While small and medium businesses face stringent punishments for not paying statutory dues within time, SpiceJet Ltd has not paid its dues worth Rs427 crore for tax deducted at source (TDS), provident fund (PF) or gratuity dues to employees and goods and services tax (GST) since 2020, reveals a document filed by the carrier for raising Rs3,000 crore through qualified institutional placement (QIP). Due to delays in paying taxes and the non-filing of returns, Haryana has cancelled GST registration. At the same time, Delhi has suspended GST registrations of Spicejet Technic Pvt Ltd (STPL) and SpiceTech System Pvt Ltd (SSPL), according to the preliminary placement document filed by Spicejet with the stock exchange.
Further, the cash-strapped carrier has 36 out of its 58 aircraft grounded as of June 2024 due to 'alleged default' in payments to aircraft lessors, SpiceJet says in the document filed for raising Rs3,000 crore through QIP. QIP allows a listed company to raise capital from Indian markets without the need to submit any pre-issue filings to market regulators.
"Additionally, there have been delays in the payment of annual custodian fees and other corporate action fees due to the depositories, due to which the depository services were temporarily suspended. Subsequently, these dues to the depositories have been paid and the services were resumed. There are foreign currency trade receivables and trade and other payables that are overdue beyond the timelines; however, we are yet to seek an extension for the same from the AD Bank or the Reserve Bank of India (RBI), as the case may be, for settlement of such balances under foreign exchange management guidelines," SpiceJet says.
The carrier says several of its aircraft have been grounded primarily due to an alleged default in payment dues to the aircraft lessors and lack of maintenance, adversely impacting its operations.
"Further, as of 30 June 2024, of our total fleet size of 64 aircraft, 36 aircraft (constituting to 56.25% of total fleet size) are grounded, owing primarily to alleged default in payment of dues to the aircraft lessors and lack of maintenance on such aircraft due to financial constraints and/or non-availability of components and spare parts. Due to the smaller size of our fleet after the pandemic, our traffic and market share have both declined," it says.
According to SpiceJet, Ajay Singh, its chairperson and managing director (CMD), and Shiwani Singh, non-executive non-independent director, appeared on the list of defaulters. Star Bus Pvt Ltd, in which Mr Singh and Ms Singh are directors, had availed a loan from ICICI Bank, which was declared as a non-performing asset (NPA) of Rs55.50 crore in 2016. The loan was repaid through a settlement agreement on 22 December 2022, and the borrowers received a no-dues certificate from ICICI Bank on 3 April 2024.
Mr Singh had also pledged 23.5mn (million) shares or 2.96% stake in SpiceJet in favour of Indian Bank (erstwhile Allahabad Bank) for availing debt facility for the carrier. Indian Bank still treats this invoked pledge as security for fresh or renewed debt facilities, SpiceJet says.
As of 30 June 2024, SpiceJet had negative retained earnings of Rs772.83 crore and a negative net worth of Rs502.21 crore. It says, "We have incurred liability on account of alleged delays in repayment or non-payment to our creditors, inability to comply with the terms of leasing arrangements, non-payment of statutory dues and irregularity in complying with the regulations or guidelines."
"Our ability to arrange financing and the costs of capital of such financing are dependent on numerous factors, including general economic and capital market conditions, credit availability from banks, investor confidence, the continued success of our operations and other laws that are conducive to our raising capital in this manner," it added.
