Auditors frown at Dunlop a/cs

The auditors of Dunlop India Ltd (DIL) have expressed their concern over the authenticity of the balance sheet and profit & loss account of the company.

DIL had recorded a Rs32 crore net profit but in its report to shareholders, Dunlop's auditors, Lodha & Co, stated, "We are unable to express our opinion on whether the balance sheet and profit & loss account are in agreement with the books of accounts, and whether the said accounts give a true and fair view in conformity with the accounting principles generally accepted in India."

Nevertheless, DIL reported Rs 9.19 crore as income while operating loss was around Rs 10.99 crore.

This was against a net profit of Rs 32.67 crore. Dunlop had entered into settlement with banks and financial institutions over liabilities towards cash credit, overdrafts, debentures and employees at its Ambattur factory.

It stated as a result of the arrangement full and final settlement with respect to its entire outstanding were arrived at and payments there-against were made.

Necessary steps for vacating the charges where applicable against the assets were being taken by the company. Consequent to this the relevant excess provisions amounting to Rs 55.14 crore and Rs 17.89 crore respectively were written back in the accounts leading to the profit that was higher than the turnover of the company.

The auditors mentioned there was non-reconciliation with subsidiary balances, non-maintenance of liquid assets, non-submission of requisite returns, non-payment of dues, as a result DIL has not complied with directives issued by RBI and under the Companies Act with regards to deposits accepted from the public.

The company also did not carry out internal audit due to suspension of operations at both its plants.