Jet Airways' auditors said the 'appropriateness of assumption of going concern' for the company depends on its ability to raise necessary funds, among other factors
Mumbai: With Jet Airways incurring a huge fourth quarter loss of over Rs1,000 crore, its auditors have said the “appropriateness of assumption of going concern" for the company depends on its ability to raise necessary funds, among other factors.
In accounting parlance, the ‘going concern assumption’ means that the company will remain in business for the foreseeable future without being forced to halt operations and liquidate its assets.
The airline posted a whopping Rs1,036 crore net loss for the March quarter due to rise in oil prices and weaker rupee, compared to a profit of Rs602.4 crore in the corresponding period of FY17.
The Naresh Goyal-owned full service carrier reported a quarterly loss for the first time in eleven quarters.
For financial year 2017-18, the airline reported a standalone net loss of Rs767.62 crore, against a net profit of Rs1,482.52 crore earlier, according to the filing.
Jet Airways’ auditors said the financial statement was prepared on a “going concern basis". “The appropriateness of assumption of going concern is dependent upon realization of the various initiatives undertaken by the company and/or the company’s ability to raise requisite finance/generate cash flows in future to meet its obligations, including financial support to its subsidiary companies," according to the independent auditors’ report.
The auditors made these observations in reference to one of the ‘notes’ attached to the company’s financial results wherein Jet said it has incurred losses for the last fiscal and had a negative net-worth as on 31 March 2018 “that may create uncertainties".
However, the company added various initiatives undertaken with regard to saving costs, optimising revenue management opportunities and enhancing ancillary revenues are expected to result in improved operating performance.
“Further, our continued thrust to improve operational efficiency and initiatives to raise funds are expected to result in sustainable cash flows addressing any uncertainities...," Jet Airways said.
Defending the preparation of financial results on a ‘going concern’ basis, the airline said it involves “realization of assets and settlement of liabilities in the normal course of business including financial support to its subsidiaries".
Yesterday while announcing the results, Jet Airways chief executive Vinay Dube had said the company is focused on undertaking numerous steps to create a healthier business by maintaining focus on lowering costs and increasing operational reliability, among others.
Total income in the March quarter declined by 3.44% to Rs6,055 crore, against Rs6,271.21 crore in the same quarter last year, as per the filing. Fuel expenses rose by 31% to Rs2,063.34 crore, against Rs1,282.41 crore.