- Tata Teleservices:- The accumulated losses of the Company at the close of the year have exceeded its paid-up capital and reserves. This, however, is not uncommon for telecommunication service providers, due to the high operation costs and on account of the industry being inherently capital intensive. However, the Company is consistently making operating cash profits over the past few years.The subscriber base of the Company has further increased with the launch of services using the GSM technology during the previous year. The Company has also received sanctions from banks for additional long-term funds for future expansion. Further, during the current year the Company succeeded in winning the bid for 3G spectrum in Maharashtra circle (including Goa and excluding Mumbai) and has also commenced 3G services. Accordingly, based on the aforesaid considerations, the Company is confident of it's ability to continue it's business as a going concern and the accounts have been prepared on that basis. Note the reasons (industry characteristics, bank sanction, new revenue streams etc). These go beyond the typical MD&A fluff.
- Jet Airways:- The Airline Industry was adversely affected by the general economic slowdown witnessed globally in the year 2008.This coupled with high fuel cost significantly impacted the performance and cash flows of the Company and its subsidiary resulting in substantial erosion of the net worth. The Management has been constantly implementing initiatives to improve the operating results through cost control measures, route rationalization, leasing out aircraft
etc. During the financial year 2010-11, the Company improved its operating performance consequent to passenger traffic returning to normalcy and reflected operating profits in the first three quarters. However, as a result of significant increase in the crude oil prices not matched by increase in fares, the Company could not maintain its profitable performance during the last quarter of the year. This, in the view of the Company is purely temporary as the fuel prices have now subsided and going forward, the Company expects to perform better. The Company is also
exploring options of raising finances to meet its various short term and long term obligations including financial support to its Subsidiary – Jet Lite (India) Limited. These measures would result in sustainable cash flows and accordingly continues to present these financial statements on a going concern basis, which contemplates realization of assets and settlement of liabilities in the normal course of business. These reasons, to me, seem a bit shaky, and I think the auditors allowed this going concern to persist due to the fund raising plans
- Kingfisher Airlines: - The Company has incurred substantial losses and its networth has been eroded. However, having regard to improvement in the economic sentiment, rationalization measures adopted by the Company, fleet recovery and the implementation of the debt recast package with the lenders and promoters including conversion of debt into share capital, these interim financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities. While the debt recast happened post Mar-11, it would have allowed enough evidence to the auditor for proceeding.
May, 2010, wherein net worth of the Company has turned positive, Company made an application to the Board of Industrial & Financial Reconstruction (BIFR), for deregistration of its reference. BIFR vide its order dated 19th August, 2010 discharged the Company from the purview of Sick Industrial Companies Act /BIFR. Accumulated loss of the Company has also substantially reduced over a period of last 2 years; further the company subsequent to the quarter ended 31st May, 2011 has concluded an agreement for development of leasehold land at its Mazgaon Unit, (Refer note 1 above). Accordingly, accounts are prepared on going concern basis.