Accusing Air India Ltd. of grossly understating its losses, the Comptroller and Auditor General of India said (CAG) on Friday that the national carrier had in fact suffered an operating loss of Rs 321.4 crore in financial year (FY) 2015-16 and not an operating profit of Rs 105 crore as had been put out by the national carrier earlier.
“The operating loss in 2015-16 occurred because of differences in the implementation of accounting standards with respect to resource valuations by Air India,” said CAG Director General V Kurian said in New Delhi.
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According to calculations by statutory auditors and CAG, Air India did not make provisions according to standard accounting procedures, which resulted into under-reporting of losses, said Kurian. He was presenting the CAG's audit report on the financial restructuring plan for the airline which was also tabled in Parliament on Friday.
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These provisions also relate to depreciation of assets, explained another CAG official. The report tabled in Parliament only have financial earnings data till FY15.
The under-statement in the previous three financial years means “the earnings before interest, tax, depreciation and amortisation (EBITDA) would be negative till at least March 2015,” said the report.
In a bid to revive the ailing carrier, a consortium of 19 banks led by the State Bank of India Ltd. (SBI) had approved the financial restructuring plan of Air India in 2012. The plan included, among other things, debt restructuring of Rs 18,000 crore by the banks and a committed equity infusion by the government.
The CAG report went on to point out that Air India failed to meet the Rs 500-crore target for monetising its assets as well, saying that only six properties had been put up for e-auction, out of which only two were sold.
“Air India earned only Rs 64.06 crore from monetisation of assets against a target of Rs 2,000 crore for the four-year period from 2012-13 to 2015-16,” it said, adding that the shortfall in meeting the target was mainly due to considering properties for the purpose, which could not be sold “due to deficiencies in ownership or restrictive conditions attached to ownership.”
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