Arasu puts up dismal revenue performance: CAG

NEW DELHI: Even as the Tamil Nadu Government imposed taxes on DTH in a move to help the Arasu Cable Corporation, the Comptroller and Auditor General of India termed the performance of the corporation as "dismal" on two major counts—revenue and consumer base.

"The company which anticipated a revenue of Rs 2.412 billion in three years of operation up to 2010-11 actually earned only Rs 24.8 million from October 2008 to October 2010. Even out of this small amount, the company could not realise Rs 9.55 million from local cable operators till November 2010," the report said.

"To earn this revenue, the company incurred Rs 105.9 million in payments made to pay channels (Rs 27.1 million, lease charges for fibre cables Rs 21.6 million and establishment, rent and other incidentals Rs 57.2 million). Thus the overall operations of the company resulted in a cash loss of Rs 81.1 million", it is stated.

The CAG said that the project proposals approved (July 2008) by the state Government indicated that the company‘s estimated project cost of Rs 915.9 million would be paid back in four years and three months, subject to achievement of anticipated connections—152 million connections in the first year of operation with five per cent cumulative annual growth.

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 81.1 million, besides unfruitful creation of infrastructure worth Rs 282.8 million."

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".

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