Mint Explainer: Why SpiceJet Repeatedly Delays Earnings Releases and How It Pays for It

Deferred profits

This is not the first time that SpiceJet has failed to file its financial statements with stock exchanges by the deadline set by the regulator. It has deferred reporting its profits at least three times in the recent past.

The company delayed its Q4 FY2022 results after an attack on its IT systems affected the audit process, forcing it to postpone the quarterly results. The company then announced its January-March FY2022 and April-June FY2023 results together in September 2022.

The following year, the airline postponed its January-March fiscal 2023 earnings due to the “ongoing medical disability of a key audit committee member.” It then postponed its April-June fiscal 2024 earnings as well, eventually reporting both quarters in August 2023.

The company has not published any financial results since the announcement of its July-September quarter results of fiscal year 2024, when it said its consolidated net loss narrowed to ₹449 crores from ₹830 crore during the same period a year earlier.

SpiceJet told stock exchanges on Tuesday that it will release its Q3 and Q4 FY24 results on July 15. The airline did not disclose the reason for the delay.

Sebi standards

Delays in filing results do not go unpunished. According to the market regulator, a listed company must provide stock exchanges and investors with relevant and timely information.

As per the norms laid down by the Securities and Exchange Board of India, periodic statements, reports, statements, documents and information reports should contain information that enables investors to monitor the performance of the listed company at regular intervals and provide them with sufficient data to assess its current status.

A listed company must file its quarterly and annual financial results with the stock exchanges within 45 days of the end of each quarter, failing which it may face penalties. SpiceJet has faced penalties in the past for non-compliance with the SEBI (Listing Obligations and Disclosure Obligations) Regulations, 2015.

According to SpiceJet’s annual report for fiscal year 2023, the company paid a penalty of ₹5,900 for a one-day delay in filing unaudited financial results for the quarter ended December 31, 2021, and ₹59,000 for a 10-day delay in filing unaudited financial results for the quarter ended December 31, 2022.

He was fined ₹271,400 from Sebi for 93 days delay in filing audited financial results for the year ended March 31, 2022 and was asked to pay ₹88,500 for a 16-day delay in filing unaudited financial results for the quarter ended June 30, 2022.

Current challenges

SpiceJet is embroiled in legal battles over unpaid dues to aircraft leasing companies, vendors and suppliers, and has also received contempt of court notices from the Delhi High Court and the National Company Law Tribunal.

Airline market share has declined sharply over the past five years, falling to 4% of the domestic aviation market in May 2024 from 5.4% in May 2023 and 14.8% in May 2019.

“If a company does not announce its results on time, it will have a huge impact on investor sentiment. Good or bad, a company has to announce its results on time,” said Kranthi Bathini, equity strategist at WealthMills Securities Pvt Ltd.

Bathini added that the aviation sector was doing very well, tourism was growing and oil prices remained relatively stable.

“With the recent fund infusion and QIP, the sentiment in SpiceJet is positive, so the question is how SpiceJet has performed in the last two quarters,” Bathini said.

In December 2022, the SpiceJet board approved the increase ₹2,250 crore from 64 entities, including financial institutions, foreign institutional investors, high-net-worth individuals and private investors through the issue of equity shares and warrants. In February 2024, the airline said it had secured additional funding ₹316 crore, which is the total amount raised under the preferential issue ₹1,060 crores.

Earlier this year, the airline laid off about 1,500 employees, or about 15% of its staff, after cutting its fleet by two-thirds due to a lack of funds. The airline expects to save about ₹100 crore annually from these funds.

Elara Securities had previously estimated the airline’s revenue at ₹1876.8 crore and adjusted net profit of ₹275.1 crore. The company recorded a total income of ₹2,499 crore in the same period a year ago and a consolidated net loss of ₹6.2 million.