THIRUVANANTHAPURAM: The Kerala State Electricity Board (KSEB) has reported a rare full-year profit of Rs623.49 crore for FY25, up sharply from Rs218.51 crore in FY24 – but this headline number may not tell the whole story.
The financial statements reveal that KSEB has admitted to “material weaknesses in internal financial controls on financial reporting,” a serious disclosure that raises questions about the reliability of its accounts.
The admission, tucked into the notes accompanying the annual report, casts a shadow over the utility’s first substantial profit in years.
The full-year profit was largely driven by the March quarter, which alone contributed Rs680.47 crore in profit. The turnaround was powered by a dramatic fall in power purchase costs in Q4 and accounting treatments that cushioned its bottom line.
Finance cost dropped sharply during Q4 and the full year FY25 to Rs457.99 crore and Rs1,781.60 crore compared with Rs1,284 crore and Rs2,409.63 crore respectively for the same periods last year
Though the borrowings have marginally dipped from Rs18,292.89 crore in FY24 to Rs17,620.23 crore towards end-FY25, the overhang of negative net worth continues to be worrisome, having inched up from Rs32,479 crore to Rs33,531.53 crore during the year.
Accounting experts told businessbenchmark.news that the company’s key indicators raise concerns about long-term sustainability and financial transparency.
Power purchase bill drops
Power purchase expenditure in Q4 FY25 fell sharply to Rs2,624.01 crore from Rs3,819.61 crore in the same period last year.
The lower procurement cost, coupled with a tariff revision, was expected to improve revenue – yet KSEB’s Q4 revenue from sale of power dipped marginally to Rs5,279.09 crore from Rs5,449.42 crore, raising questions over actual consumption levels.
Industry insiders point to a shift towards rooftop solar and energy-efficient practices as possible contributors to declining demand.
Compounding the concerns, the financial statements confirm that KSEB has still not adopted Indian Accounting Standards (Ind AS) fully as required under law.
While this is presented as a note rather than an auditor’s qualification, the language – which states that accounts are not Ind AS compliant and that the impact of such deviation is unquantified – closely resembles a “Basis for Qualification” clause.
Red flag
“This is a red flag,” said a senior chartered accountant, requesting anonymity. “You may show a notional profit, but without aligning with Ind AS fully and without strong internal financial controls, the reliability of the entire statement becomes questionable.”
KSEB’s total power purchase cost for FY25 was Rs12,554.73 crore, slightly down from Rs12,982.59 crore in the previous year. The employee costs remained high, with Rs3,823.02 crore spent in FY25 – only a marginal reduction from Rs3,936.71 crore in FY24.
Even as it celebrates a paper profit, KSEB appears far from resolving its deeper structural and financial challenges. Analysts caution that unless long-term reforms, stronger financial controls, and better transparency in reporting are implemented, the utility’s fiscal health will remain fragile.
