Bangalore, Feb. 5:
The auditors of Vijay Mallya-owned Kingfisher Airlines have said that
the carrier’s third quarter losses would have been Rs 1,090.34 crore, against
the reported loss of Rs 755.17 crore had it followed “generally accepted
accounting standards.”
The auditors, in their review report for the third quarter of 2012-13,
have repeatedly questioned certain practices followed by the airline which,
they said, falls foul of accounting standards prevalent in the country.
The airline, in a statement to the Bombay Stock Exchange on Tuesday,
said its third quarter losses grew 70 per cent to Rs 755.17 crore (Rs 444.26
crore similar previous period) for the current fiscal.
Accumulated debt
This was largely because of higher finance costs of Rs 401 crore and a
one-time cost of Rs 275 crore on re-delivery of aircraft (which will reduce
lease rentals and other related costs going forward, the company claimed).
Following the results, the airline’s share closed at Rs 12.24 on the
BSE, down 2.39 per cent.
The airline, which has never reported profits since its inception, did
not report any revenues for the quarter as it has suspended its operations. For
the October-December quarter in 2011-12, it reported revenues of Rs 1,367.71
crore. The airline’s accumulated debt is around Rs 8,000 crore, with a similar
amount as net loss. It has also not paid salaries to its over 3,000 employees
since last June. Meanwhile, Kingfisher Airlines has said it has made
significant progress towards complying with the DGCA requirements.
In their limited review report, auditors B.K. Ramadhyani & Co said
the methods of accounting for costs incurred on major repairs and maintenance
of aircraft is not in accordance with generally accepted accounting standards
prevalent in India and “ought to have been recognised in the statement of
profit and loss as and when incurred.”
The auditors said the company has prepared the financial results “on a
going concern basis,” notwithstanding the fact that the company’s net worth is
eroded.
They noted that the revival of the airline depends on its ability to
renew its licence with the DGCA, infuse the funds necessary to meet its
obligations, rescheduling of debt/other liabilities and resuming normal
operations.
Reserves amount
The reserves as of March 31, 2012 should have been a debit of Rs
10,460.90 crore, against the reported figure of debit of Rs 6213.14 crore, the
auditors pointed out.
They said the estimated of number of unflown tickets and their average
value, based on which the management has reportedly estimated the amount of
unearned revenue, not being drawn from accounting records, could not be
reviewed by them.
http://www.thehindubusinessline.com/todays-paper/tp-corporate/kingfisher-airlines-posts-rs-755cr-loss-in-q3/article4383383.ece
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