Wednesday, August 1, 2012

NEWS| SpiceJet’s profits spiced up?

The Kalanithi Maran-controlled SpiceJet has reported profits, a rarity for an airline. Its net profit for the quarter ended June 2012 grew to Rs56.15 crore when compared to a massive loss of Rs71.96 crore recorded in the corresponding quarter of the previous fiscal. It sales for the latest quarter improved by 51%, year-on-year, to Rs1,406.74 crore. According to the company, its market share has increased to 18.6% as of 30 June 2012, from 17.1%. Ace speculator Rakesh Jhunjhunwala’s Rare Enterprises bought 25 lakh shares of the scrip at a price of Rs30.77.

Do all the numbers look good as they make out to be? On closer examination, auditor SR Batliboi & Associates, reveals that it has used accounting methods to boost net profit. The auditor note said, “No provision has been made for interest of Rs747.1 lakh up to 30 June 2012, relating to earlier years on the outstanding inter-corporate deposits taken by the company. Had the same been accounted for, the net profit (after tax) for the quarter ended 30 June 2012, would have been lower by Rs597.60 lakh and accumulated losses as at date would have been higher by the same amount.” Even an exceptional income to the tune of Rs12.86 crore boosted its net profit. The income in question was the warranty claim set against some of the exceptional costs it incurred on engine repair last year.



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