* Air India's short term loans worth 4 times limit set - CAG
* Debt growth was due to missing of asset-monetisation goals
(Adds details from report)
By Aditi Shah
NEW DELHI, March 10 India may need to reassess
the amount of bailout funds given to Air India because the
state-run carrier has breached loan limits set under a
government restructuring plan, causing its finances to be
squeezed, the federal auditor said in a report on Friday.
Heavily-indebted Air India, which was bailed out in 2012
with $5.8 billion of government funding, saw its short-term
loans rising to four times the limits laid down in its
turnaround plan, the Comptroller and Auditor General of India
The increase in loans was "due to failure in generating
projected revenue, mainly on account of non-achievement of
asset-monetisation target, increase in staff costs," the auditor
The report, which the government will use to evaluate the
progress of Air India's restructuring, said Air India failed to
meet its cash-credit limits, leading to short-term loans rising
to 145.51 billion rupees ($2.18 billion) as on March 31, 2016
against the target of 36.46 billion rupees.
It said the airline should monetise more of its assets
faster to reduce its debt burden and speed up the leasing of
narrow-body aircraft to improve its performance.
"The company, though aware of the shortage of narrow body
aircraft as early as May 2010, delayed leasing of A-320
aircraft," the report said, referring to Airbus Group's
narrow-body aircraft which is widely used in India.
This resulted in the induction of only five such aircraft by
March 2016 versus a requirement of 19, it said.
An Air India spokesman was not immediately reachable for
The Indian carrier also incurred a book loss of 6.71 billion
rupees on the sale of five wide-body aircraft, B-777-200 LR, it
had bought from Boeing, to Etihad Airways, the report
The Indian carrier had to agree to the sale at a price
significantly lower than the indicative market price after it
found no buyers at the market value, it said.
Air India is expected to report a 10 percent increase in
total revenue to about 225.21 billion rupees ($3.38 billion) for
the year to end-March compared with a year ago, the ministry of
civil aviation said on Thursday in response to a parliament
($1 = 66.6475 Indian rupees)
(Reporting by Aditi Shah and Tommy Wilkes; Editing by Malini
Menon and Muralikumar Anantharaman)