The country’s largest lender, State Bank of India (SBI), has ordered a forensic audit of Jet Airways’ accounts. The audit, ordered last week, is being carried out by consultancy firm EY.
Jet is looking for fresh funds from banks and is in discussion with SBI to convert loans into equity and this would depend upon outcome of the audit. The airline has a debt of Rs 82 billion.
The audit is being carried out after a complaint of financial irregularities. The exact details, however, could not be ascertained. The audit period will be April 2014 to March 2018.
Jet Airways and EY declined to comment. “It is a policy of the bank to not comment on individual accounts and their treatment,” said an SBI spokesperson.
Jet has come under regulatory scrutiny twice this year. In August, the Ministry of Corporate Affairs ordered a probe on charges of siphoning off funds. In September, the airline came under the lens of the income tax department, which carried out a two-day survey on suspicions of falsification of accounts.
Complaints about siphoning off funds have been made earlier too.
In 2016, Arvind Gupta, a trustee of the Indian Investors Protection Council, had complained to the government, alleging that over Rs 50 billion was siphoned out of the airline by its promoter Naresh Goyal through several questionable transactions. Gupta wrote to the Prime Minister’s Office in August to seek action on his complaint.
Jet Airways posted a loss of over Rs 25 billion in the first half of 2018-19. The airline has struggled to pay employees and vendors on time because of a cash crunch. It has been looking to raise funds through a mix of share sale and sale and lease back of planes. It has approached banks for fresh funds. One option under consideration is to convert debt into equity, but no decision has been taken yet.
Talks with Tata Sons for a stake sale have fizzled out over issues of control and future role for Goyal, while discussions with Etihad Airways are underway. Etihad, which acquired a 24 per cent stake in the airline in 2013, is expected to seek a significant role in running the airline.