The C&AG (Comptroller and Auditor General of India) on Friday released a report looking into the last four years financial track records of the national carrier Air India. Based on its findings the apex audit body said that Air India may have underreported losses to show it turned up an operating profit of Rs 105 crore in its books just two years back.
Air India “significantly” understated its losses during the four-year period under audit (2012-15). The understatement of losses was to the tune of Rs1,455.8 crore in 2012-13, Rs2,966.66 crore in 2013-14 and Rs 1,992.77 crore in 2014-15, the CAG report said.
The alleged 'under-reporting' amounts to Rs 6,800 cr during 2012-13 and 2015-16, said deputy C&AG H Pradeep Rao, while releasing the 197- page government audit report titled 'Turnaround Plan and Financial Restructuring of Air India Ltd' that was tabled before Parliament earlier.
Pradeep Rao, Deputy C&AG said in a news conference that while Air India has said that it has reported an operating profit in fiscal 2016, based on observation of statutory auditors and subsequently by the CAG the airline has not made provisions it should have as per the standard accounting procedures, resulting in underreporting of the loss.
He further said the airline had made inadequate financial provisioning for payment of various liabilities including outstandings to the Airports Authority of India, payment of liability to employees en-cashing leave and also made excess valuation of one of the two properties that it has in Delhi.
Air India is on a Rs 42,280 cr life line (turnaround plan) provided by the UPA government in 2012 to rescue the debt-laden airline. This includes equity infusion by the government between 2011-12 and 2031-32. Air India also missed the Rs 5,000 crore target for monetisaation of its assets as was projected between 2012-13 and 2015-16.
As per C&AG, the deficit in recovery of total costs on international operations for Air India was Rs 3,755 crore in 2015-16 vis-a-vis Rs 1,759 crore loss incurred for domestic operations.
The airline operated 68 international service, 154 domestic services. Contribution of services to the USA was the highest in international segment. Air India, however, lost Rs 6,685 cr in FY2016 alone for carrying out its long haul direct service flights to various destinations in US.
Underlining some other transactions on which Air India bled to losses the C& AG pointed out that Air India lost money on sale of five older planes, and could not meet most performance targets set under the restructuring plan.
"Its short term credit levels were three times the allowed limit under the restructuring plan," said Rao.
