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The Fall of KingFisher
By siliconindia
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Friday, 18 November 2011, 02:21 IST |
5 Comments
Salaries were normally credited to the accounts of its employees on the 7th day of every month. It has also been alleged that the tax company deducted from the salaries wasn't being paid to the tax department.
After all, about two months back, media reported the observations made by Kingfisher Airlines' auditors -- namely, B K Ramdhyani & Co. In accounting parlance, they asked if Kingfisher Airlines could be even described as a 'going concern' and these remarks were published in the 2010-11 annual report of the company.
A 'going concern' refers to a company's ability to continue functioning as a business entity in the near future and it is extremely rare that auditors make such mention in the passing.
Welcoming the Prime Minister Dr Manmohan Singh's recent statement that the Government would find ways to solve the aviation industry's financial troubles, he said: "The Prime Minister is an economist who understands the importance of connectivity."
About the dues to oil companies, he said the airline has paid two state-owned oil companies Indian Oil and Bharat Petroleum in full. "We don't owe them a single paise."
On the Rs 600-crore worth of unsecured dues to HPCL, the Chairman said the oil firm has been given bank guarantees and our unsecured credit has now come down to Rs 40 crore only.
The chief of the UB Group, which runs Kingfisher, also announced that the company has applied to the Directorate General of Foreign Trade (DGFT) for direct import of jet fuel, which would reduce fuel costs drastically. Jet fuel costs are almost 50 per cent of the total operating costs of the airline.
Mallya also said there were varied credit lines with various suppliers and vendors of the airline and refuted reports that certain lessors wanted to take back some of the leased aircraft in the Kingfisher fleet.
Referring to the cancellation of more than 200 flights over the past week, he justified the move saying it was a commercially prudent decision.
" We cancelled flights not because we could not afford to. Even today Kingfisher is operating the rest of its schedule ... We could have handled the situation better. But it (flight cancellations) was a commercially prudent decision," he said.
