By CL Jose
Auditors pick holes in several key aspects of financial statements
KOCHI/January 12-2022: The state’s power generator (or the power broker?), Kerala State Electricity Board Ltd (KSEBL), continues its loss-making streak through years with the loss for 2020-21 (FY21) surging 6.76 times to Rs1822.35 crore compared with the previous year’s loss of Rs269.55 crore.
As if this wasn’t enough, the auditors have picked holes in several aspects of the KSEBL financial statements, and have gone to the extent of concluding that the FY21 loss of the company is unlikely to stop at Rs1822.35 crore, and could very well rise to Rs2512.74 crore.
In a serious observation made by the auditors, it was noted that the impact of the matters listed in a couple of paras in the FY21 financial statements, has resulted in the understatement of loss and overstatement of “Retained Earnings” of the company by Rs690.39 crore in FY21.
“Accordingly, in the Statement of Profit & Loss (P&L), the loss before tax”, loss for the period from continuing operations or loss for the year ought to have been Rs2,512.74 crore as against the currently reported loss of Rs1,822.35 crore,” they explained.
The power minister of the state, K Krishnankutty, has recently stated that the tariff will likely be hiked by 10 per cent by April this year with a view to bridling the deteriorating KSEBL finances to an extent.
Negative net worth
Mind you, today KSEBL sits on a huge negative net worth of Rs11,089.53 crore against a share capital of Rs3499.05 crore, a substantial worsening from Rs8,605.38 crore (negative net worth) a year ago.
Thanks to the continual loss-making the company has been witnessing all these years without fail, the negative net worth kept ballooning.
No let up in borrowings
Total borrowings of the company have reached Rs15,716.79 crore as on March 31, 2021, as per the financial details revealed by the company.
It seems the ‘devil is hiding in the details’ of the financial statements. In fact, the auditors have cast doubt on several areas of the company’s financial statements.
They have laid bare serious inconsistencies with regard to several seminal aspects of the company’s financial statements, especially those related to the valuation of plants and fixed assets, accounting norms to be followed, etc.
The company said, “The impact of COVID 19 in the power sector and increase in employee cost consequent to the pay revision effected with retrospective effect from 2018, contributed a steep increase in loss during the year 2020-21”
The company that generates about 30 per cent of the state’s power requirements and intermediates for the purchase of the remaining 70 per cent, turned in a total income of Rs15,169 crore including an ‘other income’ to the tune of Rs748.76 crore during 20-21.
KSEBL, on the other hand, incurred a total expenditure of Rs16,973.13 crore during the same period, thus effectively landing the company in ‘red’.
The largest expense of the company as anyone could guess, was on account of purchase of power – at Rs8,057.93 crore eating up 47.50 per cent of the total expense.
The company that carries a growing borrowing portfolio handed out an attractive largesse to its employees, a ritual any government entity is obliged to follow as long it’s alive.
While the total Employee Benefit Expense soared 69.10 per cent to Rs5153.17 crore from Rs3047.48, most of this came from the 84 per cent or Rs2116.64 crore salary increase (as part of the revision) from Rs2513.10 crore to Rs4629.74 crore effected during 2020-21.
KSEBL’s total assets have grown to Rs35,677.89 crore during the period under review, a slight increase from Rs34,355.11 crore last year.