Net worth of 5 Nagaland Govt companies ‘completely eroded’

February 23, 2021 53 Views No Comment

CAG reveals nil returns on govt’s ‘non performing’ investments

Morung Express News
Dimapur | February 22

The net worth of 5 Nagaland Government companies have been “completely eroded,” informed the Comptroller and Auditor General (CAG) of India in its report which was tabled at the NLA last week.

It was also pointed out that Nagaland Government’s investments in companies and other ventures over a period from 2014 to 2018 saw an average ‘nil’ return.

The CAG report for Nagaland for the year ending March 2019 further showed how the State Government’s investments in several ventures were “non-performing.”

As of March 31, 2019, the Nagaland Government had invested Rs 294.17 Crores in government companies, statutory corporations, joint stock companies and cooperatives.

The average return on this investment was ‘nil’ during the years 2014-15, 2016-17 and 2017-18 while there was a return of Rs 4.94 Crores during the year 2015-16 and Rs 0.66 Crores during the year 2018-19. This, the report stated, indicated “non performing investments.”

The government paid an average rate of 7.14% on its borrowings during the same period.

Out of the government investment of Rs 294.17 Crores at the close of the year ending March 2019, Rs 108.76 Crores was invested in five government companies, Rs 0.30Crores in a distillery project (part of the Nagaland Sugar Mills Ltd), Rs 86.11 Crores in undertakings under the Nagaland Hotels Ltd.

On the other hand, the government invested Rs 43.10 Crores in two joint stock companies and Rs 55.90 Crores in statutory corporations, cooperative banks and cooperative societies.

Out of the six government companies in the State, the Nagaland Sugar Mill Ltd along with the distillery project associated with it (Rs 7.59 Crores investment up to 2001-02) was non-working. It’s accounts were in arrears for 17 years, revealed the report.

Meanwhile, the five working companies which received investment include the Nagaland Industrial Development Corporation Ltd (Rs 8.39 Crore), Nagaland Industrial Raw Materials and Supply Corporation Ltd (Rs 4.05 Crores), State Mineral Development Corporations (Rs 86.20 Crores), Nagaland Handloom and Handicrafts Development Corporation Ltd (Rs 2.82 Crores) and Nagaland Hotels Ltd (R 86.11 Crores).

The accounts of the five working government companies were in arrears for periods ranging between 1 and 9 years, found the CAG audit. “Hence, the actual financial status of the companies as of March 2019 could not be assessed by the audit,” it said.

The report however mentioned that in all five working government companies, accumulated losses of Rs 63.38 Crores had exceeded their paid up capital of Rs 27.26 Crores. This means that their net worth has been completely eroded, it assessed.

In light of this, the CAG recommended that the Nagaland State Government review the working of loss making corporations, companies and cooperative societies and take appropriate action to avoid further financial burdens.

Source: https://morungexpress.com/net-worth-of-5-nagaland-govt-companies-completely-eroded