Mumbai: The auditors of Tata Sons have raised concerns about the ability of AirAsia India and Tata Steel Europe to “continue as a going concern”, according to the holding company’s FY20 annual report. The net worth of the carrier, a joint venture between the Tata Group and Malaysia’s AirAsia Bhd, has been fully eroded and current liabilities exceed assets by Rs 1,208.89 crore, it said.Tata Sons and AirAsia India did not respond to queries.AirAsia India’s losses widened to Rs 332 crore in the quarter ended June from Rs 15 crore a year earlier, according to a Kuala Lumpur stock exchange filing.The airline attributed this to the “decrease in revenue from suspension of flights and the increase in operating expenses from operating nine additional aircraft”. Total revenue was Rs 80.7 crore, down 91 per cent from the same period last year. The management has prepared AirAsia India’s financial statement on the basis that it’s a going concern, the auditors were cited as saying in the annual report. Tata Sons, the holding company of the Tata Group, has a 51 per cent stake in AirAsia India. AirAsia Bhd owns the remaining 49 per cent.Support from Tata Sons may be CrucialThe impact of the Covid-19 pandemic will require Tata Steel Europe to access group company support in order to meet obligations as they fall due. Tata Steel Europe has received a letter from TS Global Procurement Co., part of parent Tata Steel, undertaking to provide working capital and/or other cash support up to a specified amount, the auditors said. This has been given by way of comfort only for a specific period and should not be construed as a promise of future funding, they said.77815110“The special purpose financial information does not include the adjustments that would result if Tata Steel Europe Ltd were unable to continue as a going concern,” it said.On a consolidated level, Tata Steel’s net debt on March 31 was Rs 1.05 lakh crore, compared with Rs 94,879 crore a year earlier and Rs 69,215 crore at the end of FY18.Support for the Europe steel business from Tata Sons may be crucial with no seeming progress on bailout talks between Tata Steel and the UK government, leaving the firm to rely on private financing to weather the pandemic’s impact.ET reported August 18 that Tata Steel’s auditors had said there was “significant doubt” about Tata Steel Europe’s viability as a going concernoverworries about its ability to raise adequate funds for working capital requirements over a period of time.AirAsia India’s total equity at the end of June fell to a negative Rs 982 crore from a negative Rs 328 crore a year earlier, according to the Bursa Malaysia filing.The joint venture partners had decided to raise Rs 300 crore by issuing optionally convertible redeemable debentures at an AirAsia India board meeting earlier this month.In July, AirAsia Bhd auditor EY had raised significant doubts about the Malaysian company’s ability to continue as a going concern.“The travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel which impacted the group’s financial performance and cash flows,” the auditor said in its note.“The group has a net loss of RM 283 million ($68 million) for the financial year ended December 31, 2019 and the current liabilities exceeded its current assets by RM 1,843 million,” EY had said. “Further, in early 2020, the global economy, in particular the commercial airlines industry, faces uncertainty as a result of the unprecedented Covid-19 pandemic. The travel and border restrictions implemented by countries around the world has led to a significant fall in demand forair travel which impacted the group’s financial performance and cash flows.”In June, a Credit Suisse report cited AirAsia Bhd global CEO Tony Fernandes as hinting that the airline may exit its India venture.
from Economic Times https://ift.tt/3jke988
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