Kingfisher debt woes deeper than visible’

Mumbai: The debt woes of Kingfisher Airlines is worse than what the company had been reporting, according to a recent research report by Kotak Institutional Equities.
The airline, owned by the Bangalore-based UB Group, has been saying its debt was around Rs 7,500 crore. The report says it is at least Rs 10,000 crore.
“In our view, the debt number is understated, as current liabilities, a large part of which comprise overdue payments, are very high. For a perspective, current liabilities of the company at Rs 5,000 crore are similar to Jet Airways, even as Jet’s quarterly run rate of sales is 2.2 times that of Kingfisher. Going by that assumption, one could say that almost half of current liabilities of the airline are overdue payments and, hence, equivalent to debt (as punitive interest is charged for overdue payments). Therefore, in our view, actual debt in Kingfisher’s balance sheet is closer to Rs 10,000 crore,” said the report, authored by Jasdeep Walia of Kotak Institutional Equities.
The report further takes a critical view on Kingfisher’s profit and loss. It says Kingfisher is the only publicly held airline in India which did not make a profit at the PBT (profit before taxes) level (excluding one-offs) in the third quarter of 2010-11, the best quarter for the sector till date.
21/11/11 Raghuvir Badrinath & Arijit Barman/Business Standard

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~ by anand213 on November 21, 2011.

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