Ceat Auditors Question Investments

In their latest report, the auditors have refrained from expressing an opinion on the realisation potential of investments in convertible debentures and certain loans/deposits to companies aggregating Rs 93.50 crore.

The reservations are on account of the significant diminution in net worth and losses suffered by these companies and non-withdrawal of loans/deposits repayable on call.

The auditors have also expressed reservations on various investments/loans by Ceat, including Rs 9.21 crore recoverable from RPG-Ricoh and investments in zero-coupon debentures of subsidiary/associate companies. The Ceat management has said the investments/loans are realisable.

The audit report has pointed out that provisions have not been made for depreciation amounting to Rs 19.92 crore in the value of investments, and for doubtful loans and advances amounting to Rs 4.43 crore.

 

Reconciliation of stocks is also pending in respect of one sales division, inter-factory transfers etc., the report says.

They impact of pending reconciliation and analysis on the profit for the period is not ascertainable, the auditors have said.

The Ceat management said the inadequacies in its financial statement were being rectified and that the diminution in the value of investments was a temporary market phenomenon.