KINGFISHER LOSSES UNDERSTATED DUE TO IMPROPER ACCOUNTING

NEW DELHI,INDIA -- The auditor of Kingfisher Airlines Ltd. has found out that the carrier's losses last financial year were under-reported due to improper accounting practices, Kingfisher said Wednesday in its annual report to shareholders for the past financial year.

The carrier's auditor, B.K. Ramadhyani and Co., said that Kingfisher's losses for the past year ended March 31 would have been 34.44 billion rupees ($616.39 million) instead of the reported 23.28 billion rupees had the company properly amortized repairs and maintenance costs on leased aircraft and made provisions for withholding tax and security commission to guarantors of the company's loans.

The auditor's observations are likely to add to the woes of a company already marred by a severe cash crunch and struggling to keep its operations afloat.

The auditor also pointed out anomalies in the way Kingfisher assigned the rights on some aircraft purchases to its lessors. It also said Kingfisher owes 5.39 billion rupees as tax deducted at source.

The airline, which was once the country's second-largest carrier, has now slipped to the last spot and is struggling to pay taxes and wages for months, weighed by a mounting debt burden.

05/09/2012  :  Nikhil Gulati  / The Wall Street Journal.

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