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In early 2015, when Ajay Singh took over SpiceJet, the airline had a negative net worth of Rs 1,329 crore. But the return of the entrepreneur, who had founded the airline in 2004, did good for the airline.
SpiceJet made profits for the next three financial years, cementing Singh's repute as a turnaround man.
The negative net worth fell to Rs 42 crore in the 2018 financial year.
But since then, even as the airline's bottom line turned red, its net worth also deteriorated. In 2019, SpiceJet had a negative net worth of Rs 350 crore. This has zoomed to Rs 1,579 crore in the 2020 financial year.
The airline reported a net loss of Rs 934.8 crore in FY20 that includes a non‐cash loss of Rs 697 crore due to forex loss on the restatement of lease liability due to Ind‐AS 116. It incurred a loss of Rs 302 crore in FY19.
Both, COVID-19 and grounding of the Max 737 planes have hurt the company.
The losses have prompted the company's auditor to make a note, in the just announced financial statement:
"We draw attention to Note 11 in the standalone Ind AS financial statements which, indicate that the company has accumulated losses and its net worth has been fully eroded, the company has incurred a net loss during the current and previous year and, the company’s current liabilities exceeded its current assets as at the balance sheet date," said auditor S.R. Batliboi & Associates LLP.
"These conditions, along with other matters set forth in Note 11, indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern," the auditor added.
At the same time, the airline has struck a more positive note.
"Based on the foregoing and their effect on business plans and cash flow projections, management is of the view that the company will be able to achieve profitable operations and raise funds as necessary, in order to meet its liabilities as they fall due," SpiceJet said.
"Accordingly, these financial results have been prepared on the basis that the company will be able to continue as a going concernfor the foreseeable future,"it added.
