Cleartrip’s auditors cast doubt on its ‘going concern’ status

Cleartrip’s poor financial health and the Covid-induced travel restrictions have led the online travel portal’s auditors to cast doubts on whether the company can sustain itself as a ‘going concern’.

“The travel and border restrictions implemented by countries around the world have led to a significant fall in travel, which has impacted the company’s financial performance and cash flows. These events or conditions indicate the existence of material uncertainties that may cast significant doubt on the company’s ability to continue as a going concern,” the auditors said in regulatory filings by the company accessed by BusinessLine from business intelligence platform Tofler.

Green shoots?

However, the auditors said the company has received a credit line sanction of ₹15 crore from its bankers. Further, with the recent progressive uplifting of restrictions on travel and tourism activities, the company has seen positive developments in its business operations. Hence, the financial statements of the company have been prepared on a going-concern basis.

Cleartrip has reported a revenue of ₹319 crore for 2019-20, which is a 2 per cent fall from the previous year. The company reported a net loss of ₹14 crore in FY20. This is 53 per cent lower than that of the previous financial year. The company’s total expenses for the fiscal were reported as ₹333 crore.

With regard to the company’s ability to continue as a going concern, “the management is of the view that the assets and liabilities can be recorded on the basis that the company will be able to realise its assets and discharge its liabilities in the normal course of business,” Cleartrip management said in its statement to the auditors.

It added said that the company has been in business for 15 years and has incurred significant advertising and promotion expenses and created goodwill for its brand, the benefit of which would accrue to the company in the future years.

Cleartrip has cash and bank balances totaling ₹18.35 crore as on March 31. “Further, last year, the company has received additional equity infusion from the parent company, of ₹7,179.82 lakh. There is a conscious effort on the part of the company to optimise cost.

“ClearTrip Inc Cayman Islands has provided an undertaking to the company’s Board of Directors that they would continue to provide necessary financial and operational support in order for the xompany to meet its payment obligations over the next 12 months from the date of approval of these financial statements,” it clarified.

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