KPMG misleading report on loss making Indian aviation sector

A report published by KPMG’s Indian branch painted over optimistic picture and in a way mislead investors about loss making Indian aviation sector. The report suggested in 2008 that the airline sector in India can still be profitable despite the high oil prices and other issues.
Now in 2011, three years down the line all we can witness is disastrous results in the Indian Aviation sector with national carrier Air India, private airlines such as Kingfisher, Spice jet all in severe losses.
As of now Kingfisher Airlines Ltd’s loan funds stand at Rs7,543 crore (debt-to-equity ratio of about 3.2), Jet Airways (India) Ltd’s is Rs14,123 crore (debt-to-equity about 4.2) and that of Spicejet Ltd, debt at Rs712 crore (debt-to-equity about 0.7).
Eminent consultant from prestigious companies who created and published unrealistic report believe that growth will take care of the problems, as India is the fastest growing market in the world.
Now as per latest statistics India’s airlines reported domestic passenger growth of 18 per cent in 1H2011. India is now the ninth largest and fastest growing civil aviation market in the world.
However I have highlighted and predicted long ago in my book published in July 2008 "Doing Business in India and Understanding pitfalls" that India is just a different market. The concept which works globally doesn't necessarily works in India.
Even though India has the fastest-growing number of passengers in the world but still domestic airline industry in India is fighting for its survival.
At a time when many eminent consulting companies such as KPMG had wrongly over estimated the potential and predicted that Indian Aviation sector will be profitable around 2011, the aviation industry in India is still losing money and number of operators are struggling to meet day-to-day expenses.
21/11/11 Barbara/journalism.co.uk

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Nov 2011