KANNUR: Kannur International Airport Ltd (KIAL) continues its losing streak, with the financial year 2023-24 (FY24) closing with a net loss of Rs168.56 crore compared with Rs126.27 crore the company logged for the previous year.
KIAL that commenced commercial operations with much fanfare about six years ago, on December 9, 2018, has already accumulated losses to the tune of Rs742.77 crore.
This means a lot, and more than meets the eye. The accumulated losses have eroded more than half of KIAL’s paid-up capital of Rs1,338.39 crore and as of June 30, 2024, the company’s net worth has reduced to Rs596.97 crore, which is obviously less than half of the paid-up capital.
Significant net worth erosion
Talking to businessbenchmark.news, a chartered accountant specialising in company law, said that as per Section 271 of the Companies Act, 2013, the company may have to report this significant erosion to the board of directors, shareholders, and other stakeholders.
“This situation may indicate that the company is approaching financial distress, which could lead to more stringent scrutiny from regulators, creditors, and shareholders,” he added.
Borrowings
KIAL has total borrowings to the tune of Rs1,165.61 crore with Rs1,124.90 crore being the non-current portion and the remaining Rs40.71 crore sitting in the balance sheet as current borrowings.
V Thulasidas, the former managing director of Kannur International Airport (KIAL) had earlier told this writer that unless the Central Government changes its adamant stand disallowing international airlines to operate from the KIAL, the airport is unlikely to be financially viable.
Income too low
The severity of the financial non-viability of the airport project is evident from the fact that while the total income earned by KIAL was Rs101.62 for the financial year 2023-24 (FY24), the total expenditure incurred during the period at Rs275.27 crore was far more than double the income.
A lion’s share of the expenditure is attributable to the finance cost or the interest paid by the airport to service its loans at Rs117.12 crore, which accounts for about 43 per cent of the total expenditure during the financial year.
More seriously, the interest paid by the company is far more than the total income earned by the airport during the financial year, at Rs101.62 crore.
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