Financial Daily from THE HINDU group of publications
Monday, Sep 09, 2002
Financial Daily from THE HINDU group of publications Monday, Sep 09, 2002 |
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Corporate
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Auditing Audit firm qualifies Apollo Tyres accounts K.R. Srivats
NEW DELHI, Sept. 8 THE statutory auditor of the Rs 1,710-crore Apollo Tyres has qualified the financial statements of the company for the year ended March 31,2002 over the accounting treatment adopted in writing off advances amounting to Rs 32.70 crore. "The company has written off advances aggregating Rs 32.70 crore to profit and loss account. It has also transferred an equivalent amount to profit and loss account from general reserve, resulting in nil impact on the profit for the year on account of such write-off. Had the write-off not been set off against the transfer from general reserves, the profit for the year before and after tax would have been lower by Rs 32.70 crore with a corresponding increase in general reserve," said the audit firm Fraser & Ross's report to the members of ATL. The company had reported net profit of Rs 36.81 crore on net sales of Rs 1,710.14 crore for the year ended March 31, 2002. ATL had recorded net profit of Rs 25.42 crore on net sales of Rs 1,454.70 crore for the year ended March 31, 2001. ATL, as principal guarantor and main promoter of Gujarat Perstorp Electronics Ltd (GPEL), had advanced Rs 32.70 crore to financial institutions and banks of GPEL towards "one-time settlement" of their dues as well as towards working capital requirements of GPEL in accordance with the draft rehabilitation scheme that was finally approved by the Gujarat High Court/BIFR during the year. This amount of Rs 32.70 crore has been written off by ATL to the profit and loss account as the company is not hopeful of their recovery and an equivalent amount has been transferred from general reserve. The board of directors of ATL have, in their directors' report, observed that "the board decided to write off the advance of Rs 32.70 crore by transfer from general reserve instead of against the current year's profit. Since the write-off was an exceptional item arising out of the company's obligation as a promoter and principal guarantor of term loans of GPEL and accordingly the profits as stated in the accounts are correctly stated."
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