The CAG today said Air India "actually incurred" an operating loss of Rs 321.4 crore in 2015-16, even the airline maintained it had an operating profit of Rs 105 crore based on generally accepted accounting standards.
While making it clear that there was no fudging of numbers, officials at the Comptroller and Auditor General (CAG) said figures reported by the airline are "actually under-reporting of loss".
Air India said the "operating profit of Rs 105 crore is as per the generally accepted accounting standards" and was calculated on the basis of reducing total expenditure excluding only the financing costs from total revenue.
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"It is therefore the equivalent of earnings before interest and tax (EBIT) and includes provision of Rs 1,867.78 crore of depreciation.
"Had depreciation been excluded from the expenditure the operating profit would have significantly increased," the airline's spokesperson said in a late evening statement.
Air India, which is staying afloat on taxpayers' money, reported an operational profit of Rs 105 crore in 2015-16 -- its first in more than a decade.
"For 2015-16 where Air India has reported an operating profit of approximately Rs 105 crore, the audit of Air India's standalone accounts for 2015-16 has been completed," Deputy CAG Pradeep Rao said.
About the operating profit which Air India has stated it has made in 2015-16, Rao said that in the view of CAG, "it is actually an operating loss of Rs 321.4 crore".
Based on the observations made by statutory auditor of the company and the subsequent check by the CAG, "We have found that they have not made provisions which they should have made in terms of standard accounting procedures," he noted.
Rao spoke about Air India's financial performance during the 2015-16 fiscal while briefing reporters about the CAG's performance audit on 'Turnaround Plan (TAP) and Financial Restructuring Plan (FRP) of Air India Ltd'.
The performance audit report, which covered the period from 2010-11 to 2015-16, was tabled in Parliament today.
CAG's observations also come at a time when concerns persist in certain quarters about the financial viability of Air India even as the government has been talking about last fiscal's operational profit to counter the concerns.
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V K Kurien, Director General at the CAG, said there was an under-reporting of loss by Air India in the last fiscal.
"Since we have separately completed the audit of AI's standalone financial statement for 2015-16, this Rs 105 crore (of operating profit) does not represent the actual...," he said.
In the detailed statement, the spokesperson said Air India has prepared its accounts for the year 2015-16 in line with the generally accepted accounting principles and standards.
While noting that the CAG during its supplementary audit had made a few observations, the airline said it has adequately replied to the observations.
"The first and the main observation was on non-provision of depreciation amounting to Rs 306.43 crore on nine B787 aircraft which were transferred by Air India to Current Assets under the head of Assets held under disposal," it said.
In this connection, the airline said it had already clarified to the government audit that depreciation is to be provided for fixed assets and not on current assets.
"This is in accordance with AS 10 which clearly states that if Assets are held for disposal no depreciation needs to be provided," it added.
The spokesperson said Air India's board approved the sale of the nine planes before March 31, 2016. The sale actually took place in the first quarter of this year after the balance sheet date but before the accounts were signed. Also, the sale was at a value higher than the acquisition cost of the plane.
"There is no disagreement in classifying the aircraft as Current Assets under the head 'Assets held for disposal' as the carrying amount of the asset was to be recovered principally through a sale transaction rather than through continuing use," the carrier said.
Further, the airline said the other observation was on non-provision of service tax amounting to Rs 15.24 crore on the revenue sharing arrangement with AIATSL (Air India Air Transport Services Ltd).
"It is to be noted that a major portion of the same would be taken as input credit and would not affect the loss position," Air India said.
