Air Deccan in profit-loss haze

Bangalore: This is a tale of two auditors and their treatment of income and expenditure of Deccan Aviation Ltd, operator of budget carrier Air Deccan, and its impact on the airline’s financial results.
The story emerges from observations of the low-cost carrier’s two auditors (previous and current) posted on the BSE website.
Under one version, for the quarter ended December 31, 2006, Deccan Aviation posted a profit of Rs 13.32 crore. The other version says the airline suffered a loss of Rs 125.81 crore.
Simply put, if the previous auditor’s views on amortisation of training and pre-operative costs, subsidy on leased aircraft, credit inflow for spare/service/software, income on pledging of aircraft purchase rights, foreign exchange loss error and others are considered, then the net profit of Rs 9.64 crore reported by Deccan Aviation for the third-quarter of the current fiscal would have transformed into a loss Rs 125.81 crore — a whopping difference of Rs 135.45 crore
In contrast, the no-frill airline’s new auditor’s reading of the accounts would have boosted the profit by Rs 3.68 crore to Rs 13.32 crore.
02/03/07 Daily News & Analysis

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Categories: Air Deccan Mar 2007