The function of AVR in the Alternator is to controlled the 
Alternator's voltage by controlling the excitation voltage 
of stator, if The AVR fails on Load  the voltage will be 
reduced to zerro.

Ans: From my real experience the voltage may not come to 
zero, the volltage will fluctuate from one value to another 
it may not constant at any time period. with this frequency 
also increases drastically. due to this there is chance of 
blown down of ACB fuses and coils.

There wont be any excitation to the main field other than 
residual magnetism which is lost drastically(within 
fraction of second) if AVR failed on load.
So voltage grops and may come down to zero.

If AVR fails when there is no load on alternator, the 
residual magnetism will be sufficient to build some voltage 
less than the rated voltage till it exists.

The AVR scheme comes into operation only when there is a 
change in loading.......
we have AVR scheme to regulate the changes in voltage level 
at the alternator terminals, because of change in reactive 
power loading.when AVR fails it will not increase the 
voltage, thats why further decrease in voltage takes 
place ..... which leads to final voltage collapse of the 
system.