Auditor of Kingfisher Airlines expressed their opinion on the
financial performance of Company for Q1, FY2012, deep concerns about
the Company continuing as a Going Concern.
Notwithstanding, several accomplishments achieved, the financial
losses has taken a toll on the company, considering no profit ever
been posted since its inception in 2003. With the Auditors, M/s BK
Ramadhyani Co. questioning the Companies' ability to continue its
operations in foreseeable future!! Auditor mentions Kingfisher need to
infuse more funds in order to continue its operations smoothly. The
Company is delaying payment of salaries to its employees for the month
of July. Considering incredible increase in Aviation Turbine Fuel(ATF)
which
forms big portion of Expenditure of KFA, other Operating
Expenses, including airport charges, promotion, Marketing, ticketing
through third party, General and Administrative, Passenger Services
including all expenses incurred for the provision of passenger
services, inc. cabin crew; accident insurance, Misc. Operating
Expenses. Income of KFA has seen an increase of 23%, stands at Rs.
649,556.23 (Lakhs) whereas the Expenditure incurred comes out to be
Rs. 790,927.15(lakhs) for the FY2010-2011.
After taking into consideration, Loss incurred by foreign exchanged
translation difference, other exceptional items and Tax Items, Loss
for the FY2010-11 comes out to be Rs. 102,739.80(Lakhs) as against Rs.
164,722.06(Lakhs) loss incurred in FY2009-10, (-37%) signifying cost
reduction measures, like benefit of Debt Recast Package even though
fuel costs have been witnessing increase over past months, with fuel
cost hovering around $100 per barrel.
Debt restructuring, Nov. 25, 2010
Rs 8000 cr, with all lenders agreeing to cut interest rates and
convert part of loans to equity.(Debt to Equity). Debt Recast
Package(DRP) has to be approved by all the lender yet..
Further, Rs 650 crore of debt would be converted into Pref Shares
which will later be converted into Equity, by selling of GDRs once Co.
gets listed in Luxembourg Stock Exchange.....(Note : Why Debt to Pref
Share to Equity?)
Problem which Kingfisher is facing is that as per norms, applicant
company seeking permission of Govt. should have a clean track record
and also good financial performance for last 3 years. Indian financial
regulators are considering imposing stringent regulations on Ind
Companies issuing GDRs. A depository receipt is a negotiable
instrument issued abroad, often in lightly regulated markets such as
Luxembourg, to represent underlying domestic shares, making it easier
for foreign investors to take an exposure to the issuing company
without moving money across borders. According to Bloomberg data,
there have been 457 overseas GDR listings by Indian companies since
1993. (FI)
Further, continuing our talk about debt restructuring, reduction of
Interest Rate has helped the company save Rs. 500 Crore annually
In turn, Founders, UB Ltd have pledged their entire stake to certain
lenders.
Kingfisher Airlines have delayed payment of salary for July 11 without
mentioning any date of payment
Like a turnaround that Suzlon managed, can Kingfisher Company also
manage to do the same considering mounting losses the Company is
facing! The investor’s confidence upon the Airline is at its bottom
considering share price in Sep 2010 was Rs80 and now, Sep11, its
shares are being traded at Rs 25.80!!!
- Gaurav Gupta
- B.Com (Hons.) II Year
