No under-provisioning done in results, says SpiceJet CEO

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No under-provisioning done in results, says SpiceJet CEO

There was no under-provisioning done in the results, says Neil Mills, chief executive of SpiceJet, replying to comments made by its auditor in a recent report.

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There was no under-provisioning done in the results, says Neil Mills, chief executive of SpiceJet , replying to comments made by its auditor in a recent report. "We have fully provided for everything that we felt is justified to go into the account," he said, adding that "the comments made are not a qualification but just a note."

Accumulated losses of Rs 1080 crore have SpiceJet's auditors concerned as to the continuation of the airline's operations.

SpiceJet reported a net loss of close to Rs 40 crore for the third quarter due to high fuel prices and a weak rupee. Sales, however, grew 41% to Rs 1,175 crore on the back of high passenger load factors.

Below is an edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: Apparently there is a qualification from your auditors suggesting that your net worth is getting eroded every quarter with continuing losses and it may be difficult for you to sustain operations if it continues like this. Would you like to comment on that?

A: I think you are misinterpreting what they have said. It's not a qualification, it's merely a note which is part of their accounting guideline. To me it seems like a strange thing to focus on considering how good the results are comparative not only our previous quarters' results but actually the entire industry.

Q: Your auditors made that note, its not that we are saying it. Why would an auditor make a note like that?

A: It's merely a note, it's not a qualification.

Q: Nevertheless your auditor has chosen to mention it, so why would you ignore it? It's your auditor at the end of the day.

A: It's not a qualification.

Q: Never mind, it's a note made by your auditor, why would you not take it seriously?

A: Because we have a viable growing concern, that's all the note says if you read it.

Q: There are some more points made here, if you could just clarify. They say that the Q3 losses are understated as the provisions have not been made and they also mention that Rs 1080 crore of accumulated losses is what has eroded SpiceJet's net worth. What would your comments be on that?

A: The accumulated losses from the past is just a fact. There is no debating that, that's just a number. Going forward, as I have said before, the results are much better than what we have had in the past and certainly what any of our competitors have had. There is no under provisioning, this is a short term accounting issue and we have fully provided for everything that we feel is justified to go into the account.

Q: What has the EBIT performance been this quarter around?

A: The bottom line performance this quarter is actually Rs 39 crore loss.

Q: The margin performance?

A: The bottom line margin performance is just under 3% negative on the turnover that we are making.