By CL Jose
With guaranteed profit, KMML is now PSUs’ Saving Grace
KOCHI/April 04-2022: It has become a regular refrain from the industries minister or finance minister during the initial days of April, every year, that the state PSUs (manufacturing) have performed much better than that in the previous year.
There was no exception to the ritual this time too. The industries Minister P Rajeeve, the other day, announced that several companies from the state’s public sector (manufacturing) have staged smart performance in 2021-22.
Other than those in the Government, no one would have a clue as to how these PSUs had peformed in the just-concluded financial year, as the websites normally have years-old financial details, let alone mention about the just-concluded financial year.
Citing numbers, Rajeeve said the combined profit of the PSU companies has jumped by Rs273.38 crore to Rs384.60 crore in 2021-22. But why hide the fact that more than 85 per cent of this aggregate profit has been contribituted by KMML alone, at Rs332.20 crore?
The industries minister, who is hell-bent on reviving the industries in the state, also added that four more PSUs joined the list of profit-making firms. “There is an increase in the turnover of a majority of PSUs. We expect more PSUs to record positive growth and attain profit margin in this fiscal,” he further said
KMML contributes 85 pc of aggregate profit
As has been explained, Kerala Minerals and Metals Ltd (KMML) has generated an operating profit of Rs332.20 crore for FY22 (as revealed by the minister).
Moreover, as experts put it, KMML being a special case, has its own unique reasons for the uninterrupted track record of profit-making for years together. Year after year, the respective governments have been piggybacking KMML to brag about the PSU (manufacturing) companies’ profitability.
The profits the governments have been claiming to have earned by these PSUs are operating profit, which has a long way to go to get translated into net profit as our PSU companies are mostly highly leveraged, and in many cases, these are companies with huge negative net worth.
Businessbenchmark.news tried to walk through the financials of those PSU (manufacturing) available on the public domain. In many cases, auditors have flagged serious shortcomings in thier financial statements.
Many of these PSU companies do not bother to post their financials in their website, and whoever elect to report them, do it with a lag of one year or even more.
Delving deeper into the financials of these PSUs reveals a lot more, invariably proving that the ‘devil is in the detail’.
Financials in public domain
The financials of KMML are not accessible though the website is alive. Even otherwise, the company never posts its full financial reports on its website as it prefers to highlight some salient numbers of the financial performance.
In the case of Travancore Cochin Chemicals Ltd (TCCL), though the website does open, only details regarding tender and other day-to-day operations are available.
Trivandrum Titanium Products Ltd (TTPL)
The company has reported a loss of Rs36.37 crore for the financial year 2020-21 (FY21) compared with a lesser loss of Rs6.9 crore for the previous year.
TTPL with a share capital of Rs13.77 crore has already piled up a huge negative reserve of Rs84.41 crore, meaning that the capital base has already vanished and the company currently sits on a negative net worth of Rs70.64 crore.
It has borrowings to the tune of Rs19.25 crore, mostly long term. Even if the company has earned a small operating profit for FY22, as is reported, it will not come to assuage the huge negative net worth the company has been carrying in its books.
Keltron Components Complex Ltd
The latest annual report available for this PSU company is of 2019-20 (FY20). Though the company could earn a net profit of Rs2.79 crore for the financial year 2019-20, a relatively large accumulated loss at Rs48.44 crore is staring at the company.
Serious remarks from auditors
The auditors of Keltron Components Complex have raised serious doubts about its FY20 financials and have gone to the extent of making ‘qualified opinion’ on the FY20 accounts, casting doubts on their financial statements.
Keltron Components, which attracted Rajeeve’s mention this time, will have to deal with a negative net worth to the tune of Rs7.81 crore.
Malappuram Cooperative Spinning Mills, another company, which is said to have done well according to the Industries Minister, has also not uploaded any relevant details on its website.
Steel Industries Kerala (SILK)
Though no financial details are available, under the ‘Message from Our Leaders’, it’s stated, “By 2025-30 SILK needs to be a 500-cr company with world-class production of fabrications and casting.”
With regard to Priyadarshini Spinning Mill Ltd, the latest annual report available was that of 2014-15.
Kerala Ceramics Ltd
The company, which has generated a total revenue of Rs9.81 crore for FY21 has incurred a total expense of Rs9.31 crore and arrived at a profit before interest, depreciation and tax of Rs49.80 lakh – which can be called operating profit.
But its finance cost on its substantial loan is Rs7.73 crore which landed the company in a net loss of Rs9.62 crore against a lesser loss of Rs6.78 crore for the previous year.
Adverse Opinion
More serious is the fact that the company’s financial statements have drawn ‘Adverse Opinion’ from its auditors, which is looked down upon by the investment community.
The auditors have stated, “The accompanying financial statements [for FY21] do not give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company, as at March 31, 2021, of its loss and the cash flows for the year then ended.”
The company with a share capital of Rs4.94 crore has lost its capital due to a larger negative net worth of Rs9.5 crore.
No relevant details, let alone financials, were available on the websites of Malabar Cooperative Textiles Ltd (MALCOTEX) and Metal Industries Ltd. In the case of Trivandrum Spinning Mills, even the site is not accessible.
