Auditors of low-cost airline SpiceJet have cast doubts over the company's ability to stay afloat as its accumulated losses have eroded its net worth.
In a limited review report to SpiceJet directors, S R Batliboi & Associates said accumulated losses of Rs1,077.81 crore as of December 31 have "substantially" eroded the company's net worth, raising questions about the company's ability to continue as a "going concern" as per a report in ET by Manisha Singhal.
SpiceJet, whose net worth stood at Rs315.83 crore in December, has a market-cap of Rs1,108 crore. Shares in SpiceJet closed at Rs24.60, down 0.40% on BSE on Monday. The Kalanithi Maran-owned airline on Monday reported a loss ofRs39.3 crore for the three months to December as against a profit ofRs94.44 crore a year ago.
The third quarter is traditionally the strongest for airlines in India. The auditors said the losses would have gone up further had SpiceJet made a provision for interest relating to earlier years on the outstanding inter-corporate deposits which the Gurgaon-based airline has under-reported.
The auditors also said SpiceJet has not accounted for the foreign exchange differences on borrowings to the extent they are regarded as an adjustment to interest costs. SpiceJet is among the three listed Indian carriers (of a total of six scheduled commercial airlines) whose health is being questioned by auditors.
Chief executive officer Neil Mills said that differences on account of foreign currency borrowings will be corrected soon.
But Mills also said the airline is considering recapitalisation options though they are in a comfortable position as a going concern and the airline will be able to raise funds as and when required but it is not going to raise funds in a hurry.
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