The Comptroller and Auditor General of India (CAG) has termed the performance of the Arasu Cable TV Corporation set up by the Dravida Munnetra Kazhagam Government in October 2007 “dismal” on two major counts—revenue and consumer base.

“The company which anticipated a revenue of Rs 241.2 crore in three years of operation up to 2010-11,actually earned only Rs 2.48 crore from October 2008 to Oct 2010. Even out of this small amount, the company could not realise Rs 95.5 lakh from Local Cable Operators till November 2010,” the report said.

The report further added: To earn this revenue, the company incurred Rs 10.59 crore ( being the payments made to pay channels Rs 2.71 crore, lease charges for fibre cables Rs 2.16 crore and establishment, rent and other incidentals Rs 5.72 crore. Thus the overall operations of the company resulted in a cash loss of Rs 8.11 crore”.

The CAG said that the project proposals approved (July 2008) by the Government indicated that the company's estimated project cost of Rs 91.59 crore would be paid back in four years and three months, subject to achievement of anticipated connections—15.20 lakh connections in the first year of operation with five per cent cumulative annual growth.

But the patronage proved a damp squib. The report is quite damning in this regard.

It pointed out that after installation of the digital heads, “the company started with a baby step and procured a consumer base of only 34,350 in August 2008 which expanded to 55,705 in October 2010. But it could not expand further due to non-availability of popular channels”.

The report observed that the company ventured into a highly competitive business and commenced its commercial operations immediately after the clearance of the proposal by the project investment committee in the same month. However, “in the absence of proper strategy to procure telecasting rights of popular channels and increase the consumer base and firm agreements with local cable operators for assured patronage resulted in a cash loss of Rs 8.11 crore, besides unfruitful creation of infrastructure worth Rs 28.28 crore.”

It also said that the Government stated (August 2010) that its aim of formation of this company was not to augment the revenue but to provide high quality television signals at a reasonable cost to public. The fact, however, remained that even this objective was not achieved as the company did not make headway in enlarging the customer base as envisaged till November 2010 resulting in “continued poor performance”.