In their report, dated March 16, 2010, sent to the members, auditors have mentioned the unconsolidated financial statements, which state that the Corporation incurred a loss of Rs 5,822 million during the year ended on December 31, 2009, resulting in accumulated losses of Rs 76,645 million at the close of the year, and, as of that date, the Corporation's current liabilities exceeded its current assets by Rs 51, 937. "These conditions indicate the existence of a material uncertainty which may cast doubt about the Corporation's ability to continue as a going concern."
In the notes to the consolidated financial statements for the year ended on December 31, 2010, the auditors have put accumulated losses at Rs 79,683 million. Another note by the auditors describes the uncertainty related to the difference between the amount due as per the corporation's records and amounts claimed by the Civil Aviation Authority (CAA) in respect of which a reconciliation and settlement exercise is currently in progress through the Ministry of Defence.
CAA has claimed additional amounts aggregating Rs 4,114 million in respect of rent and allied charges, landing and housing charges, aviation security and bay charges, interest surcharge, etc. The matter has been referred to Ministry of Defence through which a reconciliation and settlement exercise is currently in progress. The management considers that no additional liability of material amount is likely to arise as a result of such exercise. However, as a matter of prudence, PIA has made a provision of Rs 1,500 million.
The Collector of Central Excise had raised demand of Rs 600 million in respect of duties levied on tickets provided by PIA to staff, either free of charge or at concessional rates, repair/replacement of re-imported aircraft engines, non-availability of invoices, import related to miscellaneous consignments, printed material sent at its various stations abroad for utilisation, late/short payment of sales tax and central excise duty and excess baggage tickets. On protest by the Collector Central Excise, PIA has already paid an amount of Rs 100 million which is considered fully recoverable by the management. PIA has filed appeals with the customs, central excise & sales tax tribunal which are pending adjudication.
Additional Collector, LTU, Karachi had served a show-cause notice on PIA as a result of audit of PIAC records pertaining to 2004, 2005 and 2006. Similarly, a show-cause notice was issued by Collector of Customs in respect of customs duty on the import of simulator. Appeals have been filed in both cases. According to Pakistan State Oil (PSO), to-date a payment of Rs 2.056 billion is outstanding against PIA.