Kingfisher Financial Report For Quarter Ended Dec 31,2013 not in accordance with the “Generally Accepted Accounting Standards”

Kingfisher Airlines reported a net loss of Rs. 822.42 crore for the third quarter ended December 31, 2013 and the auditors said the company’s financial results for the quarter ended December 31, 2013, are not in accordance with the “generally accepted accounting standards”.

The Auditors, B.K. Ramadhyani & Co., said the accounting method used by the airline to calculate costs incurred on maintenance and repairs of aircraft was “not in accordance with generally accepted accounting standards prevalent in India.” 

For the nine-month period ended December 31, 2013, losses would have been lower at Rs. 2,636 crore, the report stated.

Kingfisher during this period reported a net loss of Rs. 2,694.89 crore. 

Besides, the Company’s Reserves as on March 31, 2013, would have been debit of Rs. 14,340 crore as against the reported figure of debit of Rs. 14,281 crore, it said. 

The auditors have drawn the attention to Kingfisher’s financial results being prepared on a ''Going Concern Basis'', notwithstanding the fact that the company’s net worth is eroded, the scheduled air operator’s permit issued by the DGCA has lapsed, the Karnataka High Court having admitted petitions by the consortium of bankers and one unsecured creditor for winding up of the company and several other winding up petitions pending before the court.

“These events cast significant doubt on the ability of the company to continue as a going concern,” the report noted.

“The appropriateness of the said basis is inter-alia dependent on the company’s ability to obtain renewal of the permit, infuse requisite funds for meeting its obligations, withdrawal of winding up petitions, rescheduling of debt, other liabilities and resuming normal operations,” they said. 

“Estimates of number of unflown tickets and their average value, based on which management has reportedly estimated the amount of unearned revenue, not being drawn from accounting records, could not be reviewed by us,” the review report said. 

“The company did not have any operations during the period under review in view of the expiry of its Scheduled Air Operator’s Permit. The company has filed necessary application to the DGCA to renew the permit and has been exploring various options to recapitalise and resume operations,” Kingfisher said in a stock exchange filing.