The Air India management dressed up the airline’s balance sheet with “accounting loopholes” and “deception” to inflate receivable rents to make its losses look smaller with respect to its former headquarters in Nariman Point, a book titled The Descent of Air India, written by the airline’s former executive director Jitendra Bhargava, has alleged.
The airline’s 23-storey building has been operational since 1974. Earlier this year, AI shifted its base to Delhi.
Bhargava has documented AI’s decline, focussing on the 2004-08 period when former civil aviation minister Praful Patel and then chairman V Tulsidas were at the helm.
Tulsidas, who is currently on a visit to Muscat, was unavailable for comment.
On Tuesday, in an newspaper column, Tulsidas had refuted the allegations and, without naming the author or the book, had claimed that the senior official in question was removed twice by him from the posts HR and PR chief due to inadequate performance. In his defence, Bhargava had replied that if that was the case, why was he again given the charge after the merger of AI and Indian Airlines.
When contacted, a spokesperson for AI refused to comment.
The content in the book on pages 132 and 133 notes that the airline’s measures to show reduced losses invited objections from the auditors, Kalyaniwalla and Mistry and SK Mehta & Company.
One of the issues the auditors red-flagged in the annual accounts of 2006-07, the year prior to the merger, was that of the receivable rents.
The book, quoting the audit, says that the airline claimed Rs77 crore as rent from the office space leased out in the AI building a gross exaggeration, given that several tenants in the building were paying rates of Rs3-5 per square foot and a large part of the building was vacant following the eviction of many tenants on the ground that AI needed space for itself.
The book adds, “Some tenants had challenged their ouster, and a committee was looking into the charges made against Air India. Until the disputes were settled, Air India could not rent out the vacated space. There was no way that it could have earned the amount that it said it did in the annual report. It would be interesting, however, to understand the calculations that led to the figure.”
The book claims that during the hearing of an evicted tenant’s case, the committee had used a rent estimate of Rs300 per square foot. “The figure was hypothetical and meant for the express purpose of the court hearing. Air India applied this rate to all tenants for their occupation since April 1, 1995, i.e. from the time their licences were terminated. They were asked to pay profits/damages until they handed the premises over to Air India and that helped arrive at the amount of Rs77.77 crore.”
Skeletons tumble out
The content in the book on pages 132 and 133 notes that the airline’s measures to show reduced losses invited objections from the auditors, Kalyaniwalla and Mistry and SK Mehta & Company.
The book, quoting the audit, says that the airline claimed Rs77 crore as rent from the office space leased out in the AI building a gross exaggeration, given that several tenants in the building were paying rates of Rs3-5 per square foot and a large part of the building was vacant following the eviction of many tenants. However, the book adds, the auditor noted that the actual rent earned during 2006-07 from the tenants was Rs2 crore.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}