Auditors critcise revival plans of Kingfisher
Kingfisher Airlines invites sharp criticism from auditors over revival - Grounded carrier Kingfisher Airlines' decision to consider it a 'going...
Say recent developments cast significant doubt on the ability of the company to continue as a 'going concern'
New Delhi(PTI): Grounded carrier Kingfisher Airlines' decision to consider it a 'going concern' entity, despite having accumulated huge losses and defaulted on loans, has come for a sharp criticism by its own auditors, given a lack of clarity about its revival plans.
At the same time, the auditors of Kingfisher's parent entity, United Breweries (Holdings) Ltd, have also expressed their concern over the company's significant exposure to the airline, which has been grounded for about ten months now and its flying permit also lapsed long ago. Part of Vijay Mallya-led UB group, Kingfisher has never reported a full-year profit as yet, its accumulated losses have crossed Rs 17,000 crore, net worth has been completely eroded and lenders have recalled loans totalling more than Rs 6,000 crore after repeated defaults.
In their latest 'review report' presented to Kingfisher's board, the auditors said: "These events cast significant doubt on the ability of the company to continue as a going concern". In accounting parlance, 'going concern' entities are generally those that function without any threat of liquidation in the foreseeable future. The auditors said that Kingfisher continues to prepare financial results on a going concern basis "notwithstanding the fact that the company's net worth is completely eroded, the scheduled air operator's permit issued by the Director General of Civil Aviation has lapsed and the consortium of banks have recalled their debt to the company."