CAG points out losses at TANCEM and TANTEA

The report also said that TANCEM failed to obtain environmental clearance for eight out of nine limestone mines taken on lease from the government

According to a detailed analysis done by the Comptroller and Auditor General of India (CAG), the Tamil Nadu Cements Corporation Limited (TANCEM) earned profit only “two out of five years” and incurred losses during the remaining period, primarily due to the payment of a penalty for the extraction of limestone without a permit, the accounting and charging of finance costs, and deprecation in respect of the new plant established at Ariyalur.

Despite incurring losses, the company’s financial management was deficient, resulting in wasteful expenditure or avoidable losses viz, delay in arranging finance for an expansion plant, avoidable import of raw material for a defunct unit, failure to carry forward input tax credit, etc. The audit was conducted between July and December 2020-21 covering the period from April 2016 to March 31, 2021, and was carried out at the Ariyalur and Alangulam units of TANCEM.

Failed to obtain environmental clearance

The report also said that TANCEM failed to obtain environmental clearance for eight out of nine limestone mines taken on lease from the government. It operated mines illegally for the extraction of limestone without a permit, and consequently, it faced penalties and royalty liabilities to the extent of ₹119.61 crore.

K.P. Anand, Principal Accountant General (Audit II), Tamil Nadu and Puducherry, at a press meet on Friday pointed out that TANCEM, the nodal agency for Amma Cement Supply Scheme, was procuring cement from PCMs (Private Cement Manufacturers) without any agreement, and hence, it could not impose any legal action against them for a short supply of the ordered quantity. Instances of misappropriation of cash and shortages of cement were noticed at godown levels.

Delay in completion

A compliance audit on Tamil Nadu Tea Plantation Corporation Limited (TANTEA) showed a delay in the completion of modernisation of factories postponed the realisation of envisaged benefits such as an increase in sales quantity and a reduction in tea waste, fuel consumption, and manpower costs. The detailed report done by the CAG also showed that the per hectare yield of green tea leaves (GTL) of TANTEA was lesser than the district average yield to the extent of 6,846, 12,535 and 18,806 kg per hectare in Nilgiris, Wayanad, and Anamalai regions, respectively, during the five-year period ending 2020-21. The report also noted that despite complaints from the field office, TANTEA procured (2019-22) 44.85 lakh kg of poor quality GTL amounting to ₹9.61 crore, from a private party. The non-implementation of the committee recommendation regarding the reduction of lease rent by government of Tamil Nadu resulted in an additional liability of ₹17.70 crore.

CAG’s audit of Tamil Nadu Sugar Corporation Limited (TASCO) and Perambalur Sugar Mills (PSM) shows that the area registered for growing sugarcane has been declining. The capacity utilisation of the sugar mills was in the range of 54% to 75% of the maximum crushing capacity during the audit period. The actual recovery rate of sugar in respect of TASCO and PSM, ranged between 7.8% and 8.97%, as against the budgeted recovery rate of 8.5% to 9.5%. This has resulted in a loss of revenue of ₹46.29 crore.