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HindustanTimes Fri,31 Oct 2014

Auditors cast doubts on SpiceJet's survival

HT Correspondent , Hindustan Times  New Delhi, August 15, 2014
First Published: 23:43 IST(15/8/2014) | Last Updated: 23:45 IST(15/8/2014)

Auditors of India's second-largest low-cost carrier, SpiceJet, have raised red-flags over the company's "going concern" status.

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A company is typically known as a "going concern" if it has sufficient resources to continue to operate indefinitely and to avoid any potential bankruptcy risks.

The company's statutory auditors SR Batliboi and Associates LLP said that SpiceJet's total liabilities exceeded its total assets by Rs. 1,145.58 crore as on June 30. "These conditions, along with other matters...indicate the existence of a material uncertainty that may cast doubt about the company's ability to continue as a going concern," the auditor said.

SpiceJet reported fourth straight quarterly loss of Rs. 124 crore loss for the quarter ended June against a net profit of Rs. 50.56-crore last year. It had posted a loss of Rs. 1,003 crore in 2013-14.

HT had reported on August 8 that the company's promoter Kalanithi Maran is in talks with potential buyers to sell his majority stake in the airline. The promoters hold 53.48% stake in the airline and have initiated discussions with former SpiceJet director and co-founder Ajay Singh and a clutch of private equity players for buying out Marans's stake.

"No provision has been made for interest of Rs. 747.1 lakhs up to June 30, 2014, relating to earlier years on the outstanding inter-corporate deposits taken by the company. Had the same been accounted for, the net loss for the quarter ended June would have been higher by Rs. 747.1 lakhs, and the accumulated losses as at that date would have been higher by the same amount," the auditors said.

The airline said it had availed a loan of Rs. 75 crore from Maran.

The airline's revenue dropped less than 1% to Rs. 1,691.04 crore in the June quarter from Rs. 1,701.54 crore last year while its expenses rose to Rs. 1,782.95 crore from Rs. 1,641.93 crore a year ago.


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