THIRUVANANTHAPURAM: Kerala State Electricity Board Ltd (KSEBL) appears to be least concerned about the issues repeatedly flagged by its auditors, quarter after quarter.
The auditors have, this time too, qualified KSEBL’s second quarter accounts by stating that the company has presented the financial information in deviation from the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act 2013.
Loss again
KSEBL, the sole distributor of power in the state, reported a net loss of Rs193.75 crore for the quarter ended September 30, 2024.
The company, which has been a habitual loss maker traditionally, had logged a net profit of Rs184.55 crore for the previous quarter that ended June 30, 2024, deviating from the regular performance trend.
The revenue from operations of KSEBL for the second quarter of 2024-25 (FY25) has declined by one-fourth from Rs6,291.32 crore to Rs4,717.32 crore on a quarter on quarter basis (QoQ).
It is pertinent to note that KSEBL’s auditors have once again raised concerns over several issues, but it seems the management has, as usual, failed to address them.
“The repeated qualifications indicate a persistent issue with compliance and governance. Such a pattern reflects poorly on the company’s commitment to regulatory standards and financial transparency,” a chartered accountant with a leading audit firm told businessbenchmark.news.
Several issues flagged
KSEBL auditors highlighted the issue with the retirement benefits of its former employees as a serious matter. “The company has carried out actuarial valuation of the retirement benefits using the work of an actuary and assessed the actuarial loss for the half year ended September 30, 2024 as Rs1,647 crore,” they noted.
The auditors have underlined the need to address the issue regarding reconciliation of the amount classified under deposits for electrification service connections, amounting to Rs637.90 crore as on September 30, 2024.
They added that KSEBL has not recognised the deferred tax liabilities or deferred tax tax assets, if any, as required by the Ind AS 12 (Income Taxes).
Stating that the company has not completed the reconciliation of GST as per the books of accounts and the periodical returns filed, the auditors further added that KSEBL has not complied with the provisions of Ind AS 116 with respect to accounting and disclosure of leases.
“There are material weaknesses in the internal financial controls and financial reporting as reported in the latest audit report. The company has presented the financial information in deviation from Indian Accounting Standards specified under Section 133 of the Companies Act 2013.”
Negative net worth
The company has been carrying a huge negative net worth in its books. As of September 30, 2024, the company’s negative net worth has soared to a whopping Rs33,816 crore. “Negative net worth per se isn’t always a sign of insolvency but can indicate financial distress. If persistent, it may impact a company’s ability to secure financing or maintain operations,” said financial controller of a bank. The borrowings of KSEBL stood at Rs17,313 crore as of September 30, 2024
