Calcutta, Sept 23: Titagarh Industries Ltd remained in the black during 1998-99 by adjusting bad debts against general reserve and not provisioning for the fall in the value of its investments. Net profit for the year to March 31, 1999, fell by half to Rs 2.03 crore from Rs 5.54 crore the previous fiscal. Total turnover declined to Rs 59.73 crore from Rs 97.16 crore in 1997-98.
The latest turnover included an other income component of Rs 1.58 crore, earned mainly through interest, profit on sale of assets and miscellaneous income.
Statutory auditor Salarpuria & Partners have commented on accounting policies like writing-off bad debts against general reserve, not provisioning for dimunition in investment value and not writing off certain overdue loans.
Titagarh adjusted Rs 2.39 crore worth of bad debts by withdrawing a similar amount from its Rs 46.71 crore general reserve.
The company maintains that it has written off the debts based on one-time negotiated settlement arrived at by drawing corresponding amount from general reserve.
The auditors were unable to comment on the consequent impact on account of non-provisioning for dimunition in the value of the company's investment portfolio.
According to the notes to the accounts: ``In the opinion of the Board, the carrying amount of long-term investments, when compared against their market values and/or intrinsic values as applicable shows a shortfall amounting to Rs 575.74 lakh which is not permanent in nature.''
Titagarh's total loan component increased by 17 per cent during fiscal 1998-99 to Rs 339.27 crore from Rs 299.63 crore mainly on account of a 22 per cent increase in secured loans. Its secured loan component increased to Rs 226.27 crore in 1998-99 from Rs 185.62 crore in the previous fiscal.
The company has stopped charging interest for Rs 8.58 crore loans advanced by it to other parties. According to the notes to accounts, the company ``...has suspended levying of interest on such loans amounting to Rs 97.31 lakh...''
Its list of contingent liabilities include:
disputed sales and turnover tax of Rs 1 crore; claims by CESC towards fuel surcharge of Rs 45.93 lakh; various pending suits before several courts and fora amountinmg to Rs 61.40 lakh; and interest for non-payment of instalments of funded interest on one-time settlement dues of the financial instutions, which at present is not ascertainable.The auditors pointed out that company has no other dues except Rs 4.76 lakh sales tax outstanding.
In a bid to conform to the accounting standards as laid down by the Institute of Chartered Accountants of India, the company changed its policy of valuing its finished goods from selling price to cost price or estimated realisable value.
The management noted that due to this change, profit for the year and net assets are lower by Rs 77.15 lakh.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.