SHILLONG:
The state government has continued to extend financial assistance to Meghalaya Mineral Development Corporation Limited (MMDC), which has stopped its commercial operations for the past many years.
All commercial activities were stopped with effect from March 2012 and MMDC had not earned revenue from operations since 2012-13, said the Comptroller and Auditor General of India (CAG) in its report on social and economic sector for the year ended March 31, 2020
On scrutiny of records of MMDC in March last year, Audit observed that since 2011-12, the company had been fully dependent on the grant-in-aid (GIA) for making payment of salary and other emoluments to its employees and the chairman and vice-chairman.
It said though the company had stopped its commercial operations since March 2012, it continued to incur expenditure on administration and salary of staff.
“During the last five years, 60.67% i.e. Rs 6.35 crore out of the total expenditure of Rs 10.30 crore was incurred towards payment of salary to the staff (at Rs 5.51 crore) and perks and facilities to the chairman and vice-chairman of MMDC (at Rs 0.74 crore). Whereas, revenue from operation of the company during the same period was nil,” the CAG said.
“Despite of the fact mentioned above, the government of Meghalaya has not initiated any steps to revive or liquidated the company, instead it continues to pump financial assistance from state’s annual budget. This, resulted in draining of the state coffer to the tune of Rs 10.12 crore during the period from 2015-16 to 2019-20,” it stated.
The MMDC is a state company incorporated under the Companies Act, 1956.
The primary objective (core activities) of MMDC is to explore mine, develop, process, trade in mineral and mineral products and to acquire mining rights by obtaining licenses/leases from any state government and to promote, subsidise or otherwise assist any company (ies) or any other concern within or outside the state for the purpose of prospecting/mining of mining of minerals by leasing or subleasing.
As per the notification dated May 2020, the company had seven BoDs including Director & Member Secretary who is also the Managing Director to exercise control over the day to day activities of company’s administrative and financial matters.
The commercial operations of MMDC commenced in 1989 with canalisation of export of coal to Bangladesh which was stopped after decentralisation of coal trade in 1993.
The company while accepting the Audit observation stated in October last year that, they are actively working to revive the company and in January last year have entered a lease agreement for land at prime location to allot seven acres out of twelve acres to private parties for lease rent of Rs 80.49 lakh per annum. Further, other joint ventures are in clearance stage.
Audit however was of the view that, leasing of land for rent is not a core activity for which the company has been formed. Further, income of expected lease rent mentioned above is not even sufficient to meet staff salary.
Thus, budgetary support for continuation of the company which has stopped its commercial operations since March 2012 is a drain on public exchequer and needs to be reviewed.
Meanwhile, the CAG has recommended that the department may review the operations of MMDC with a view to either restructure the company to make it profitable, or wind it up if not found viable.