J&K Forest Corp faces Rs.250 Cr loss, debt of Rs.396 Cr due to fiscal indiscipline: CAG

The apathetic attitude and financial mismanagement by Jammu and Kashmir State Forest Corporation (J&KSFC) has pushed it into the debt trap and crores in outstanding, as per CAG the Company had accumulated losses of Rs.249.13 crore at the end of March 2020 and outstanding Royalty of Rs.395.67 crore was payable by the Company to State Forest Department for markings of trees.

Audit noticed that appointment of Statutory Auditors was made (December 2004) after a delay of over four years and accounts for the period from 1996-97 to 2003-04 were certified (December 2011) after a delay of 15 years. Further, accounts up to the year 2013-14, for the years 2014-15 to 2016-17 and for the years 2017-18 to 2019-20 were submitted to the Principal Accountant General in October 2015, January 2020 and September 2021, respectively. Audit of accounts for the period from 1996-97 to 2013-14 was conducted in January/ February 2021. As of November 2021, reply to the preliminary audit observations was awaited from the Statutory Auditors of the Company.

The functions of J&KFDC (Company) included removal of trees from forests and their disposal, exploitation of forest resources, undertaking research programmes relating to forest and forest products, rendering technical advice to the Government on matters relating to forestry, management, maintenance and development of forests transferred to it by the Government However, the Company was undertaking only removal of trees from forests and carrying out sale of timber.

Even after carrying out only a couple of functions, the Audit found that Timber/ markings valuing 2.71 crore had become or would become rotten/ unsaleable as these had not been transported by contractors/ Amani mates to the Sale Depots or had not been converted to timber.

As per agenda note placed before the meeting (April 2019) of the Board of Directors, Rs.904.15 crore was payable by the Company to the Forest Department on account of royalty bills against markings of trees handed over to the Company during the period 1979-80 to 2018-19. Against the outstanding of Rs.904.15 crore, the Company paid Rs.381.01 crore and supplied timber to the Forest Department valuing Rs.377.30 crore as of March 2019, thus, leaving a balance of Rs.145.84 crore as of March 2019.

Accounts for 2018-19, however, showed that royalty payable to Forest Department was Rs.395.67 crore. The variation of Rs.249.83 crore was not reconciled by the Company.

There was shortfall in achievement of extraction (converted volume) targets ranging between 13.36 per cent and 33.21 per cent; and extraction (standing volume) was done to the extent of 26.17 per cent and 46.35 per cent of the total markings available leading to accumulation of markings.

Unrealistic criteria were set for categorization of forest area led to incorrect fixation of rates for extraction/ transportation of timber. There was irregular allotment of contracts in contravention to the directions of the BoDs led to undue favour to the contractor.

Also Contractors/ Amani mates had abandoned work without converting the markings valuing 17.61 crore. There was Shortfall in achievement of sales targets ranged between 35.44 per cent and 54.46 per cent during 2015-19.

Contractors/ Amani mates abandoned work leading to markings/ timber valuing Rs.17.61 crore being left unattended in the forest. In 31 cases22, the contractors/ Amani mates failed to execute the work with the result markings of 3.070 lakh cft with expected outturn of 2.22 lakh cft valuing Rs.13.79 crore remained un-attended.
The Management attributed (November 2021) delay/ abandoning of works by the contractors/ Amani mates to upward trends of labour rates and scarcity of labour in general due to developmental activities, reduction in working hours in a day due to security reasons, spread of marking in vast areas in view of dead end marked trees and erratic climatic conditions. They further added that penalties invoked were subject to the circumstances existing in the forest coupe.

The reply is not tenable, as during preparation of the project reports all the variables are to be suitably taken into consideration.

Audit noticed that division-wise targets were not fixed for dale of time and no targets were fixed for 2019-20. Shortfall in achievement of targets during 2015-19 ranged between 35.44 per cent (2015-16) and 54.46 per cent (2016-17). Sales which stood at 23.24 lakh cft during 2015-16 decreased to 18.44 lakh cft during 2019-20. Sales revenue per cft which was Rs.585.64 during 2015-16 increased to Rs.696.21 during 2019-20.

The Management attributed (November 2021) the shortfall in sales revenue to local market demand and that imported timber had taken a chunk of the conifer sale. The Company’s reply was silent with regard.