Kingfisher needs more funds to remain 'going concern': Auditors
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Auditors of Kingfisher Airlines, which posted a net loss of Rs 444.26 crore for the third quarter of this fiscal, have once again raised concern over its ability to stay afloat and said it would need to inject more money to remain a "going concern".
"... the financial statements being prepared on a going concern basis, notwithstanding the fact that the company's networth is eroded. The appropriateness of the said basis is inter-alia dependent on the company's ability to infuse the requisite funds for meeting its obligations," BK Ramadhayani & Co said in its report.
'Going concern' means that the firm in question would not go broke or be liquidated and remain operationally afloat in the foreseeable future. Their noting came in the wake of Kingfisher promoter Vijay Mallya claiming that the latest financial statement had been based on the premise that "the company is a going concern".
In the same note to the shareholders, Mallya however said, "The company has incurred substantial losses and its net worth has been eroded". Kingfisher Airlines' net loss widened to Rs 444.26 crore for the quarter ended December 31, 2011 due to high fuel costs and weaker rupee from Rs 253.69 crore in the October-December quarter in the last fiscal, the company informed the BSE.
"Steep depreciation of the Indian rupee coupled with consistently high crude oil prices has led to a challenging quarter for the Indian aviation industry," Kingfisher said.
The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs 6,000 crore.
In the notes to the unaudited financial results announced today, Kingfisher Airlines Chairman and Managing Director Vijay Mallya assured shareholders that its agenda for the coming fiscal should help the company stay going, even as he accepted that its networth has eroded due to substantial losses.
"(This is) having regard to capital raising plans, group support, the request made by the company to its bankers for further credit facilities, planned reconfiguration of aircraft and other factors. These interim financial statements have been prepared on the basis that the company is a going concern and that no adjustments are required to the carrying value of assets and liabilities," Mallya said in the report.
The company's income from operations also declined to Rs 1,342.32 crore in the quarter ended December 31, 2011 from Rs 1,583.43 crore in the same period last fiscal, it said.
However, shares of the company closed looking upwards by 0.75 per centat Rs 26.95 on the BSE.