THIRUVANANTHAPURAM: For Kerala State Electricity Board (KSEB), audit qualifications have become an almost mechanical feature of its quarterly financial reporting.
Auditors qualifying accounts of a company is serious, as it amounts to auditors expressing concerns about how the company has presented the accounts.
With the March quarter (Q4 FY25) once again carrying a familiar qualification from its statutory auditors over deviations from Indian Accounting Standards (Ind AS), the big question is no longer about what the qualification says, but why nothing is being done to resolve it.
KSEB’s Q4 interim results carry a qualification that has been echoed in previous quarters. The auditors have once again drawn reference to the company presenting financials in deviation from Ind AS, leading to under- or over-statement of losses and impact on assets and liabilities, the extent of which even the company is unable to quantify.
This is not an isolated observation. The same concern has been flagged quarter after quarter. Yet, neither the KSEB management nor the Government of Kerala, its owner, appears to be taking concrete steps to bring the company into compliance.
A governance vacuum?
The consistency of this qualification suggests more than a technical lapse. It points to a systemic failure in financial management and internal controls. More troubling is the apparent silence of the state government, which has a responsibility to ensure its public-sector undertakings maintain credible financial practices.
When a state-run monopoly in a critical sector like power consistently deviates from national accounting standards – and cannot even assess the financial impact – it raises serious questions about transparency and accountability.
Where are the regulators?
Despite the auditors citing deviations from Section 133 of the Companies Act and guidelines from the Department of Public Enterprises (DPE), there has been no visible regulatory response.
For a company of KSEB’s size and importance, this is not just a compliance issue but a matter of public trust. One has to remember that this public utility company, fully owned by the state government, carries a whopping negative net worth in excess of Rs33,000 crore and borrowings to the tune of about Rs17,500 crore as of March end, 2025.
How accurate are KSEB losses?
KSEB has been reporting losses nearly every quarter for the past few years, barring a few. But with its own financial reporting deemed unreliable due to persistent accounting deviations, how accurate or meaningful are these reported numbers?
Time to act
While audit qualifications are not uncommon in India’s PSU landscape, the persistence of this particular issue – and the state’s lack of urgency in resolving it – make KSEB’s case especially concerning. It is time for the state government to break its silence and institute a credible plan to bring the power utility’s financial reporting in line with national standards.
If not now, when?
