Auditors express doubt on SpiceJet’s ability to remain a ‘going concern’

Forum Gandhi Mumbai | Updated on February 10, 2021

SpiceJet’s current and non-current liabilities were Rs. 2,982 crore and Rs. 1,475 crore, respectively. V_V_Krishnan

SpiceJet has reported a narrowing of its net loss in the December quarter to ₹57 crore, from a loss of ₹112.6 crore in the September quarter.

However, its auditors have cast a significant doubt on its ability to continue as a ‘going concern’. They have also flagged that it would have reported a wider loss in the December quarter had it not recognised other income and foreign exchange gains on account of compensation expected from Boeing for the grounding of 737 Max aircraft.


SpiceJet recognised ‘other income’ of ₹140.36 crore for the December quarter and related ‘foreign exchange loss on restatement’ of ₹10.61 crore.

Auditors Walker Chandiok & Co LLP noted in their report: “Had the company not recognised such other income (including its related forex restatement), the reported loss for the quarter and nine-month period ended December 31, 2020 would have been higher by ₹150.97 crore and ₹447.05 crore, respectively.”


The company's accumulated losses amounted to ₹3,960.25 crore, which have resulted in a complete erosion of its net worth. Also, its current liabilities have exceeded its current assets by ₹4,778.36 crore as on December 31, 2020.

“These conditions, together with uncertainties relating to the impact of the ongoing Covid-1 9 pandemic on the operations of the company...indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern,” said the report.

Fund-raise plans

SpiceJet has been renegotiating payment terms to various parties. It also said that the group is currently in discussions with banks/financial institutions to raise additional funds. BusinessLine had reported that SpiceJet had written a letter to YES Bank, seeking a working capital of ₹500 crore along with a one-time debt restructuring under the RBI’s Covid-19 scheme.

“Based on the foregoing and their effect on business plans and cash flow projections, The management is of the view that the group will be able to achieve profitable operations and raise funds as necessary, in order to meet its liabilities as they fall due,” it said.

However, the auditors said: “Management is of the view that the going concern basis of accounting is appropriate. Our conclusion above is not modified in respect of this matter.”

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Published on February 10, 2021
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