Arasu Cable incurred loss worth Rs 8.11 crore

CHENNAI: The report of the Comptroller and Auditor General of India for the year ending on March 31, 2011, tabled in the Assembly on Wednesday,  charged that the Arasu Cable TV Corporation, set up by the former DMK regime, had created unfruitful infrastructure worth Rs 28.28 crore and incurred a loss of `8.11 crore during its three years of commercial operations up till October 2010.The company started its functions with the government’s investment of Rs 25 crore in the form of share capital and a loan of Rs 36.35 crore. The project proposals approved 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 the achievement of anticipated connections (that is, 15.20 lakh cable connections in the first year of operation with five per cent cumulative annual growth).The CAG report observed that operation of Cable TV services within the State was a highly competitive business and dominated by the private multiple system operators like Sumangali Cable Vision and Hathway. As a new entrant in the business, Arasu should have obtained commitment from local cable operators (LCOs) for assured patronage and agreements from popular channels to broadcast their programmes, it pointed out.  However, the company commenced its commercial operations ( in July 2008) without a tie-up with neither LCOs or the channels, leading to its dismal performance, it added.The company procured high cost digital heads at Rs 28.08 crore, considering their clarity and superiority over the conventional analog system. But such clarity of digital signals could be received through cable, especially in the conditional access system (CAS) areas, only through high definition set top boxes, which cost a whopping Rs 142.50 crore. However, Arasu included an investment of Rs 13.75 crore only in the project proposals and later on, it recorded (on March  2009) that it would be impossible to break even considering the investment on the HD set top boxes.The company anticipated a revenue of Rs 241.21 crore in three years till 2010-11,  but earned only Rs 2.48 crore from Aug 2008 to Oct 2010.