fund for SLPEs to be closed being sourced from the Asian Development Bank under Assam Governance & Public Resource Management Program.
  • Ineffective management, right from the level of Board of Directors demanded inculcation of professionalism at all levels. Appropriate reforms in the management of enterprises through privatization, enforcing accountability through the system of Memorandum of Understanding (MoU) are essential. The system of MoU has been introduced in selected enterprises to begin with. Human Resource Development is also one of the areas needing priority attention. The role of Public Enterprises Selection Board (PESB) in selecting proper persons for the post in top management levels is to be played more effectively. The concept of Chairman-cum-Managing Director (CMD) in selected SLPEs needs to be enforced.
  • Inadequacy of capital has crippled some of the enterprises. Some of the enterprises suffer on account of high Debt Equity ratio (DER). The viable enterprises need injection of capital, but the State’s resource crunch has limited the scope. Institutional finance is poor due to poor repayments of past loans, caused by poor recovery and heavy backlog in finalization of accounts. In developmental schemes, Institutional Finance is costly in some cases. Capital restructuring in some of the enterprises is necessary to reduce the DER. In short, enterprise-wise detailed study is to be made by the concerned administrative departments to diagnose the cause and work-out remedies for the SLPEs to be revived.
  • Some of the SLPEs have to render uneconomic services in the social interest resulting in financial losses. The possibilities of transfer of these activities to NGOs with proven records, the Government or conversion of such enterprises to some kind of development Boards needs exploration.
  • Some of the enterprises are engaged in common programs in common areas at high administrative cost. Merger of such SLPEs would result in appropriate utilization of resources at reduced costs.
  • Infrastructure constraints such as frequent interruption in power supply, especially in those engaged in manufacturing activities, transport bottlenecks, causing high inventory carrying cost, poor capacity utilization are the causes of losses in some SLPEs. These are to be looked at enterprise-wise and resources pulled to improve the situation.

Published by the Department of Public Enterprises, Government of Assam
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