The Jammu and Kashmir Projects Construction Corporation (JKPCC) Limited came up for sharp criticism from the Comptroller and Auditor General (CAG) for its poor performance and failure to finalise its accounts amid sharp decline in the value of works from Rs 364.19 crore in 2012-13 to Rs 250.65 crore during 2016-17.
The public sector undertaking (PSU) firm was dependent on the state government departments or agencies for works on nomination basis and had failed to secure any work on competitive tender basis, the CAG said in its report on revenue sector and PSU (social, general and economic sectors) on the government of J&K for the year ending March 31, 2017, which was tabled in Parliament this week.
JKPCC was incorporated with the objective of execution of construction works for the state and central governments and PSUs, carry on the business of builders, contractors, engineers, architects, surveyors, estimators and designers in J&K and curb monopoly of private contractors and provide healthy competition between private and public sectors.
"The company had finalised its accounts up to 2010-11 only. The value of works done decreased from Rs 364.19 crore during 2012-13 to Rs 250.65 crore during 2016-17. It suffered loss of Rs 3.95 crore and Rs 11.69 crore during 2014-15 and 2015-16, respectively, the report said.
It said the shortfall in achievement of targets of value of works done remained between 29 and 50 per cent. "Funds ranging between 58.52 per cent and 75.55 per cent only were utilised on works during 2012-17".
The report said the service tax of Rs 5.14 crore paid in excess had neither been reconciled nor refund thereof received.
"The company had not submitted revised cost offers, to the extent of Rs 22.66 crore, to reflect enhanced rate of service tax and made payment of service tax at the enhanced rate without actual recovery of Rs 3.45 crore from the project authorities," the report said.
It said the company was dependent on the state departments and agencies for works on nomination basis and had failed to secure any work on competitive tender basis.
"The quantum of new works obtained declined during 2012-16 from Rs 349.48 crore to Rs 236.03 crore, but increased during 2016-17 to Rs 696.64 crore. Execution of works in excess of the funds released by the project authorities led to accumulation of outstanding balance of Rs 188 crore as of March 2017 and loss of interest of Rs 26.56 crore," it said.
The delay in completion of works led to increase in cost to the extent of Rs 360.87 crore which was mainly due to poor monitoring by company and slow progress.
It said the company had not framed any recruitment and promotion policy and staff had been deployed at different units in an ad hoc manner. The report said JKPCC did not devise any mechanism for ensuring continuous monitoring and internal control.
"Weak quality control, inadequacy of internal audit and variations amongst performance reports were observed," the report said.
Jammu and Kashmir had 30 working PSUs (27 companies and three statutory corporations) and three non-working PSUs.
The working PSUs recorded a turnover of Rs 8,357.91 crore as per their finalised accounts as of September 30, 2017.
As on March 31, 2017, the investment (paid-up capital, free reserves and long-term loans) in 33 state PSUs and statutory corporations was Rs 7,426.67 crore, the report said adding the power sector accounted for 43.47 per cent (Rs 3,228.68 crore) of the total investment as on March 31, 2017.
The total investment consisted of 21.70 per cent towards paid-up capital and 78.30 per cent as long-term loans, it said.
It said the investment has grown by 45.08 per cent from Rs 5,119.04 crore in 2012-13 to Rs 7,426.67 crore in 2016-17.