Vijay Mallya-led loss-making air carrier Kingfisher Airlines will need to infuse more funds if its wants to stay afloat, its auditors said.
Noting that the net worth of the airlines has been ‘completely eroded', Kingfisher's auditor BK Ramadhyani & Co said it would need fresh funds to meet its obligations.
“The financial statements of the company have been prepared on a going concern basis notwithstanding the fact that its net worth is completely eroded.”
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“The appropriateness of the said basis is inter alia dependent on the company's ability to infuse requisite funds for meeting its obligations,” according to the comments of the auditors which form part of the annual report for 2010-11.
The audit report also pointed out that the company's accumulated losses at the end of the financial year were more than 50 per cent of its net worth.
“The company has incurred cash losses during the financial year and in the immediately preceding financial year,” it said.
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Kingfisher Airlines, however, said that it had already obtained long-term funds, amounting to more than Rs.475 crore and is exploring various options of external funding.
Simultaneously, the company is exploring capital raising either through GDR or by way of rights/domestic follow-on offering, an amount of nearly Rs.500 crore has already been infused into the company by way of soft loans. This has enabled the airline to continue trading and meet its commitments as negotiated from time-to-time” it said in a statement.
In August, Kingfisher Airlines had informed the Bombay Stock Exchange that its board has approved raising of Rs.2,000 crore through a rights issue.
In the quarter ended June 30, 2011, the net loss of the airlines widened by 40.66 per cent to Rs.263.54 crore, mainly due to increased fuel expenses.