AASL
AIRLINE ALLIED SERVICES LIMITED
ANNUAL REPORT 2017 - 18
AASL
CONTENTS
Page No.
1. Board of Directors 1
2. Chairman’s Message 2
3. Directors’ Report 6
4. Management Discussion & Analysis Report 15
5. Comments of the Comptroller & Auditor General of India 42
6. Independent Auditors’ Report 45
7. Balance Sheet as at 31 March 2018 77
8. Statement of Prot & Loss for the year ended 31 March 2018 78
9. Statement of Change in Equity for the year ended 31 March 2018 79
10. Cash Flow Statement for the year ended 31 March 2018 80
11. Notes forming part of the Financial Statements for the year ended 31 March 2018 81 AASL
BOARD OF DIRECTORS (as on 26 DECEMBER 2018)
Shri Pradeep Singh Kharola Chairman
Shri Vinod Hejmadi Director
Shri Pankaj Kumar Director
Shri Angshumali Rastogi Director
Shri Pranjol Chandra Director
Chief Executive Officer Shri C.S. Subbiah
Auditors M/s. M. Verma & Associates Chartered Accountant 1209, Hemkunt Chambers 89, Nehru Place New Delhi-110 019.
Company Secretary Smt. Manjiree M. Vaze
Registered Office Alliance Bhawan Domestic Terminal 1 I.G.I. Airport, New Delhi-110 037
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CHAIRMAN'S SPEECH
Dear Shareholders,
It gives me great pleasure to present to you the Thirty Fifth Annual Report of the Company for the year 2017-18.
Airline Allied Services Ltd. is one of the leading regional airlines in the country providing connectivity to Tier II & Tier III cities in India as well a feeder to its parent company, Air India Limited and its subsidiary, Air India Express Limited. It is in the process of expanding its operations on Pan India basis by inducting more aircraft in its eet. These aircraft will serve shorter routes within the country and also y overseas in the near future.
OVERVIEW- CIVIL AVIATION INDUSTRY
India's civil aviation industry seems to have become a more mature market than any time in the past. The number of players in the industry still remain fairly large. The big change in the current year is the emergence of numerous regional airports that will increase connectivity tremendously across the country. In addition, policy changes like allowing foreign direct investment in domestic airlines has changed the market landscape. Passenger trafc is also rising by leaps and bounds as consumers are shifting from rail to air in large numbers.
AIR TRAVEL GROWTH
The latest data released by aviation regulator Directorate General of Civil Aviation (DGCA) reveals that domestic air trafc nearly doubled to 117 Million passengers in 2017 with 100 ights taking off every hour compared with 67 in 2011. As against 59.87 Million passengers in 2011, there were 117.18 Million passengers in 2017. There was also an 18% growth in passenger trafc in 2017 as compared to 2016. In addition, ights were operating at fuller capacity than in the past, from 75.5 per cent full in 2011 to 86.1 per cent full in 2017.
The other clear trend that has emerged in recent years is the rm preference for low budget airlines by air travelers. The situation now is that Low cost carriers dominate the skies with a nearly 68 per cent market share.
INDIA TO BE THIRD LARGEST AVIATION MARKET
The country is poised to become the third largest aviation market by 2025, overtaking the UK, according to the International Air Transport Association (IATA).
The inow of foreign investment has led to an acceleration in the industry's growth over the last seven years. According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inows in air transport (including air freight) between April 2000 and September 2017 stood at USD1.59 Billion. According to Morgan Stanley, the country will witness an investment of USD25 Billion in the next decade in the airports sector and trafc growth of 13 %. It has projected that the share of air travel in air and rail travel combined in the country will grow to 15.2 % per cent by 2027 from 7.9 % now.
Given the huge investments being planned for the civil aviation sector, it is clear that the country is poised for a big leap in the arena of air travel. It has enormous potential for expansion since air transport remains beyond the reach of most of the country's travelling public. Rail travel has increasingly become more expensive. In contrast, air travel provides comfort with speed. There is thus no doubt that civil aviation needs to keep a focus on quality, cost and passenger interest, which will enable it to become the third-largest aviation market by 2025.
FUEL PRICES
One factor that needs to be kept in mind is the cost of fuel, as oil prices have risen signicantly over the past year. Fuel prices account for about 30% to 40% of airlines' operational costs. In case these continue to rise it
2 AASL will impact pricing and also ight occupancy. Indian consumers tend to be extremely price conscious and airlines nd that a hike in prices leads to an immediate dip in demand. For this, however, the industry needs to ensure better efciency in operations to cut costs and improve passenger service to lure customers.
To sum it up the Indian aviation industry is on the verge of a gigantic leap forward. It can only be hoped that the policy environment continues to be conducive to its growth so that the industry can realize its full potential in the coming years.
NEW CIVIL AVIATION POLICY – REGIONAL CONNECTIVITY SCHEME
The new Regional Connectivity Scheme “Ude Desh ka Aam Nagrik" (UDAN) introduced by the Government, which will run for 10 years, will work to revive existing airstrips and airports. Under this scheme in rst round of bidding, Government had awarded 128 regional routes to ve airlines — Airline Allied Services Limited (Alliance Air), SpiceJet, Turbo Megha, Air Odisha and Air Deccan.
In the second round of Regional Connectivity Scheme (RCS), 325 routes have been awarded to airlines and helicopter operators with the aim of enhancing ight services to hilly and remote areas. Under the scheme airline operators have to offer half of their seats at discounted rates and helicopter operators can offer up to 13 seats at lower fares with the Government providing Viability Gap Funding (VGF) or subsidy to airlines and helicopter operators.
With the introduction of RCS, a number of new routes to unserved and undeserved airports have opened up for Alliance Air and it has been awarded 15 routes and 18 routes in the rst and second round respectively of the bidding process. The Hon'ble Prime Minister agged off the rst UDAN ight on the Shimla-Delhi sector on 27th April, 2017 and Alliance Air had the privilege of being the launch carrier. Alliance Air had launched 19 routes as on 31st March, 2018 and also holds the credit for the rst airline to complete commencement of operations on all the awarded routes in the rst round of bidding. Under Wings India 2018, organized by FICCI in association with Govt of India, Alliance Air has been declared as the winner of 'Best Airlines and Helicopter under RCS'.
As operation to unserved and undeserved airports has been incentivized by the Government, it will stimulate trafc on regional routes connecting Tier-II/III cities. Alliance Air, with its existing eet of ATR aircraft, supplemented by an early induction of more ATR aircraft can take a position of dominance in the regional market. It, therefore, plans to participate aggressively in the subsequent rounds of RCS bidding as well.
PERFORMANCE OF THE COMPANY DURING THE YEAR
The Company incurred a Net Loss of Rs. 2637.64 Million for Financial Year 2017-18 as against, net loss of Rs. 2867.06 Million for Financial Year 2016-17. Although the total revenue has increased by Rs.2039.85 Million, the loss decreased only by Rs. 229.42 Million due to increase in expenditure by Rs. 1810.44 Million. The increase in losses can be attributed to the following reasons: l Passenger revenue increased by Rs.1861.17 Million due to net impact of increase in passenger carriage by 0.66 million and decline in passenger yield by Rs.1076 per passenger. l Other Operating Income increased from Rs. 26.59 Million in 2016-17 to Rs. 206.38 Million in 2017-18. l There was increase in ATF cost by Rs. 538.26 Million due to increase in operation and resultant increase in quantity uplifted. The average ATF rate increased by 27%. l Lease charges increased by Rs. 240.65 Million due to induction of 6 new Aircraft in the year 2017-18 (Rs.1804.15 Million from Rs. 1563.50 Million).
3 AASL l The maintenance charges increased by Rs.162.11 Million (Rs.1593.79 Million from Rs. 1431.68 Million) due to induction of three new aircraft and increase in the expenditure on repair of aircraft and cost of material consumed. l Increase on account of re-computation of redelivery cost of Aircraft and induction of new aircraft in eet, increase in Financial cost towards interest on outstanding amount to be payable to the parent company.
FUTURE PLANS
The passenger aviation market in India has been growing steadily due to induction of capacity by all airlines and also fares becoming more affordable. The growth in Tier II & III cities is still largely untapped, as larger airlines have focused on trunk routes and operate larger capacity aircraft which are not suitable for serving in smaller airports.
Alliance Air has the advantage of operating ATR type of aircraft since January 2003. It intends to build on this experience of over a decade of serving to Tier II & III cities. The Company has a eet of 2 ATR 42-320 and 14 ATR 72-600 aircraft. Four New ATR 72-600 aircraft were likely to be inducted in FY 2017-18. The existing eets is operating 86 ights every day over a network of 51 stations. The new aircraft being inducted will be utilized to increase frequency on present routes as well as deployment on new RCS routes. The Company plans to expand its network and reach to neighboring countries. It further plans to increase the eet to 40 aircraft by FY 2021.It plans to reverse the trend of adverse nancial parameters and improve the nancial position of the Company as well. We hope to do much better in the year 2018-19 and condent of increasing our revenues, cutting down on expenses and loss making routes.
ACKNOWLEDGEMENT
I take this opportunity to thank Air India Limited and Ministry of Civil Aviation for their unstinted support. I also acknowledge the support extended by all other authorities including banks and regulatory agencies and assure that we will continue our growth trajectory, taking Airline Allied Services Limited to greater heights. I would like to thank my colleagues on the Board for their valuable guidance.
I would like to thank all employees of Airline Allied Services Limited for their contribution and support to transform Alliance Air as the First choice of the travelling Public.
On behalf of the Board, I seek your continued support, as always.
Sd/- (Pradeep Singh Kharola) Chairman
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VISION:
To be a Leading Regional airline providing connectivity to Tier II and III cities and a feeder airline to the network & in complete synergy with Air India.
MISSION & OBJECTIVES :
Prominent domestic airline
Customer l Provide safe, reliable and on-time services l Take effective steps to provide high level of customer satisfaction l Explore new passenger base for airline market l Provide one-stop connectivity to metros and beyond for seamless travel to main domestic and international destinations.
Processes l Continuously improve standards of safety and efciency l Operate and maintain a young and modern eet l Provide the best and most efcient network in conjunction with main network of Air India l Create economic value l Enhance its competitive market standing and image as a Regional short haul airline.
Route – Network l Compete with high density train trafc l Meet regional aspirations of swift connection to metros and beyond l Provide connectivity to cities so far not air connected.
People l Build a highly motivated and professional team l Maintain highest degree of transparency and ethics l Be a responsible corporate citizen
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DIRECTORS’ REPORT
To, The Members, Airline Allied Services Ltd.
The Directors of your company have pleasure in presenting the Thirty Fifth Annual Report together with audited Statement of Accounts of Airline Allied Services Ltd. for the year ended 31st March, 2018.
FINANCIAL PERFORMANCE
The Financial and Physical performance for the year under review vis-a-vis the previous year was as under:
Financial Performance
(Rs. in Million)
2017-18 2016-17
Operating Revenue Schedule Revenue 4947.37 3091.38 Non schedule revenue 777.71 558.69
Other Operating Revenue 206.38 26.59
Other Income 86.28 291.82
Total Revenue 6017.74 3968.47 Total Expenses 8659.47 6848.73 Other Comprehensive Income 4.09 13.50 Exceptional Items 0.00 (0.03) Net Prot/(Loss) for the year Before Tax (2637.64) (2867.05) Net Prot/(Loss) for the year After Tax (2637.64) (2867.05) Share Capital 4022.50 4022.50
SHARE CAPITAL
Authorized Share Capital
As on 31st March, 2018 the Authorized Share Capital of the Company was Rs.2000 Crore divided into Twenty Crore Equity Shares of Rs.100 each.
Issued, Subscribed and Paid up Share Capital
As on 31st March, 2018, the Issued, Subscribed and Paid up Share Capital of the Company was Rs.402.25 Crore divided into Four Crore Two Lakhs Twenty Five Thousand Equity Shares of Rs.100 each.
CHANGES IN THE SHARE CAPITAL, IF ANY
During the year there was no change in the paid up share capital of the Company.
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CHANGE IN NATURE OF BUSINESS
During the year there was no change in the nature of business of the Company.
DIVIDEND
In terms of Section 123 of the Companies Act, 2013 the dividend could not be considered due to accumulated losses.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND
Since there was no unpaid/unclaimed Dividend for the past years, the provisions of Section 125 of the Companies Act, 2013 did not apply.
AMOUNTS TRANSFERRED TO RESERVES
In view of the accumulated losses, the Board of Directors have decided not to transfer any amount to reserves during the year.
HUMAN RESOURCES
The staff strength of the Company at the close of the year was 602 (533) contractual employees excluding 12(16) employees on deputation from the parent Company, Air India, 26 employees on deputation from AIESL and 03 employees deployed from AIATSL. All the employees of the Company are on xed term contract basis. Out of the 602 contractual employees, 178 (29.57%) were female employees. Cadre-wise, as on 31st March, 2018, there were 187 Pilots, 147 cabin crew and remaining 268 were other categories of employees. The Company has been supplementing cabin crew and other manpower as required by Air India.
As on 31st March, 2018, there were total 52 expatriate pilots for ATR42 & ATR-72 eet. The Company's endeavor is to keep the number of expatriate pilots to bare minimum to maintain minimum mandatory strength of commander vis-à-vis aircraft eet.
IMPLEMENTATION OF RESERVATION POLICY :
The Reservation Policy has been implemented as per the Presidential Directives issued in the year 1975, along with the revised Directives effective 1991 and 1996.
SC/ST/OBC – Number of employees as on 31 March 2018
Total No. Total No. % of SC Total No. % of ST Total No. % of OBC of employees of SC employees of ST employees of OBC employees employees employees employees
602 56 9.30 23 3.82 107 17.77
IMPLEMENTATION OF OFFICIAL LANGUAGE - USE OF HINDI
To fulll the objectives of the Ofcial Language Policy of the Government, the Company played meaningful role in promoting the usage of Hindi at all levels. Ofcers/ Staff were encouraged to work more and more in Hindi. Hindi Pakhwara was conducted, wherein employees participated with enthusiasm. Prizes and awards were distributed to winners and participants during the function.
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CONTRIBUTION TO EXCHEQUER
The Company has contributed Rs 142.88 Million (Rs. 30.60 Million) to Government exchequer by way of Sales Tax and other levies on Aviation Turbine Fuel.
COMPLIANCE WITH RTI ACT, 2005
The Company being a public sector enterprise has successfully ensured compliance with the provisions of Right to Information Act for providing information to the citizens.
The Company has a CPIO (Central Public Information Ofcer) and Appellate Authority for timely disposal of applications and appeals.
During 2017-18, 34 Requests / Appeals were received and 34 have been disposed off.
INFORMATION ABOUT SUBSIDIARY/JV/ASSOCIATE COMPANY
The Company does not have any Subsidiary, Joint Venture or Associate Company.
MATERIAL CHANGES AND COMMITMENTS
In terms of the provisions of Section 134(3)(l), no major changes have occurred which have affected the nancial position of the Company between 31st March, 2018 and the date of Board's Report.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed Management Discussion and Analysis Report is given separately.
MEETINGS OF THE BOARD OF DIRECTORS
During the Financial Year 2017-18, the Company held four meetings (including adjourned & re-adjourned meetings) of the Board of Directors as per Section 173 of Companies Act, 2013 which is summarized below:
Sr. No. Date of Meeting Board Strength No. of Directors Present
1 11.07.2017 7 6
2 22.08.2017 7 7
3 17.11.2017 7 6
4 17.01.2018 7 7
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors of the Company conrm:-
(a) That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
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(b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the nancial year and of the prot and loss of the Company for that period;
(c) The Directors have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) The Directors have prepared the Annual Accounts on a going concern basis;
(e) Company being unlisted, sub clause (e) of section 134(3) is not applicable.
(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDIT COMMITTEE
The Audit Committee comprised of 4 Directors. In the absence of Independent Directors on the Board of the Company, the Audit Committee is chaired by the Government Director. During the year 2017-18 following were the members of the Audit Committee:
Name of the Director Position held in the Committee Category of the Director
Shri Angshumali Rastogi Chairman Government Director
Shri K V Unnikrishnan Member Government Director (Ceased w.e.f.18.12.2017)
Dr Shefali Juneja Member Government Director (Ceased w.e.f. 12.5.2017 and re-appointed w.e.f. 18.12.2017)
Shri Vinod Hejmadi Member Nominee Director – AI
Shri Ashwani Lohani Permanent Invitee Chairman (Nominee of AI) (Ceased w.e.f.23.08.2017)
Shri Rajiv Bansal Permanent Invitee Chairman (Nominee of AI) (Ceased w.e.f.12.12.2017)
Shri Pradeep Singh Kharola Permanent Invitee Chairman (Nominee of AI) (appointed w.e.f. 12.12.2017)
AUDITORS
The Comptroller & Auditor General of India (CAG), has appointed M/s M Verma & Associates, Chartered Accountants, Delhi as Statutory Auditors of the Company for FY 2017-18.
Qualications or adverse remarks in the Auditors' Report which require any clarication/ explanation along with reply of management thereto are attached herewith in the Report.
The Notes on nancial statements are self-explanatory and needs no further explanation.
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COMMENTS OF COMPTROLLER AND AUDITOR GENERAL
The Comments of the Comptroller & Auditor General of India under Section 143(6) of the Companies Act, 2013 on the accounts of the Company for the year ended 31st March, 2018 are annexed to this report.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 the Board has appointed M/s Jiwan Parkash Saini, Practicing Company Secretaries, New Delhi, to conduct Secretarial Audit for the nancial year 2017-18.
The Secretarial Audit Report and Managements' Comments thereon for the nancial year ended 31st March, 2018 are Annexed to this Report:
The Management Comments on Secretarial Auditors' observations are as under:
Secretarial Auditor's Observation Management's Reply
Company has not appointed Independent In terms of the provisions of Articles of Association, Directors pursuant to sub-section 4 of Section 149 the appointment of Independent Directors will be of Companies Act, 2013 , hence no meeting of done by Holding Company/Administrative Ministry. Independent Directors could be held during the period under audit. Since, the Company has not As per the provisions of Section 177(2) of the appointed Independent Directors , the Company Companies Act, Audit Committee shall consist of a has not complied with the provisions of section minimum of three Directors with Independent 177(2) and 178 of Companies Act, 2013 read with Directors forming a majority. AASL, however, has Rule 6 of Companies( Meetings of Board and its constituted Audit Committee consisting of three Power) Rules, 2014 as regard the appointment of members, with Govt Nominee Directors forming a Independent Directors in composition of the Audit majority, pending the appointment of Independent Committee. Directors.
As there was no Independent Director on the Board of AASL, the matter was taken up with the Ministry of Civil Aviation by Air India Limited.
The Audit Committee shall be reconstituted upon appointment of Independent Directors.
Company has not constituted Remuneration and As required under section 178, the Nomination and Nomination Committee of the Board pursuant to Remuneration Committee should consist of 3 or section 178 of Companies Act, 2013, read with more Non Executive Directors out of which not less Rule 6 of Companies (Meetings of Board and its than one half should be Independent Directors. Power) Rules, 2014 as it meets the prescribed criteria as mentioned in Rule 6. As presently there is no Independent Director on the Board of AASL, Nomination and Remuneration Committee has not been constituted. However, the matter has been taken up with the Ministry of Civil Aviation by Air India Limited.
10 AASL
LOANS, GUARANTEES AND INVESTMENTS
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the provisions of the Section 186 are not applicable to the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
(A) The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 in respect of conservation of energy and technology absorption have not been furnished considering the nature of activities undertaken by the Company during the year under review.
(B) FOREIGN EXCHANGE EARNINGS AND OUTGO
CURRENT PREVIOUS YEAR YEAR 2017-18 2016-17 (Rs. In Million) (Rs.In Million)
A. Expenditure on Imports (CIF) during the year ended 31st March, 2017
- Aircraft Spares Parts & Tools 117.94 44.47
- Capital Items-Ground Support Equipment 32.99 NIL Airframe Rotables and Aero Engg. Rotables
B. Expenditure on Consumption during the year ended 31st March 2017.
- Imported Spares & Components 120.92 81.77
- Indigenous Spares
C. Earnings in Foreign Currency
- Interline Revenue NIL NIL
D. Expenditure in Foreign Currency
- Aircraft Lease & Maintenance Charges 2593.59 1857.77
- Purchase of Stores & Equipment 150.93 44.47
- Technical Literature 13.06 1.46
- Training & Travelling 63.01 92.58
- Legal charges 0.567 0.086
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DEPOSITS
The Company has not accepted any deposits during the year.
SIGNIFICANT & MATERIAL ORDERS
During the year no signicant and material orders were passed by the regulators or courts or Tribunals impacting the going concern status and Company's operations in future.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Provisions of Section 135 of Companies Act, 2013 relating to Corporate Social Responsibility is not applicable to the Company as the Company has not earned any prots during the year.
COMPLIANCE WITH THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The details of sexual harassment cases reported in the Company during the nancial year are as under:-
1) No complaint of sexual harassment was received during the relevant year.
2) Number of cases pending for more than ninety days are Nil.
3) Number of workshops or awareness programmes carried out in connection with sexual harassment:
General awareness programmes are normally conducted periodically. Besides this, posters on sexual harassment are being displayed at work places.
4) Remedial measures taken by the Company :
In line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, an Internal Complaints Committee (ICC) has been set up to deal with the complaints and also spread awareness in the organization.
CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance with the exception of appointment of Independent Directors on the Board. This matter is being pursued with Air India / the Administrative Ministry.
A report on Corporate Governance is annexed at Annexure A.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the nancial year were on an arm's length basis and were in the ordinary course of business. There are no materially signicant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conict with the interest of the Company at large.
RISK MANAGEMENT
Since the revenue of AASL is tied up through its parent Company, Air India and the parent company is having adequate risk management policy in case of sales through agents, credit cards, etc. by establishing a Capping
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Monitoring Policy, Bank Guarantee Policy, Risk Monitoring through Risk engine attached to web portal, AASL being 100 percent subsidiary is not prone to high business risk.
Therefore, the Company does not have any Risk Management Policy yet as the element of risk threatening the Company's existence is very minimal.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return in form MGT 9 is annexed to this report.
DECLARATION OF INDEPENDENCE
AASL is a wholly owned subsidiary of Air India Limited. As per the provisions of Article 22 of the Articles of Association of the Company, the number of Directors of the Company shall not be less than three and not more than twelve all of whom shall be appointed by Air India Limited, who in turn can do so subject to the directions of the Government of India.
Air India has requested the Ministry of Civil Aviation to nominate at least two Independent Directors on the Board of AASL and appointments are awaited.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
The following changes have occurred in the constitution of Directors and KMP of the Company during the FY 2017-18.
Sr. Name Designation Date of Date of Mode of No. Appointment Cessation Cessation 1 Dr Shefali Juneja Director, MOCA 18 December 12 May 2017 Ceased to be 2012 Director 2 Shri Ashwani Lohani CMD, AIL 31 August 2015 23 August 2017 Ceased to be Director 3 Shri Angshumali Rastogi Director, MOCA 12 May 2017 4 Shri K V Unnikrishnan Dy. Secretary, 12 May 2017 18 December Ceased to be MOCA 2017 Director 5 Shri Rajiv Bansal CMD, AIL 23 August 2017 12 December Ceased to be 2017 Director
6 Smt Meenakshi Dua Regional Director- 21 October 29 September Ceased to be Northern Region, 2014 2017 Director AIL 7 Shri Sarabjot Singh Regional Director- 29 September Ceased to be Uberoi Northern Region, 2017 Director w.e.f. AIL 1 May 2018 8 Shri Pradeep Singh CMD, AIL 12 December Kharola 2017 9 Dr Shefali Jt. Secretary, 18 December Ceased to be Juneja MOCA 2017 Director w.e.f. 31 August 2018 13 AASL
In view of the exemption granted vide Notification dated 5 June 2015 of the Ministry of Corporate Affairs information on the following points has not been given:
I. Performance Evaluation of Board, its Committees and individuals. ii. Policy for selection and appointment of Directors and their remuneration. iii.Remuneration Policy - Remuneration to Executive Directors and Non Executive Directors.
ACKNOWLEDGEMENTS
The Board sincerely appreciates the Company's valued customers in India and abroad for using the services of Company and looks forward to their continued support and condence.
The Board also gratefully acknowledges the support and guidance received from Air India Ltd., Ministry of Civil Aviation and various Ministries of the Government of India, to the Company's operations and development plans. The Board expresses their grateful thanks also to the DGCA, Comptroller and Auditor General of India, the Ministry of Corporate Affairs, the Statutory Auditors, Secretarial Auditor, Internal Auditors, Airports Authority of India, other Govt. Departments, airlines and agents.
For and on behalf of the Board
Sd/- (Pradeep Singh Kharola) Chairman
Place : New Delhi
Date : 6 November 2018
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MANAGEMENT DISCUSSION & ANALYSIS REPORT
ANALYSIS OF FINANCIAL PERFORMANCE
Revenue v Total revenue earned during the year was Rs. 6017.74 Million as against Rs. 3968.47 Million during 2016- 17.
Expenditure v The total expenditure incurred during the year was Rs.8659.47 Million as compared to the previous year's gure of Rs. 6848.73 Million.
HUMAN RESOURCES
Staff Strength
As on 31st March, 2018, AASL had 602 employees on Fixed Term Employment Agreement basis. In addition, there were 12 employees on deputation from Air India Limited and 26 employees on deputation from AIESL and 03 employees on deputation from AIATSL.
FLEET POSITION
As on 31st March, 2018, aircraft available in AASL eet were as under:
Aircraft MSN TYPE
VT-ABA 390 ATR42-320
VT-ABB 392 ATR42-320
VT-AII 1197 ATR72-212A
VT-AIT 1226 ATR72-212A
VT-AIU 1246 ATR72-212A
VT-AIV 1252 ATR72-212A
VT-AIW 1272 ATR72-212A
VT-AIX 1268 ATR72-212A
VT-AIY 1273 ATR72-212A
VT-AIZ 1279 ATR72-212A
VT-RKC 1381 ATR72-212A
VT-RKD 1383 ATR72-212A
VT-RKE 1421 ATR72-212A
VT-RKF 1423 ATR72-212A
VT-RKG 1427 ATR72-212A
VT-RKH 1434 ATR72-212A
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TECHNICAL RELIABILITY
Aircraft-wise Technical Reliability during the year 2017-18 was as under: a) ATR 72-212A (600) 9 9.42% b) ATR 42-320 9 9.09%
AIRCRAFT UTILIZATION
Aircraft utilization during the year 2017-18 was as under: a) ATR 72-600 3 3463:33 BH b) ATR 42-320 4 782:22 BH
MARKETING INITIATIVES
Total number of ights operated as on 31st March, 2018 - 542 ights/week
Total number of ATR 72-600 ights operated as on 31st March, 2018 – 482 ights/week.
Total number of ATR 42-320 ights operated as on 31st March, 2018 - 60 ights/week
Total number of Stations as on 31st March, 2018 – 48
New Flights / Links
ATR-72 Aircraft l Vizag/Vijayawada/Tirupati & v.v. 6 freq/week w.e.f. 01st April 2017 l Hyderabad/Pune/Hyderabad 5 freq/week w.e.f. 07th April 2017 l Vizag/Vijayawada/Bangaluru & v.v. 6 freq/week w.e.f. 29th May 2017 l Gwalior/Indore/Gwalior 3 freq/week w.e.f. 31st May 2017 l Delhi/Gwalior/Delhi 3 freq/week w.e.f. 31st May 2017 l Jaipur/Lucknow/Jaipur Daily w.e.f. 05th July 2017 l Jaipur/Dehradun/Jaipur Daily w.e.f. 05th July 2017 l Jaipur/Bhopal/Jaipur Daily w.e.f. 05th July 2017 l Lucknow/Patna/Lucknow Daily w.e.f. 24th August 2017 l Chennai/Trichy/Chennai Daily w.e.f. 30th August 2017 l Chennai/Vijayawada/Chennai Daily w.e.f. 30th August 2017 l Chennai/Coimbatore/Chennai Daily w.e.f. 30th August 2017 l Chennai/Madurai/Chennai Daily w.e.f. 30th August 2017 l Delhi/Ludhiana/Delhi 4 freq/week w.e.f. 02nd September 2017
16 AASL l Hyderabad/Raipur/Bhopal & v.v. Daily w.e.f. 03rd September 2017 l Delhi/Bikaner/Delhi Daily w.e.f. 26th September 2017 l Mumbai/Shirdi/Mumbai Daily w.e.f. 01st October 2017 l Hyderabad/Shirdi/Hyderabad Daily w.e.f. 01st October 2017 l Chennai/Coimbatore/Hyderabad & v.v. 6 freq/week w.e.f. 03rd October 2017 l Kullu/Chandigarh/Kullu 6 freq/week w.e.f. 05th October 2017 l Bangaluru/Coimbatore/Bangaluru Daily w.e.f. 29th October 2017 l Delhi/Chandigarh/Delhi 6 freq/week w.e.f. 29th October 2017 l Chennai/Coimbatore/Hyderabad/Pune/Goa & v.v. 6 freq/week w.e.f. 01st December 2017 l Jaipur/Agra/Jaipur 3 freq/week w.e.f. 08th December 2017 l Bathinda/Jammu/Bathinda Daily w.e.f. 27th February 2018 l Bangaluru/Coimbatore/Kochi & v.v. Daily w.e.f. 27th March 2018
ATR-42 Aircraft l Delhi/Shimla/Delhi – Daily w.e.f. 27th April 2017
North East Operations
Alliance Air continued with its ight operations under a MoU with North Eastern Council (NEC) during the year 2017/2018 with VGF support from NEC: a. Kolkata/Guwahati/Tezpur & v.v. - 3 freq/week with ATR 42 b. Kolkata/Guwahati/Lilabari & v.v. - 4 freq/week with ATR 42 aircraft c. Kolkata/Shillong/Kolkata - Daily with ATR 42 aircraft
Operation of flights with VGF support: l Kochi/Agatti/Kochi – Frequency of this ight was increased to Daily w.e.f. 01 November 2017 ISO 6 freq/week with VGF support from Lakshadweep Administration. l Mumbai/Diu/Mumbai – 4 times per week with ATR 72 aircraft w.e.f. 25 October 2015. Flights are being operated under VGF support from Diu Administration.
Regional Connectivity Scheme
In the rst round of Regional Connectivity Scheme – UDAN of the Government of India, Alliance Air was awarded 15 routes. Effective 27 April 2017, Alliance Air was the rst airline to commence ights on Shimla/Delhi sector under this scheme which was agged off by Hon'ble Prime Minister of India. The ights which have been commenced under this scheme are given as under:
1. Delhi/Shimla/Delhi-Daily w.e.f. 27th April 2017
2. Delhi/Bathinda/Delhi- 3 ights per week w.e.f. 27th April 2017
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3. Gwalior/Indore/Gwalior- 3 ights per week w.e.f. 31st May 2017
4. Gwalior/Delhi- 3 ights per week w.e.f. 31st May 2017
5. Delhi/Ludhiana/Delhi- 4 ights per week w.e.f. 02nd September 2017
6. Delhi/Bikaner/Delhi- Daily w.e.f. 26th September 2017
7. Jaipur/Agra/Jaipur- 3 ights per week w.e.f. 08th December 2017
8. Delhi/Pathankot/Delhi- 3 ights per week w.e.f. 05th April 2018
In the second round of Regional Connectivity Scheme–UDAN 2 of the Government of India, Alliance Air has been awarded the following routes:
1. Bathinda/Jammu/Bathinda
2. Bikaner/Jaipur/Bikaner
3. Hyderabad/Kolhapur/Bangalore/Kolhapur/Hyderabad/Hubli/Hyderabad/Sholapur/Hyderabad
4. Hyderabad/Nasik(Ozar)/Kandla/Ahmedabad/Kandla/Nasik(Ozar)/Hyderabad
Alliance Air has commenced ights on the following sectors in RCS-UDAN round 2
1. Bathinda/Jammu/Bathinda- Daily w.e.f. 27th February 2018
2. Bikaner/Jaipur/Bikaner- Daily w.e.f. 27th March 2018
Alliance Air will commence ights on the other routes shortly.
ENGINEERING INITIATIVES
Major achievements during the year 2017-18 were as below:
Expansion of Aircraft Workshop facilities: l AIESL contracted MRO of AASL, is considering setting up of an Overhaul facility for the PW127M Engines tted on ATR-72 Aircraft at JEOC, Delhi. l AIESL has signed an MoU with M/s ATR for development of in house capabilities for maintenance of LRU's and development of MRO capabilities on ATR-600 family aircraft by providing training to AIESL Engineers on structural repair. l AIESL Hyderabad base has upgraded its capabilities to include C-Check on ATR-72 Aircraft and the following aircraft have undergone C-Check at this facility:
Aircraft From To
VT-AII 07-11-17 25-11-17
VT-AIT 04-12-17 26-12-17
VT-AIU 26-03-18 01-04-18
VT-AIV 15-01-18 24-01-18
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Details of engineering services provided to other Airlines/Organisation during 2017-2018:
As per MOU dated 29 July 2013 signed between AIESL and AASL, all AME's have been hived off from AASL and transferred to AIESL. Subsequently, all engineering/maintenance activities of AASL are being carried out by AIESL w.e.f 1 January 2015. Hence no Engineering services are being provided by AASL to other Airlines/Organisation.
Engineer's Training Programme:
As per the MOU signed between AIESL and AASL, all AME's (certifying staff) have been hived off and transferred from AASL to AIESL. Hence, all aircraft related Engineering trainings are being managed by AIESL. For PPC and CAMO functions all the recently inducted Assistant Engineers and Technical Assistants have completed the initial Orientation and Company information course in-house, along with the mandatory regulatory requirements training such as Human factor, SMS etc., and now these Ofcers are put in On-the job training.
CIF value of Imports (New Purchases & not repaired items) during the year 2017-18 in respect of (a) components & spares (b) inventory control (c) capital items
AASL is handling only exchange of Spares/Components and new purchases, if any, are currently being handled by MMD, AIL through RAMCO.
Disposal / Return of Aircraft and Spares and other surplus / obsolete assets, if any.
All CRJ aircraft have been returned and the inventory currently lying with AASL which was procured on account of CRJ aircraft operation is valued at Rs.4.6 Crore. MMD, AIL is exploring means for best economic ways to dispose of this inventory. It may also be noted that during the negotiation of VT-RJE Lease Return Buyout, a majority portion of this CRJ Inventory has been offered for sale to its Lessor and the same has been done after due approval of the competent authority.
Various economy measures adopted and achievements made during the year 2017-18: l AASL saved approximately USD 180K (INR 1.16 Crore) by exchanging PW121 engine AC0097 with another PW121 engine AC0106 with M/s Abric Leasing Ltd, instead of going for Overhaul of ESN Ac0097. l VT-ABO aircraft settlement of claim Lodged against M/s Jet airways has been concluded and AASL has received the compensation of amount to the tune of INR 7.78 Crore. l Efforts are being made to establish centralised PPC and MMD Divisions at Delhi, thereby having effective control on procurement, provisioning and ensuring availability of components to enhance reliability further.
Future Perspective
6 new ATR 72-600 aircraft were inducted during the year 2017-2018 taking the eet to 14 ATR 72 aircraft. The process for induction of remaining 4 will be concluded shortly. These aircraft are proposed to be deployed on Tier II & III cities to improve regional connectivity as proposed in the new National Civil Aviation Policy as envisaged by Ministry of Civil Aviation. After the due diligence of route economics and utilisation of aircraft, new stations are being added proportionally to be aligned with the induction of new aircraft.
FLIGHT SAFETY
The Company has an independent Flight Safety Department which functions as per the DGCA requirements in proactive manner. Flight Safety department perform proactive functions for the Airline. Under proactive function the department do FOQA (Flight Operational Quality Assurance) which requires continuous monitoring of ight data i.e of SSFDR & CVR and the internal safety audit of the base station as well as safety
19 AASL inspections of the line stations being operated by an airline which includes Aireld Inspection, Spot Checks, Ramp Inspection and Cockpit/cabin surveillance checks at regular interval.
The total reported incidents were 34 in number for FY 2017- 2018, investigated by the Permanent Investigation Board (PIB) of the Company with DGCA representatives and NIL case is pending.
Alliance Air during the nancial Year 2017-18 under review had no occurrence classied as serious incident/accident on ATR 42-320 and ATR 72-600 aircraft.
There were 12 bird hit incident reported in the Financial Year 2017-18 and nil damage reported to the aircraft.
To ensure safety of aircraft following measures are taken up by Flight Safety Department:- l The procurement of new FOQA & 3D Software for ATR 72-600 aircraft eet is taken up with M/s Teledyne. l The occurrences which are classied as incidents by the regulatory norms are investigated by the Investigation Board of the Airline in association with the Directorate of Air Safety, DGCA. l The recommendations of Investigation Board are circulated to the respective departments for their compliance. l Internal Safety Audit is conducted annually to check the compliance & evaluation of safety performance within the airline and the ndings are reported to the concerned departments to follow up. l As per CAR Load and Trim Sheet of ATR 72-600 & ATR 42-320 eet are being monitored on monthly basis. l Ramp Inspection/Spot Check of Base Stations/Line Stations is carried out randomly. l Safety inspection of Line stations are being carried out as per approved plan. l As per FOQA program the involved crew is being counseled timely.
TRAINING
Alliance Air has upgraded 4 ATR Pilots as Commander during this year and 2 ATR Pilot would be under PIC upgraded training during the year 2017-18.
GOING CONCERN
Air India Limited had formulated a Turn Around Plan (TAP) applicable to its group companies in order to improve their operational and nancial performance. The Government of India had approved the Turn Around Plan (TAP) in February 2012 with the intention to turn around Air India Limited and its subsidiaries.
Alliance Air, with the induction of 10 new ATR 72-600 aircraft will have a total eet of 16 aircraft in 2017-18 and 20 aircraft in 2018-19.
Alliance Air is presently operating to 51 destinations (as on November 2018) with 110 departures per day and 602 ights per week. It is projected to carry approximately 1.6 Million passengers in Financial Year 2018-19, which is a 22% growth year on year over Financial Year 2017-18. The projected capacity increase for Financial Year 2018-19 is 30 % over Financial Year 2017-18. The aircraft utilisation has increased close to 75% in rst half of 2018-19 as compared to 2017-18.
Alliance Air is budgeting a revenue of around Rs. 876.60 Crore in 2018-19 compared to the actual operating revenue of Rs. 593.15 Crore and Rs. 367.66 Crore in 2017-18 and 2016-17 respectively. This is principally due increase in effective utilisation of aircraft from the average 6.4 hours to 8.52 hours per day and 10.09 per day in
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September 2018 apart from increase in ASKM. The Revenue PER Kilometre (RPK), Performance (OTP) and Passenger Load Factor (PLF) had shown upward trend and is par or higher than industry standard, which has led to reduction in operating loss compared to the last year.
The Company has continued to operate to the North Eastern region like Guwahati, Lilabari, Tezpur in Assam, Shillong in Meghalaya and Agatti and Diu on request from NEC and MHA under Viability Gap Funding (VGF) arrangements. These routes are operationally protable.
The Company has emerged as a major player in the Government of India's premier scheme UDAN, which connects to various Tier II and Tier III cities with the development of unserved / underserved airports. The growth in Tier II and Tier III cities is still largely untapped and Alliance Air is likely to emerge as a largest player with its ATR 72-600 eet suitable for serving these smaller airports.
The Company has strategized itself to invest major resources in Government of India's UDAN scheme and presently it is operating 19 routes and is expected to increase it to 23 routes shortly. The airline is poised to launch another 10 routes under UDAN scheme in the next 2-3 months thereby increasing our presence to 33 routes under UDAN scheme. This is 23.74% of the total routes Alliance Air is operating presently and which shows that Alliance air is fully committed towards increasing its presence under UDAN. The performance of the airline under UDAN has been excellent wherein the Company has been operationally positive.
The Company has also earmarked specic routes, which were loss making and have consciously shifted the operations from these routes to potentially higher revenue earning routes. The airline is also planning to participate heavily in the coming UDAN 3rd round, so that majority of the routes are able to meet total cost of operation thereby enabling the airline to turnaround and declare operating prot.
The airline is consciously increasing the yield and as on date the average yield at Rs. 9.05 per kilometre, which is about 13% higher than the previous year. With the increase of additional two aircraft by December 2018, more routes are being deployed under UDAN. The airline also has the Board approval to further lease 15 aircraft in the near future and expand under UDAN, which will add substantially to the bottom line.
With the support of Air India Limited in providing corporate guarantee for aircraft leases, reservation systems, inventory management, SAP etc. and other various measures taken towards improving Company's operational and nancial activities, it is expected that the nancial position of the Company would improve in future.
With all the above measures and the Tier II & III market growing at a fast pace, Alliance Air is in the threshold of becoming one of the top regional airline in India and become a protable airline operationally in near future.
RISK MITIGATION STRATEGIES
The Company continuously monitors the risk perceptions and takes preventive action for mitigation of risks on various fronts.
INTERNAL CONTROL SYSTEMS
The Company had appointed M/s Vijay Mukesh & Co. as Internal auditors for the year 2017-18 to carry out various internal audit assignments such as Tax compliance, Risk assessment & mitigation, Strengthening Internal control process, etc.
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REPORT ON CORPORATE GOVERNANCE
1. BOARD OF DIRECTORS
As per the Articles of Association of the Company, the number of Directors shall not be less than three and not more than twelve.
BOARD OF DIRECTORS AS ON 31st March, 2018 Shri Pradeep Singh Kharola CMD- Air India Ltd. Chairman Dr Shefali Juneja J t Secretary, Ministry of Civil Aviation Shri Angshumali Rastogi Director(Finance), Ministry of Civil Aviation Shri Pankaj Srivastava Director (Commercial), Air India Ltd. Shri Vinod Hejmadi D irector (Finance), Air India Ltd. Capt A K Govil Executive Director (Operations), Air India Ltd. Shri S S Uberoi Regional Director- Northern Region, Air India Limited
During the year, all meetings of the Board were chaired by the Chairman .The Board met four times during the year to periodically review the performance of the Company and to discuss important issues which inter alia included Increase in the Authorised Share Capital and Conversion of Dues from AASL into investment in its Equity Capital, Write Off of Scrapped Asset Items, Lease Extension of 02 ATR 42-320 VT-ABA (MSN 390) and VT-ABB (MSN 392) till March 2019, Outsourcing the HSI of 10 PW127M Engines of ATR 72-212A(600 version) aircraft, Change of Name of the Registered Ofce of the Company, Authorisation for signing Lease related Documents, Delegation of Powers to Chief Executive Ofcer/ Managing Director of AASL, Evaluation of MOU (2016-17) by DPE, etc.
2. BOARD PROCEDURE The meetings of the Board of Directors are generally held at Air India's Headquarters in New Delhi. The meetings are scheduled well in advance. In case of exigencies or urgency, resolutions are passed by circulation. The Board meets at least once a quarter to review the operating performance of the Company. The agenda for the meetings is prepared by the ofcials of the concerned departments and approved by the CEO & the Chairman. The Board papers are circulated to the Directors in advance. The members of the Board have access to all information and are free to recommend inclusion of any matter in the agenda for discussion. Senior executives are invited to attend the Board meetings and provide clarication as and when required. Action Taken Reports are put up to the Board periodically. To enable better and more focused attention on the affairs of the Company, the Board delegates certain matters to Committees of the Board set up for the purpose.
Details regarding the Board Meetings, Annual General Meeting, Directors' attendance thereat, Directorships and Committee positions held by the Directors are as under:
Board Meetings :
Board Meetings were held during the nancial year 2017-18 on the following dates: 11 July 2017 (147th Meeting) 22 August 2017 (148th Meeting) 17 November 2017 (149th Meeting) 17 January 2018 (150th Meeting)
Particulars of Directors including their attendance at the Board/Shareholders' Meetings during the nancial year 2017-18.
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Name of the Academic Attendance Details of Directorships Memberships held in Director Qualications out of 4 held in other Companies Committees Board Meetings
Shri Ashwani Mechanical 2 Chairman & Managing AIL Lohani Engineer and Director Member CMD – Air India Fellow of Air India Limited Nomination & Ltd. Chartered Remuneration Committee Institute of Part-Time Chairman AIATSL Chairman Logistic and Air India Air Transport Chairman Transport Services Ltd Corporate Social (Ceased w.e.f. Air India Engineering Responsibility Committee 23.8.2017) Services Ltd Member Audit Committee Air India Express Ltd HCI Hotel Corporation of India Member Ltd Audit Committee
Director Air Mauritius Limited Air Mauritius Holdings Limited Air India SATS Airport Services Pvt. Ltd.
Shri Rajiv Civil Engineer, 1 Chairman & Managing AIL Bansal IIT, Delhi, Director Member Diploma in Air India Limited (Ceased w.e.f. Finance, ICFAI, Nomination & 12.12.2017) HYD, EXE Part-Time Chairman Remuneration Committee Masters in Intl Air India Air Transport AIATSL Business, IIFT, Services Ltd Delhi Chairman Air India Engineering Corporate Social Services Ltd Responsibility Committee Air India Express Ltd Member Hotel Corporation of India Audit Committee Ltd. HCI Member Director Audit Committee Air Mauritius Limited Air Mauritius Holdings Limited Air India SATS Airport Services Pvt. Ltd.
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Name of the Academic Attendance Details of Directorships Memberships held in Director Qualications out of 4 held in other Companies Committees Board Meetings
Shri Pradeep Phd. Masters in 1 Chairman & Managing AIL Singh Kharola Development Director Member CMD – Air India Management Air India Limited Nomination & Ltd. Part-Time Chairman Remuneration Committee Air India Air Transport AIATSL Chairman Services Ltd Chairman Air India Engineering Corporate Social (appointed w.e.f. Services Ltd Responsibility Committee 12.12.2017) Air India Express Ltd Member Hotel Corporation of India Audit Committee Ltd. HCI Director Member Air Mauritius Limited Audit Committee Air Mauritius Holdings Limited Air India SATS Airport Services Pvt. Ltd. Shri Vinod B.Com, ACA 4 Director AASL Hejmadi Air India Ltd Member Air India Air Transport Audit Committee Director – Services Ltd AIXL Finance Air India Engineering Chairman Air India Ltd. Services Ltd CSR Committee Air India Express Ltd Member Hotel Corporation of India Audit Committee Ltd AIL Chairman Air India SATS Airport HR Committee Services Pvt Ltd Member Nomination & Remune- ration Committee Corporate Social Responsibility & Sustain- ability Development Committee Share Allotment Committee AIATSL Member Corporate Social Responsibility Committee Audit Committee HCI Member Audit Committee AIESL Member Audit Committee
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Name of the Academic Attendance Details of Directorships Memberships held in Director Qualications out of 4 held in other Companies Committees Board Meetings
Dr Shefali M.A M(Phil) 1 Director AASL Juneja Phd. Air India Express Ltd. Member Jt Secretary, Audit Committee Ministry of Civil AIXL Aviation Member (Ceased w.e.f. Audit Committee 12.5.2017 and CSR Committee re-appointed w.e.f. 18.12.2017) Shri Angshumali Fellow, 4 Director AASL Rastogi Institution of Air India Express Ltd. Chairman Director Mechanical AAI Cargo Logistics & Audit Committee (Finance), Engineers, Allied Services Company AIXL Ministry of Civil London Ltd Chairman Aviation Chartered Audit Committee (Appointed w.e.f. Engineer Member 12.5.2017) (Mechanical CSR Committee Engineering), registered with Engineering Council, London Shri K V Graduate 2 Director AASL Unnikrishnan Air India Express Ltd. Member Deputy Audit Committee AIXL Secretary, Member Ministry of Civil Audit Committee Aviation CSR Committere (Ceased w.e.f. 18.12.17) Shri Pankaj MBA 3 Director AIL Srivastava, Air India Limited Member Director Share Allotment –Commercial, Committee Air India Limited Co-Opted Member Strategic Committee Smt Meenakshi BSC Hons, 2 - - Dua, Regional Masters in Director- Social Work, Northern DIP IR & PM Region, Air India Limited (Ceased w.e.f. 29.9.2017)
25 AASL
Name of the Academic Attendance Details of Directorships Memberships held in Director Qualications out of 5 held in other Companies Committees Board Meetings
Capt A K Govil - 4 - - ED-Operations, Air India Limited
Shri S S Uberoi BA(Economics) 2 - - Regional , Masters in Director- Business Northern Administration Region, Air India (Marketing) Limited
(appointed w.e.f. 29.9.2017)
3. AUDIT COMMITTEE
As part of the Corporate Governance process and in compliance with the provisions of the Companies Act, 2013 and DPE Guidelines, the Audit Committee of the Board has been constituted.
As on 31st March, 2018 the following were the members of the Audit Committee :
Shri Angshumali Rastogi Chairman Dr Shefali Juneja M ember Shri Vinod Hejmadi Member Shri Pradeep Singh Kharola P ermanent Invitee
The Terms of Reference of the Audit Committee are:
l To recommend for appointment, remuneration and terms of appointment of auditors of the company;
l To review and monitor the auditor's independence and performance, and effectiveness of audit process;
l To review the Internal Audit program & ensure co-ordination between the Internal & External Auditors as well as determine whether the Internal Audit function is commensurate with the size and nature of the Company's Business;
l To discuss with the Auditor before the audit commences the nature & scope of the audit;
l To examine the nancial statements and the auditors' report thereon;
l To review the Statutory Auditor's Report, Management's response thereto and to take steps to ensure implementation of the recommendations of the Statutory Auditors ;
l Approval or any subsequent modication of transactions of the company with related parties;
26 AASL
l Scrutiny of inter-corporate loans and investments;
l Valuation of undertakings or assets of the company, wherever it is necessary;
l Evaluation of internal nancial controls and risk management systems;
l Monitoring the end use of funds raised through public offers and related matters.
l To consider any other matter as desired by the Board;
The Audit Committee met three times during the year to review various issues including inter alia annual accounts of the Company for the year before submission to the Board, on the following dates:
11 July 2017 (8th Meeting) 22 August 2017 (9th Meeting) 17 November 2017 (10th Meeting) 27 March 2018 (11th Meeting)
Attendance at the Audit Committee Meetings
Name of the Member No. of Meetings Attended
Shri Angshumali Rastogi 4
Shri K V Unnikrishnan 2
Dr Shefali Juneja -
Shri Vinod Hejmadi 4
4. ANNUAL GENERAL MEETINGS DURING THE LAST THREE YEARS
The details of these meetings are given below :
Date and time of the Meeting Venue
32nd Annual General 28 December 2015 At 1615 hrs Board Room, Meeting Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
33rd Annual General 30 December 2016 At 1715 hrs Board Room, Meeting Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
34th Annual General 27 September 2017 Board Room, Meeting At 1130 hrs Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
27 AASL
CODE OF CONDUCT
DECLARATION
I hereby declare that all the Board Members & Senior Management Personnel have afrmed compliance with the Code of Conduct as adopted by the Board of Directors for the year ended 31st March, 2018.
Sd/- (C.S.Subbiah) Chief Executive Ofcer Airline Allied Services Limited
Place : New Delhi Date : 6 November 2018
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SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2018 (Pursuant to Section 204 (1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)
To, The Members, Airline Allied Services Limited Alliance Bhawan Domestic Terminal-1, IGI Airport New Delhi -110037
I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Airline Allied Services Limited (CIN:U51101DL1983GOI016518) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing my opinion thereon.
Based on my verication of the Airline Allied Services Limited's books, papers, minute books, forms and returns led and other records maintained by the company and also the information provided by the company, its ofcers, agents and authorised representatives during the conduct of secretarial audit and as per the explanations given to me and the representations made by the Management, I hereby report that in my opinion, the Company has, during the audit period covering the nancial year ended on 31st March, 2018 generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
A. I have examined the books, papers, minute books, forms and returns led and other records made available to me and maintained by the company for the nancial year ended on 31st March, 2018 according to the applicable provisions of:
i. The Companies Act, 2013 ('the Act') and the rules made there under;
During the period under review the Company has complied with the provisions of Companies Act, 2013 ('the Act') and the rules made thereunder, as applicable, subject to the following observations:
a) Company has not appointed Independent directors pursuant to sub-section 4 of section 149 of Companies Act, 2013 , hence no meeting of independent directors could be held during the period under audit. Since, the company has not appointed independent directors , the company has not complied with the provisions of section 177(2) and 178 of Companies Act, 2013 read with Rule 6 of Companies (Meetings of Board and its Power) Rules, 2014 as regard the appointment of Independent directors in composition of the Audit Committee.
b) Company has not constituted Remuneration and Nomination Committee of the Board pursuant to section 178 of Companies Act, 2013 read with Rule 6 of Companies( Meetings of Board and its Power) Rules, 2014 as it meets the prescribe criteria as mentioned in Rule 6.
However, appointment of independent directors in public companies which are wholly-owned subsidiaries of unlisted public companies are not require to appoint independent directors, vide notication of MCA , Companies (Appointment and Qualication of Directors) Amendment Rules, 2017 dated July 5, 2017 )
29 AASL
c) Risk Management Policy:
Provisions of Section 134(3)(n) of Companies Act, 2013 provides that there shall be attached to nancial statements laid before a company in general meeting, a report by its Board of Directors, which shall include—
a statement indicating development and implementation of a risk management policy for the company including identication therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company.
It has been claried that the Company has a Risk Management Policy for Fuel and as for commercial risks aviation and non-aviation insurance policies are taken to insure the aircraft and passengers. In addition, company takes insurance for staff who travel on duty abroad and covers operating and cabin crew for injuries including death under the Company's Aviation policy.
For other Risks, Company is under process of development of Risk Management Policy.
DPE Guidelines also emphasize that the Board should ensure the integration and alignment of the risk management system with the corporate and operational objectives and also that risk management is undertaken as a part of normal business practice.
Queries raised by Statutory auditors of the company in Audit Observations in relation to compliance of Companies Act, 2013 which has been replied by the Management in Directors Report have not been reproduced here.
(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder, Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act') as prescribed under Form MR-3 are not applicable to the company .
(iii) I have also examined compliance with the applicable clauses of the following:
a) Secretarial Standards issued by The Institute of Company Secretaries of India.
b) Guidelines on Corporate Governance for Central Public Sector Enterprises as stipulated in the O.M. No. 18(8)/2005-GM dated 14th May, 2010 of the Ministry of Heavy Industries and Public Enterprises, Government of India.
c) Being unlisted company , company was not require to enter into anylisting agreements with Stock exchange(s).
During the period under review and as per the explanations and clarications given to me and there presentations made by the Management, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above subject to the observation made therein.
(B) (i) I have examined the framework, processes and procedures of compliance with respect to labour and other laws including the following laws applicable to the company on test basis:
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Apprentices Act, 1961; Employees State Insurance Act, 1948; Payment of Wages Act,1948; Minimum Wages Act, 1948; Industrial Disputes Act, 1947; Payment of Bonus Act, 1965; Payment of Gratuity Act, 1972; Contract Labour (Regulation and Abolition) Act, 1970; Maternity Benet Act, 1961; The Child Labour (Prohibition & Regulation) Act, 1986; Equal Remuneration Act,1976; The Employment Exchange (Compulsory Notication of Vacancies) Act,1956,
Company has created separate Trusts to administer Provident Fund Contributions named Airline Allied Services Employees Provident Fund Trust Regulations, 1996 .
Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Regulation ) Act, 2013: The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.
In connection with aforesaid laws, adequate systems and processes are in place to monitor and ensure compliance with such laws.
During the audit , it is observed that the Compliance Management System needs to be further strengthen by taking the following actions:
a) To establish Corporate Compliance Committee and designate a Chief Compliance ofcer and maintain centralised mechanism to ensure compliance with all applicable laws;
b) To establish and maintain effective co-ordination of functional units and the compliance department under the overall supervision of the Board;
c) To establish mechanisms to prevent, detect, report and to respond to non-compliances;
d) To present Quarterly compliance Report to the Board;
e) Identication and classication of various compliance risks;
f) Organisation of compliance Check list, Audit, feed back, remedies.
(ii) In aviation sector, following laws are specically applicable to the Company:
l Aircraft Act, 1934
l Carriage by Air Act, 1972
l Tokyo Convention Act, 1975
l Anti-Hijacking Act, 1982
l Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982
l Civil Aviation Requirements issued by DGCA
Director General of Civil Aviation vide circular dated 21.12.2011 in connection with regulatory audit policy and programme under which regulatory audit are being carried out with an aim to carry out to ascertain the internal control of a organisation in its activities and to ensure compliance of regulatory requirements. It is explained by the company that the Regulatory audit of the company is done by
31 AASL the audit team of DGCA as per the audit programme and audit procedure as prescribed under regulatory audit policy of DGCA .
The Regulatory Audit Program (RAP) has been developed to promote conformance with the aviation regulations and standards that collectively prescribe an acceptable level of aviation safety. It also ensures that Civil Aviation audit policies and procedures are applied uniformly.
Regulatory Audits are conducted for the grant of approvals for Initial Certication, Additional Approval, Routine Conformance and Special Purpose Audit pursuant to the Aircraft Act 1934. The Director General of Civil Aviation or any other ofcer specially empowered in his behalf by the Central Government shall perform the safety oversight functions in respect of matters specied in this Act or the Rules made there under.
The Joint Director General Civil Aviation nominated by the Director General is responsible for all regulatory audits and inspections and is normally the Convening Authority.
The type of audits are Initial Certication Audit , Additional Approval Audit, Routine Conformance Audit and Special-Purpose Audit and is determined by the circumstances under which the audit is convened.
Regulatory audit includes Check Lists for of Airworthiness Audit policy and procedures and Operations audit policy and procedures .
DGCA has issued Civil Aviation Requirements ( CAR ) under section 4 of Aircraft Act, 1934 read with Rule 133A of Aircraft Rules, 1937 and the company is required to comply such requirements under DGCA check systems . While the broad principles of law are contained in the Aircraft Rules, 1937, Civil Aviation Requirements are issued to specify the detailed requirements and compliance procedures.
I further report, that the company is generally regular in compliance of aforesaid aviation laws and the compliance by the Company of such aviation laws have not been reviewed in this Audit which have been subject to review by DGCA and other designated professionals/authorities.
I further report, that the compliance by the Company of applicable nancial laws, like direct and indirect tax laws, has not been reviewed in this Audit since the same have been subject to review by statutory nancial audit and other designated professionals.
I further report that:
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors except Independent Directors as cited in observation clause A (i) (b) above. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings at least seven days in advance and where the Board meetings are called at shorter notice, presence of at least one Nominee director is ensured, agenda and detailed notes on agenda were sent and a system exists for seeking and obtaining further information and clarications on the agenda items before the meeting and for meaningful participation at the meeting.
Decisions at the Board Meetings, as represented by the management, were taken unanimously.
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I further report that as per the explanations given to me and the representations made by the Management and relied upon by me there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. It is informed that the Company has responded to notices for demands, claims, penalties etc. levied by various statutory / regulatory authorities and initiated actions for corrective measures, wherever necessary.
I further report that during the audit period, there were no specic events/actions having a major bearing on the company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above.
For J P Saini & Associates Company Secretaries
Sd/- (Jiwan Parkash Saini) P roprietor Place: New Delhi FCS No: 3671 Date : 6 November 2018 CP No: 2100
Note_1: Specic non compliances / observations / audit qualication, reservation or adverse remarks has been reported in respect of the above at appropriate place .
Note_2: This Report is to be read with my letter of even date which is annexed as Annexure A and forms an integral part of this report.
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'Annexure A’
To, The Members, Airline Allied Services Limited Alliance Bhawan Domestic Terminal-1, IGI Airport New Delhi -110037
I report of even date is to be read along with this letter.
1. Maintenance of Secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.
2. I have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verication was done on test basis to ensure that correct facts are reected in Secretarial records. I believe that the process and practices, we followed provide a reasonable basis for my opinion.
3. I have not veried the correctness and appropriateness of nancial records and Books of Accounts of the Company.
4. Where ever required, I have obtained the Management representation about the Compliance of laws, rules and regulations and happening of events etc.
5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verication of procedure on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efcacy or effectiveness with which the management has conducted the affairs of the Company.
For J P Saini & Associates Company Secretaries
Sd/- (Jiwan Parkash Saini) Proprietor Place : New Delhi FCS No: 3671 Date : 6 November 2018 CP No: 210
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Annexure to Directors' Report for the year 2017-18 Annexure-I
FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN As on financial year ended 31.03.2018 Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management & Administration) Rules, 2014.
I. REGISTRATION & OTHER DETAILS:
1. CIN U51101DL1983GOI016518
2. Registration Date 13/09/1983
3. Name of the Company AIRLINE ALLIED SERVICES LIMITED (AASL)
Category/Sub-category of the 4. Government Company Company ‘Alliance Bhavan’, Domestic Terminal, IGI Airport, Address of the Registered ofce & 5. New Delhi-110037 contact details
6 Whether listed company No Name, Address & contact details of 7. the Registrar & Transfer Agent, if N.A. any.
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated) -
NIC Code % to total Sr Name and Description of main products / services of turnover of No the Product/ the service company To establish, maintain and operate international and domestic air transport services, scheduled and non scheduled, in all the countries 1 511 100 of the world for the carriage of passengers, meals and freight and for any other purposes.
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANY:
Holding / Sr. Name and Address of the % of Applicable Subsidiary / No. Company CIN/GIN Shares Section Associate 1 Air India Limited 113, Airlines House, U62200DL2007GOI161431 Holding 100% 2 (46) Gurudwara Rakabganj Road, New Delhi, 110 001.
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IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) : Category-wise Share Holding
No. of Shares held at the No. of Shares held at the end of the Category of beginning of the year year [As on 31-03-2018] % Shareholders [As on 01-04-2017] Change during During % of % of the Demat Physical the Total Demat Physical Total Total year year Shares Shares
A. Promoters
(1) Indian a) Individual/ HUF ------b) Central Govt ------c) State Govt(s) ------d) Bodies Corp. - 40,225,000 - 100 - 40,225,000 40,225,000 100 0.00 e) Banks / FI ------f) Any other ------
Total shareholding of - 40,225,000 100 - 40,225,000 40,225,000 100 0.00 Promoter (A)
B. Public Shareholding Not Applicable
1. Institutions a) Mutual Funds/UTI ------b) Banks / FI ------c) Central Govt. ------d) State Govt.(s) ------e) Venture Capital ------Funds f) Insurance ------Companies g) FIIs ------h) Foreign Venture ------Capital Funds i) Others (specify) ------Foreign Banks
Sub-total (B)(1):------
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No. of Shares held at the beginning of No. of Shares held at the end of the % the year [As on 01-04-2017] year [As on 31-03-2018] Change Category of during Shareholders % of % of Demat Physical Total Total Demat Physical Total Total the Shares Shares year
2. Non-Institutions Not Applicable a) Bodies Corp. (Market Maker + LLP) i) I Indian ------ii) Overseas ------b) Individuals i) Individual
shareholders
holding nominal ------share capital upto Rs. 1 lakh ii) Individual shareholders holding nominal ------share capital in excess of Rs. 1 lakh c) Others (specify) i) Non Resident ------Indians ii) Non Resident Indians - Non ------Repatriable iii) Ofce Bearers ------iv) Directors ------v) HUF ------vi) Overseas ------Corporate Bodies vii) Foreign Nationals ------viii) Clearing ------Members ix) Trusts ------x) Foreign Bodies ------D R
Sub-total (B)(2):------Total Public Shareholding (B) = ------(B)(1)+ (B)(2)
C. Shares held by Custodian for ------GDRs & ADRs
Grand Total (A+B+C) 40,225,000 40,225,000 100 - 40,225,000 40,225,000 100 0.00
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B) Shareholding of Promoter-
Shareholding at the beginning Shareholding at the end of the year of the year % change % of % of In Shares Shares Share- Sr. Shareholder's % of total % of total Pledged / Pledged / holding No. Name No. of Shares No. of Shares Encum- Encum- during Shares of the Shares of the bered to bered the company company total to total year shares shares
Air India Limited 1 40,225,000 100 NIL 40,225,000 100 NIL 0.00 along with its nominees
C) Change in Promoters' Shareholding (please specify, if there is no change)
Sr Particulars Shareholding at the Cumulative Shareholding No. beginning of the year at end of the year
% of total % of total No. of No. of shares of the shares of the shares shares company company
At the beginning of the year Air India Limited 40,225,000 100% 40,225,000 100% At the end of the year Air India Limited 40,225,000 100% 40,225,000 100%
D) Shareholding Pattern of top ten Shareholders: (Other than Directors, Promoters and Holders of GDRs and ADRs):
Shareholding at the Cumulative Share- beginning of the year holding at end of the year Sr For Each of the Top 10 Shareholders % of total % of total No No. of shares of No. of shares of shares the shares the company company 1 NOT APPLICABLE 2 3 4 5 6 7 8 9 10
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E) Shareholding of Directors and Key Managerial Personnel:
Shareholding at the Cumulative Shareholding beginning of the year at the end of year S. Shareholding of each Directors and % of total % of total No. each Key Managerial Personnel No. of shares of No. of shares of shares the shares the company company
1 NIL
V. INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accrued but not due for payment. (Rs. in Crore)
Secured Loans Unsecured Total excluding Deposits Loans Indebtedness deposits Indebtedness at the beginning of the financial year
i) Principal Amount - 13823327399 * 13823327399 ii) Interest due but not paid - - - - iii) Interest accrued but not due - - - - Total (i+ii+iii) - 13823327399 - 13823327399 Change in Indebtedness during the financial year
* Addition 1602838542 - 1602838542 * Reduction - - Net Change 1602838542 - 1602838542 Indebtedness at the end of the financial year
i) Principal Amount - 15426165941 - 15426165941 ii) Interest due but not paid - - - - iii) Interest accrued but not due - - - - Total (i+ii+iii) - 15426165941 - 15426165941
* Previous figure has been restated as per IND AS. Prior Period items has been given affect in the relevant previous years.
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VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
(In gures)
Name of MD/WTD/ Manager Total Sr Particulars of Remuneration Amount No 1 Gross salary ------(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 ------(b)Value of perquisites u/s 17(2) Income- tax Act, 1961 ------(c)Prots in lieu of salary under section 17(3) Income- tax Act, 1961 ------
2 Stock Option ------3 Sweat Equity ------4 Commission as % of prot others, specify. ------5 Others : (PF, DCS, House Perks tax etc) ------Total (A) ------Ceiling as per the Act ------*There are no Managing, Whole Time Directors in the Company.
B. Remuneration to other directors Sr Total Particulars of Remuneration Name of Directors No. Amount 1 Independent Directors ------Fee for attending board committee ------meetings Commission ------Others, please specify (Fees for attending Board Sub Committee ------Meetings) Total(1) ------2 Other Non-Executive Directors ------Fee for attending board committee ------meetings Commission ------Others, please specify ------Total (2) - - - - - Total (B)=(1+2) ------Total Managerial Remuneration ------Overall Ceiling as per the Act ------
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C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD ( gures in Rs) Sr. Key Managerial Personnel Particulars of Remuneration No. CEO CS CFO Total *Not 1 Gross salary ** 2.33 Million - Applicable (a) Salary as per provisions contained in section 17(1) of the Income-tax - - - - Act, 1961 (b) Value of perquisites u/s 17(2) Income-tax Act, 1961 - - - -
(c) Prots in lieu of salary under section - - - - 17(3) Income-tax Act, 1961 2 Stock Option - - - - 3 Sweat Equity - - - - 4 Commission - - - - - as % of prot - - - - Others, specify. - - - - 5 Others: (PF, DCS, House Perks tax etc) - - - - Total - - -
* Not applicable to Government Companies. Only CFO and CS are KMPs. ** The Company Secretary is holding the position in addition to his responsibilities as Sr. Manager- Corporate Affairs, Air India Ltd.
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Details of Section of Appeal Penalty / Authority the Brief made, if Type Punishment/ [RD / NCLT/ Companies Description any (give Compounding COURT] Act Details) fees imposed A. COMPANY Penalty - - - - - Punishment - - - - - Compounding - - - - - B. DIRECTORS Penalty - - - - - Punishment - - - - - Compounding - - - - - C. OTHER OFFICERS IN DEFAULT Penalty - - - - - Punishment - - - - - Compounding - - - - -
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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF THE AIRLINES ALLIED SERVICES LIMITED FOR THE YEAR ENDED 31 MARCH 2018
The preparation of nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2018 in accordance with the nancial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act is responsible for expressing opinion on the nancial statements under Section 143 of the Act based on independent audit in accordance with standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 6 November 2018.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2018 under section 143(6)(a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records.
Based on my supplementary audit, I would like to highlight the following signicant matters under section 143(6)(b) of the Act which have come to my attention and which in my view are necessary for enabling a better understanding of the nancial statements and the related audit report.
A. Comments on Financial Position
1. Balance Sheet Current Assets (ii) Financial Assets Cash and Cash Equivalents - Rs. 26.97 crores (Note no. 7)
The above includes an amount of Rs. 28.90 lakh on account of advances given to employees of the company for ofcial purposes, which should have been booked under “Other current assets”. This has resulted in overstatement of “Cash and Cash Equivalents” and understatement of “Other current assets”by Rs. 28.90 lakh.
B. Comments on Auditor's Report
i. Accumulated losses of Rs. 2078.40 crore reported by the Statutory Auditor under Emphasis of Matter paragraph under para 1 of his report is incorrect since accumulated losses as per Balance Sheet – Note No. 13 (Other Equity) of the Company were Rs. 2098.28 crore.
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ii. Independent Auditor's Report Para 8 (iii) (d) of 'Report on the Other Legal and Regulatory Requirements' stating that the nancial statements comply with the Accounting Standards except the effects of matters described in the “basis of Qualied opinion” paragraph, is incorrect since there is no 'basis for Qualied opinion' paragraph mentioned in the Report.
Thus, the Independent Auditor's Report is not correct to this extent.
For and on the behalf of the Comptroller & Auditor General of India
Sd/- Place : New Delhi (Prachi Pandey) Dated : 09 January 2019 Principal Director of Commercial Audit & Ex-officio Member, Audit Board-I, New Delhi.
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MANAGEMENT REPLIES TO THE COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143 (6) (B) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENT OF THE AIRLINE ALLIED SERVICES FOR THE YEAR ENDED 31 MARCH 2018
A. Comments on Financial Position
1. Balance Sheet Current Assets Financial Assets Cash and Cash Equivalents - Rs. 26.97 crores (Note no. 7)
The above includes an amount of Rs. 28.90 lakh on This is a statement of fact. However, there is account of advances given to employees of the no nancial impact as both the amounts are company for ofcial purposes, which should have to be grouped under current assets and only been booked under “Other current assets”. This has a presentation error. resulted in overstatement of “Cash and Cash Equivalents” and understatement of “Other current We have noted the observation and will assets”by Rs. 28.90 lakh. ensure non-recurrence while preparing the nancial statements for the year 2018-19.
B. Comments on Auditor's Report
i. Accumulated losses of Rs. 2078.40 crore The observation is correct. This is due to reported by the Statutory Auditor under inadvertent typographical error . Emphasis of Matter paragraph under para 1 of his report is incorrect since accumulated losses as per Balance Sheet – Note No. 13 (Other Equity) of the Company were Rs. 2098.28 crore.
ii. Independent Auditor's Report Para 8 (iii) (d) of The Audit Report 2017-18 is not a qualied 'Report on the Other Legal and Regulatory report. Due to inadvertent typographic error Requirements' stating that the nancial the para 8 (iii) has been wrongly worded, statements comply with the Accounting Standards except the effects of matters We assure to take the appropriate care for the described in the “basis of Qualied opinion” non-recurrence of such typographical errors paragraph, is incorrect since there is no 'basis in future. for Qualied opinion' paragraph mentioned in the Report.
Thus, the Independent Auditor's Report is not correct to this extent.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AIRLINE ALLIED SERVICES LIMITED
To, The Members of Airline Allied Services Limited
1. Report on the Ind As standalone financial statement
We have audited the accompanying Ind As standalone nancial statement of M/s Airline Allied Services Limited, (the “Company”), which comprises the Balance Sheet as at March 31, 2018, the Statement of Prot and Loss and the Cash Flow Statement, and a summary of the signicant accounting policies and other explanatory information for the year then ended.
2. Management's Responsibility for the Ind As Standalone financial statement
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Ind As standalone nancial statement that give a true and fair view of the nancial position, nancial performance and cash ows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specied under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal nancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind As standalone nancial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these Ind As standalone nancial statement based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specied under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind As standalone nancial statement are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind As standalone nancial statement. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone Ind AS nancial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal nancial control relevant to the Company's preparation of the Ind As standalone nancial statement that give a true and fair view in order to design audit procedures that are appropriate in the circumstances . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the standalone Ind As nancial statement.
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5. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion on the Ind As standalone nancial statement.
6. Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind As standalone nancial statement read together with the signicant accounting policies and notes thereon give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31-03-2018, and its loss and its cash ow for the year ended on that date.
7. Emphasis of Matter
We draw attention in respect of followings
(i) Financial statement of the Company indicates that the Company has accumulated losses of *Rs 20982.78 Millions and its net worth has been fully eroded, the company has incurred net loss during the year and in previous years and the Company liabilities exceeded its assets as at the balance sheet date . These condition along with other matters set out in notes on accounts, indicated the existence of material uncertainty that may cast signicant doubt about the Company's ability to continue as a going concern. However, the nancial statement of the company has been prepared on a going concern basis. As stated in the Note no. 47, Air India Limited (Parent Company) had formulated a Turn Around Plan applicable to group Companies in order to improve its operational and nancial performance, which have been approved by the Government of India with the intention to turn around AIL and its subsidiaries . Management is of the view that with the support of Air India Limited and with other measures taken towards improving Company's operational and nancial activities , it is expected that nancial position of the Company would improve in future.
(ii) Revenue from operations consists of revenue from passenger, cargo & baggage etc. has been accounted for on the basis of data processed by an outsourced agency, provided by the parent Company M/s Air India Limited (AIL) through FTP server generally on monthly basis, which as per information provided to us is segregated on the basis of code assigned to the Airline Allied Services Limited (AASL). Source record of processed data uploaded on FTP server has been maintained with AIL and has not been veried by us, therefore we are unable to comment on the accuracy and authenticity of the same.
(iii) Purchases, consumption and closing stock (quantity as well as value) of Aircraft Inventory has been accounted for on the basis of data/advices received from M/s AIL and are not veried by us . Further as per information provided, inventory has been procured by the AIL's centralized procurement department (MMD) and all documents relating to purchase procedures are maintained at their end, therefore not veried by us.
(iv) Reconciliation of account with Airport Authority of India (AAI) is pending since previous years, therefore impact on expenditure and results of the Company on account of above is not ascertainable at this stage.
(v) Balances of Trade Payables, Other Current Liabilities, Long Term Loans & Advances, Other Non current Assets, Trade Receivables and Other Current Assets except accounts with Oil Companies and Airport operators were unconrmed as on 31-03-2018. We are unable to comment on the impact of adjustments arising out of non-conrmation of such balances as on the standalone Ind As nancial statement. * Typographical error, corrected as per CAG observation.
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(vi) Interest amounting to Rs. 1340.70 Millions, Rs 8.3 Millions, Rs.14.20 Millions relating to M/s AIL (parent Company), AIESL & AIATSL (both Associate Companies) respectively has been accounted for on the basis of advices received from above Companies, same has not been veried by us, therefore we are unable to comment on the authenticity of the same. Further TDS on the above interest provision has not been accounted for and paid. Impact on the results of the Company on account of interest and penalty due to non-deduction/payment of TDS has not been ascertained and provided.
(vii) Contrary to the provision of the Income Tax Act TDS on provisional expenses has been accounted for at the time of payment instead of at the time of making the provisions. Impact on account of interest and penalty has not been ascertained and provided.
Our opinion is not modied in respect of matters sated in para (i) to (vii) above.
8. Report on Other Legal and Regulatory Requirements
(i) As required by 'the Companies (Auditor's Report) Order, 2016 (“the Order”) issued by the Central Government of India in term of section 143(11) of the Act, we give in the Annexure “A” a statement on the matters specied in paragraph 3 and 4 of the order.
(ii) We are enclosing our report in terms of Section 143(5) of the Companies Act, 2013, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the Annexure “B”on the directions/ sub-directions issued by the Comptroller and Auditor- General of India.
(iii) As required by Section 143 (3) of the Act we report that
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, Statement of Prot and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.
d.** In our opinion the aforesaid Standalone Ind As nancial statement comply with the Accounting Standards specied under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. As informed by the Company, Section 164(2) of the Companies Act 2013 is not applicable to a Government Company, vide Notication F No 1/2/2014-CL.V. dated 5 June, 2015.
f. With respect to the adequacy of the internal nancial controls over nancial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C”. Our report expresses qualied opinion on the adequacy and operating effectiveness of the Company's internal nancial controls over nancial reporting.
g. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: ** Typographical error, corrected as per CAG observation.
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i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2018 on its nancial position as per Note 29 except stated in Note 49 to the nancial statement.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.
For and on behalf of M Verma & Associates Chartered Accountants (Firm Reg No: -501433C)
Sd/- (Mohender Gandhi) Partner M. No. 088396
Place : New Delhi Date : 6.11.2018
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“Annexure A” to the Auditors' Report
Referred to paragraph 1 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year ended 31st March 2018). i) In respect of its xed assets:
(a) The records maintained by the Company in respect of its xed assets are not considered to be proper to the extent that it do not give full particulars relating to location and situation of assets , quantity of assets, Rate of depreciation, useful life , residual value and identication numbers of the assets.
(b) As explained to us Company is conducting physical verication of the Fixed Assets on biennial basis. During the year physical verication of Fixed Assets situated at Delhi, Chennai has been conducted. As per said physical verication report discrepancies in respect of assets amounting Rs. 8.41 Million(gross value) were observed which has been properly dealt in the books of Account.
During the year Company has changed its Accounting Policy according to which rotable spares of the leased aircraft, which till previous years were treated as Inventory has been capitalized and has been depreciated over the leased period of the aircraft ( Refer Note No. 37.v). Physical verication of above Rotable spares has not been conducted. In the absence of same discrepancy, if any, is unascertainable.
(c) According to the information, explanation and record available to us no immovable property is owned by the Company. ii) In respect of inventories:
(a) As per information, explanation and record available to us , physical verication of inventories has not been conducted during the year. (Refer Note No. 33 (b). The physical verication of the inventory should be conducted at reasonable intervals. Since the physical verication of inventory has not been conducted, discrepancies, if any, are unascertainable.
(b) As per explanation available to us, inventories for aircrafts are procured by Air India Ltd. and records relating to receipts, issues and closing stock are maintained at their end therefore not veried by us. Further accounting entries by the Company are made on the basis of advices received from Air India Ltd. Consistent delay in the receipt of above advices has been observed. It has been further observed issue/ consumption has been account for at the year end only. iii) As explained to us, the company had not granted any loans, secured or unsecured, to any companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(b) & 3(c) of the said order are not applicable to the Company. iv) In our opinion & according to information & explanations given to us, the company has not given any loans, investments guarantee, and securities granted in respect of provision of section 185 and 186 of the Companies Act 2013. v) According to the information and explanations given to us, the company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other provisions of the Companies Act, 2013 and the rules framed there under are not applicable.
49 AASL vi) As per information and explanation provided to us , maintenance of cost records are not specied for the Company by the Central Government under clause (d) of sub section (1) of section 148 of the Companies Act, 2013. vii) Statutory dues:
(a) As per information and explanations given to us and record available to us , the company is generally regular in depositing undisputed statutory dues including provident fund, income tax, custom duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities except delay in remittance of TDS amount has been observed on some occasions.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they become payable, except Service Tax amounting to Rs.31.13 Millions payable since previous years, as the matter is under litigation with the party M/s GATI Limited.
(c) According to the information and record available to us , disputed statutory dues against the company in income tax, service tax, custom duty , excise duty , value added tax, Cess as on 31-03- 2018 are as follows
S No Name of Status Amount Nature of Year Forum where Outstanding Dues dispute is pending (` in Millions)
1 Finance Act, 1994 14.04 Income Tax 1997-98 ITAT
2 Finance Act, 1994 17.43 Income Tax 2000-01 ITAT
3 Finance Act, 1994 3.20 Income Tax 2004-05 CIT(A) viii) As per record, information and explanations available to us, we are of the opinion, the company has not defaulted in repayment of dues to a nancial institution, bank, Government or dues to debenture holders. ix) The company has not raised moneys by way of initial public offer or further public offer (including debt instrument) or term loans and hence reporting under clause (ix) of paragraph 3 of the order is not applicable. x) According to information and explanations given to us, no fraud by the company or any fraud on the company by its ofcers or employees has been noticed or reported during the year. xi) As informed, the provisions of section 197 relating to managerial remuneration are not applicable to the Company, being a Government Company, in terms of MCA Notication no. G.S.R. 463(E) dated 5th June 2015. xii) The company is not a Nidhi Company. Therefore, the provision of clause 3(xii) of the order are not applicable to the Company and hence not commented upon. xiii) Based upon the audit procedures performed and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Ind As standalone nancial statement etc. as required by the applicable accounting standards.
50 AASL xiv) According to the information and explanations and record available to us, the Company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirement under clause 3(xiv) are not applicable. xv) The company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013. xvi) According to the information and explanation given to us, the provision of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For and on behalf of M Verma & Associates Chartered Accountants (Firm Reg No: -501433C)
Sd/- (Mohender Gandhi) Partner M. No. 088396
Place : New Delhi Date : 6.11.2018
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ANNEXURE “B” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE IND AS STANDALONE FINANCIAL STATEMENTS OF AIRLINE ALLIED SERVICES LIMITED
Referred to paragraph 2 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year ended 31st March 2018.
Based on the verication of records of the Company and according to information and explanation given to us, we give below a report on the directions issued by the Comptroller and Auditor-General of India in terms of Section 143(5) of the act in respect of M/s Airline Allied Services Limited:
S.No. Areas to be examined Observation/Findings
1 Whether the company has clear title/lease As per information and record available to us no deeds for freehold and leasehold land freehold/ leasehold land is with Airline Allied respectively? If not please state, the area of Services Limited. freehold and leasehold land for which title/lease deeds are not available.
2 Whether there are any cases of waiver/ write off As per information and record available to us, debts/loans/interest etc., if yes, the reasons there is no waiver/write off of debts/loans/ interest there for and the amount involved. etc. during the year.
3 Whether proper records are maintained for As stated in Note no. 37 i and in our report that inventories lying with third parties & assets aircraft inventories are procured by Air India Ltd. received as gift/grant(s) from Government or and records relating to receipts, issues and closing other authorities. stock are maintained by Air India Ltd. Purchase, consumption, closing stock are accounted for on the basis of data/advices received from AIL. Therefore inventory record are not veried by us and we are unable to comment whether the company has maintained proper records of inventory.
Further, no assets was received as gift/ grant from the Govt. during the year 2017-18.
For and on behalf of M Verma & Associates Chartered Accountants (Firm Reg No: -501433C)
Sd/- (Mohender Gandhi) Partner M. No. 088396
Place : New Delhi Date : 6.11.2018
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ANNEXURE “C” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE IND AS STANDALONE FINANCIAL STATEMENT OF AIRLINE ALLIED SERVICES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal nancial controls over nancial reporting of AIRLINE ALLIED SERVICES LIMITED (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind As standalone nancial statement of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal nancial controls based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal nancial controls that were operating effectively for ensuring the orderly and efcient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable nancial information, as required under the Companies Act, 2013.
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal nancial controls over nancial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal nancial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal nancial controls over nancial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal nancial controls system over nancial reporting and their operating effectiveness.
Our audit of internal nancial controls over nancial reporting included obtaining an understanding of internal nancial controls over nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone Ind As nancial statement, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualied audit opinion on the Company's internal nancial controls system over nancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal nancial control over nancial reporting is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of Ind As standalone nancial statement for external purposes in accordance with generally accepted accounting principles. A company's internal nancial control over nancial reporting includes those policies and procedures that
53 AASL
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind As standalone nancial statement in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the standalone Ind As nancial statement.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal nancial controls over nancial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal nancial controls over nancial reporting to future periods are subject to the risk that the internal nancial control over nancial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Basis for Qualied Opinion
In our opinion, according to the information and explanations given to us and based on our audit, the following material weaknesses have been identied as at March 31, 2018. The Company did not have appropriate internal nancial controls in under mentioned processes:
(i) The Company did not have an interface between various functional software relating to Sales/Revenue and Inventory Management with the accounting software resulting in accounting entries made manually. Further consistent delay has been observed in the accounting of revenue instead of real time basis/regular periodic interval. System of verication of data provided by outsource agency relating to revenue needs to be strengthen. Reconciliation with regard to revenue accounted for in the Company's account with the parent Company (AIL) is after the year end only. Revenue has been accounted for on the basis of data uploaded on FTP Server. Control on ticket price applicable for ights on RCS sector is inadequate.
(ii) Internal control system is decient in respect of payment on account of remuneration to Expat Pilots (refer note no. 53 of notes on accounts).
(iii) Internal control system is decient in respect of salary payment of Indian pilots (refer note no. 54 of notes forming part of the nancial statement).
(iv) Internal control system is decient in respect of utilization of services of pilots as services of some of the pilots are utilized over and above their normal working hours by buying their leaves and services of other pilots remain unutilized/underutilized below than the minimum hours.(refer note no. 55).
(v) Internal control system is decient in respect of reconciliation with parent Company and Associates Companies as it takes place only at the year end. Signicant impact on the Company's books of account has been observed on reconciliation of account with the Parent Company and Associate Companies. Reconciliation of account with AAI is pending since past many years.
54 AASL
(vi) The Company did not have an appropriate internal control system for reconciliation of statutory dues.
(vii) The Company did not have an appropriate internal audit control system for obtaining conrmation of balances on a periodic basis and reconciliation of unmatched Receivables and Payables.
(viii) The Company did not have an effective Information system audit to evaluate and test the IT general controls, which may affect the completeness, accuracy and reliability of the reports generated from IT System.
(ix) Internal Control System is decient that maker checker concept is missing in SAP accounting.
(x) The Company does not have proper internal control for procuring goods and process of invoice/expenses in respect of aircraft inventory.
A 'material weakness' is a deciency, or a combination of deciencies, in internal nancial control over nancial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual Ind As standalone nancial statement will not be prevented or detected on a timely basis.
Qualified opinion
In our opinion, except for the effects of material weaknesses described in “basis of qualied opinion” paragraph above, the Company has, in all material respects, an adequate internal nancial controls system over nancial reporting and such internal nancial controls over nancial reporting were operating effectively as at March 31, 2018, based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identied and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2018 Ind As standalone nancial statement of the Company, and these material weaknesses have affected our opinion on the Ind As standalone nancial statement of the Company we have issued a qualied opinion on the standalone Ind As nancial statement.
For and on behalf of M Verma & Associates Chartered Accountants (Firm Reg No: -501433C)
Sd/- (Mohender Gandhi) Partner M. No. 088396
Place : New Delhi Date : 6.11.2018
55 AASL
MANAGEMENT REPLIES TO THE INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF THE AIRLINE ALLIED SERVICES LIMITED FOR THE FINANCIAL YEAR 2017-18. Sl.No. Audit Observation Management Comments
Report on the Ind As standalone financial statement
1. We have audited the accompanying Ind As This is a statement of fact. standalone nancial statement of M/s Airline Allied Services Limited, (the “Company”), which comprises the Balance Sheet as at March 31, 2018, the Statement of Prot and Loss and the Cash Flow Statement, and a summary of the signicant accounting policies and other explanatory information for the year then ended.
Management's Responsibility for the Ind AS Standalone financial statement
2. The Company's Board of Directors is This is a statement of fact . responsible for the matter stated in Section 134(5) of the Companies Act, 2013 ('the Act”) with respect to the preparation of these Ind As standalone nancial statement that give a true and fair view of the nancial position, nancial performance and cash ows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specied under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rule 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal nancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind As standalone nancial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
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Sl.No. Audit Observation Management Comments
Auditor's Responsibility
3. Our responsibility is to express an opinion on This is a statement of fact. these Ind As standalone nancial statement based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specied under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind As standalone nancial statement are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind As standalone nancial statement. The procedures selected depend on the auditor's judgment, including the assess- ment of the risks of material misstatement of the standalone Ind AS nancial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal nancial control relevant to the Company's preparation of the Ind As standalone nancial statement that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the standalone Ind As nancial statement.
5. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion on the Ind As standalone nancial statement.
6. Opinion
In our opinion and to the best of our information and according to the explanations given to us,
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Sl.No. Audit Observation Management Comments
the aforesaid Ind As standalone nancial statement read together with the signicant accounting policies and notes thereon give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31-03-2018, and its loss and its cash ow for the year ended on that date.
7. Emphasis of Matter
We draw attention in respect of the followings :
(i) Financial statement of the Company This is a statement of fact. indicates that the Company has accumulated losses of Rs 20783.97 Adequate disclosure for the same has been made Millions and its net worth has been fully vide Note no. 47. eroded, the company has incurred net loss during the year and in previous years and the Company liabilities exceeded its assets as at the balance sheet date . These condition along with other matters set out in notes on accounts, indicated the existence of material uncertainty that may cast signicant doubt about the Company's ability to continue as a going concern. However, the nancial statement of the company has been prepared on a going concern basis. As stated in the Note no. 47, Air India Limited (Parent Company) had formulated a Turn Around Plan applicable to group Companies in order to improve its operational and nancial performance, which have been approved by the Government of India with the intention to turn around AIL and its subsidiaries . Management is of the view that with the support of Air India Limited and with other measures taken towards improving Company's operational and nancial activities, it is expected that nancial position of the Company would improve in future.
(ii) Revenue from operations consists of Air India being the marketing carrier of AASL, revenue from passenger, cargo & provides sales, marketing, booking / reservation baggage etc. has been accounted for on facilities and other support services for the AASL the basis of data processed by an operations through its reservation software
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Sl.No. Audit Observation Management Comments
outsourced agency, provided by the parent maintained by SITA. However, the revenue Company M/s Air India Limited (AIL) accounting work is being entrusted by the parent through FTP server generally on monthly company, AIL to M/s Acceleya Kale, a leading basis, which as per information provided to multinational company handling revenue us is segregated on the basis of code accounting of major airlines of the world. assigned to the Airline Allied Services Limited (AASL). Source record of In airlines industry sales are booked as a liability processed data uploaded on FTP server and gets converted to revenue only on the has been maintained with AIL and has not completion of the travel by the pax. The sales been veried by us, therefore we are processing and revenue processing are two unable to comment on the accuracy and independent activities. authenticity of the same. While, the sales processing for tickets pertaining to Alliance Air sectors is being accounted in Air India books, the revenue accounting is being done in the Alliance Air Books of Accounts based on the uplifted / own passengers. The revenue earnings for passenger revenue, excess baggage & freight are therefore segregated and credited by AIL to AASL on the basis of ight wise monthly revenue reports generated electronically. The ight-wise uplift coupons are matched electronically with the manifest reports. The deployed system of Revenue Accounting is considered adequate and inline with Airline Industry practice.
It is submitted that the company has duly made available the FTP server reports for all the months of nancial year 2017-18 for the audit verication as to the SAP entries incorporated in the Books of Accounts to account for the Passenger Revenue.
(iii) Purchases, consumption and closing stock Air India provides administrative support in (quantity as well as value) of Aircraft procurement & stocking of the aircraft inventory Inventory has been accounted for on the through a centralized inventory management basis of data/advices received from M/s system, named “RAMCO”, for its AIL along with its AIL and are not veried by us . Further as subsidiaries through separate “Inventory Series”. per information provided, inventory has been procured by the AIL's centralized Requisitions are made by the concerned sub- procurement department (MMD) and all sidiary, however, for the procurement and to documents relating to purchase proce- garner the benets of best available rates, the dures are maintained at their end, there- orders are placed to the specied vendors listed by fore not veried by us. the parent company. The laid down procedure of acceptance of goods, binning and issuance for consumptions are accounted for in the centralized software as stated above. Accounting thereafter is being carried out on the basis of generated reports by the system.
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Sl.No. Audit Observation Management Comments
Suitable disclosure has been made in the Notes to Accounts vide No. 37.
(iv) Reconciliation of account with Airport Under the aegis of ministry of Civil Aviation, a Authority of India (AAI) is pending since Memorandum of Understanding (MoU) with previous years, therefore impact on Airport Authority of India (AAI) was signed by expenditure and results of the Company Headquarters on 26.08.2013 whereby the dues of on account of above is not ascertainable at AAI vis-a-vis Air India as on 31.03.2012 were this stage. adjudicated by the ministry.
The company has been making adequate provisions as to the expenditure involved in accordance with the operations carried out in each of the previous year.
Reconciliation with AAI is under process and the same is likely to be completed in the year 2018-19 for entire past period.
The suitable disclosure in this regard is made in notes to Accounts 38.
(v) Balances of Trade Payables, Other The reconciliation is a continuous process. The Current Liabilities, Long Term Loans & reconciliation with major parties such as AIL, Advances, Other Noncurrent Assets, AIATSL, AISATS, AIESL, AIEXP, all ATF Trade Receivables and Other Current suppliers, Private Airport operators has been Assets except accounts with oil companies completed upto 31st March 2018. Even majority of and Airport Operators were unconrmed the suppliers/service providers have been re- as on 31-03-2018. We are unable to conciled. The outstanding balances of trade comment on the impact of adjustments receivables mainly pertaining to Govt. and State arising out of non-conrmation of such Organizations have been realized in 2018-19. balances as on the standalone Ind As Concerted efforts are being made to reconcile nancial statement. account with all remaining parties. The amount involved with the remaining parties is not signi- cant considering the scale of operations of the company. Further, as directed by the Board, the balance conrmation of the payables and receivables and that of the contingent liabilities as on 31.03.2018 are in the process of being authenticated by an independent agency. (vi) Interest amounting to Rs. 1340.70 The interest charged by AIL and other associated Millions, Rs 8.3 Millions,Rs.14.20 Millions companies is based on the interest cost on the relating to M/s AIL (parent Company), borrowings of the parent company, which has been AIESL & AIATSL (both Associate worked out on the average method decided and Companies) respectively has been approved by AIL management as a policy, which is accounted for on the basis of advices being followed by all subsidiaries in AIL group. received from above Companies, same has not been veried by us, therefore we
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Sl.No. Audit Observation Management Comments
are unable to comment on the authenticity As far as TDS is concerned, the company has been of the same. Further TDS on the above taking action in accordance with the opinion interest provision has not been accounted obtained from M/s Rajnish & Associates for and paid. Impact on the results of the (Chartered Accountant). Company on account of interest and penalty due to non-deduction/payment of TDS has not been ascertained and provided.
(vii) Contrary to the provision of the Income Tax Airline Allied Services Ltd. (AASL) is having Act TDS on provisional expenses has been centralized accounting at Delhi having operations accounted for at the time of payment all over India. There is time gap between receipts instead of at the time of making the of actual bills at Delhi. At the time of closing of the provisions. Impact on account of interest books of accounts, the bills for various expenditure and penalty has not been ascertained and like Landing, Parking, RNFC, TNLC, Catering, provided. Hotel Accommodation and certain aircraft repairs are normally not received. To adhere with Matching Concept wherein “Expenses are recognized in the same accounting period as the related revenue are recognized”, it is required to account for these expenses. For this, ad-hoc provisions for these expenses are made on estimations through following journal entry :
Dr. Expense Head Cr. Provision Account
As actual bills are not available and provision is based on estimation, the correlation between party name and expense head is not ascertainable, thus, deduction of TDS on these provisions is not feasible as individual PAN for these expense cannot be ascertained.
It is further stated that at the time of computation of income for ling of Income Tax Return, these provisions are added back. It means that expenditure booked through provisions has not been claimed as expense in Income Tax Return.
Our opinion is not modied in respect of matters stated in Para (i) to (vii) above.
8. Report on Other Legal and Regulatory Requirements
1. As required by 'the Companies (Auditor's This is a Statement of fact. Report) Order, 2016 (“the Order”) issued by the Central Government of India in term
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Sl.No. Audit Observation Management Comments
of section 143(11) of the Act, we give in the Annexure “A” a statement on the matters specied in paragraph 3 and 4 of the order.
2. We are enclosing our report in terms of Section 143(5) of the Companies Act, 2013, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the Annexure “B” on the directions/ sub-directions issued by the Comptroller and Auditor- General of India.
3. As required by Section 143 (3) of the Act we report that
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, Statement of Prot and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.
d. Except for the effects/possible effects of matters described in the “Basis for qualied opinion” paragraph above, in our opinion the aforesaid Stand- alone Ind As nancial statement comply with the Accounting Stan- dards specied under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. As informed by the Company, Section 164(2) of the Companies Act, 2013 is not applicable to a Govern- ment Company, vide Notication F
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Sl.No. Audit Observation Management Comments
No 1/2/2014-CL.V. dated 5th June, 2015.
f. With respect to the adequacy of the internal nancial controls over nancial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C”. Our report expresses qualied opinion on the adequacy and operating effec- tiveness of the Company's internal nancial controls over nancial reporting.
g. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2018 on its nancial position as per Note 29 except stated in Note 49 to the nancial statement.
ii. The Company did not have any long- term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.
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“ANNEXURE - A” TO THE AUDITORS’ REPORT
Referred to paragraph 1 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year ended 31st March 2018.
Sl.No. Audit Observation Management Comments
i) In respect of its xed assets:
(a) The records maintained by the Company in Noted. The complete detail of asset with respect of its xed assets are not considered to location and proper coding is available in be proper to the extent that it do not give full Fixed Asset Module in SAP, which was made particulars relating to location and situation of available. However, data is in computerized assets, quantity of assets, Rate of depreciation, form. useful life, residual value and identication numbers of the assets.
(b) As explained to us Company is conducting This is a Statement of fact. physical verication of the Fixed Assets on biennial basis. During the year physical Suitable disclosure is made in Notes to verication of Fixed Assets situated at Delhi, Accounts No. 33. Chennai has been conducted. As per said physical verication report discrepancies in respect of assets amounting Rs. 8.41 Million (gross value) were observed which has been properly dealt in the books of Account.
During the year Company has changed its Physical verication of inventory has not Accounting Policy according to which rotable been carried out by AASL during the year spares of the leased aircraft, which till previous 2017-18. years were treated as Inventory has been capitalized and has been depreciated over the However, the inventory wise, location wise leased period of the aircraft (Refer Note physical verication of these inventories has No.37.v). Physical verication of above Rotable been outsourced to an Independent Agency. spares has not been conducted. In the absence The subsequent accounting action will be of same discrepancy, if any, is unascertainable. taken in 2018-19 based on the report.
(c) According to the information, explanation and This is a Statement of fact. record available to us no immovable property is owned by the Company.
ii) In respect of inventories:
(a) As per information, explanation and record Noted. Refer our reply above in point no. 1 available to us, physical verication of (b). inventories has not been conducted during the year. (Refer Note No. 33(b). The physical verication of the inventory should be conducted at reasonable intervals. Since the
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physical verication of inventory has not been conducted, discrepancies, if any, are unascertainable.
(b) As per explanation available to us, inventories The company has an advanced inventory for aircrafts are procured by Air India Ltd. and management software called “RAMCO” used records relating to receipts, issues and closing in group level for AIL and its subsidiaries. stock are maintained at their end therefore not veried by us. Further accounting entries by the Monthly computerized statements of Company are made on the basis of advices inventory showing opening stock, closing received from Air India Ltd. Consistent delay in stock and consumptions i.r.o. AASL eet are the receipt of above advices has been received from AIL periodically, as reected in observed. It has been further observed issue/ RAMCO system after the procurement, consumption has been accounted for at the receipt, custom clearance etc. which are year end only. used for accounting of inventory and consumption in AASL books. The details are sent to AASL Finance for payment and accounting is supported with purchase orders along with Invoices from respective vendors duly certied by the user department. ( Refer note no 37) iii) As explained to us, the company had not granted any This is a Statement of fact. loans, secured or unsecured, to any companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(b) & 3(c) of the said order are not applicable to the Company. iv) In our opinion & according to information & This is a Statement of fact. explanations given to us, the company has not given any loans, investments guarantee and securities granted in respect of provision of section 185 and 186 of the Companies Act 2013. v) According to the information and explanations given This is a Statement of fact. to us, the company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other provisions of the Companies Act, 2013 and the rules framed there under are not applicable. vi) As per information and explanation provided to us, This is a Statement of fact. maintenance of cost records are not specied for the Company by the Central Government under clause (d) of sub section (1) of section 148 of the Companies Act, 2013.
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Sl.No. Audit Observation Management Comments vii) Statutory dues:
(a) As per information and explanations given to us This is a Statement of fact. There are few and record available to us, the company is instances, whereby there is delay in deposit generally regular in depositing undisputed of TDS amount due to shortage of funds. statutory dues including provident fund, income tax, custom duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities except delay in remittance of TDS amount has been observed on some occasions.
(b) According to the information and explanations This is a Statement of fact. The Service tax given to us, no undisputed amounts payable in amount has not been deposited as the matter respect of provident fund, income tax, duty of is under litigation with party, M/s GATI Ltd. custom, duty of excise, value added tax, cess The party has refuted the claim raised for the and other material statutory dues were services rendered. The corrective accounting outstanding, at the year end, for a period of action will be taken when the judgment is more than six months from the date they pronounced. become payable, except Service Tax amounting to Rs.31.13 Millions payable since Suitable disclosure in note no 49. previous years, as the matter is under litigation with the party M/s GATI Limited.
(c) According to the information and record This is a Statement of fact. available to us, disputed statutory dues against the company in income tax, service tax, custom duty , excise duty , value added tax, Cess as on 31-03-2018 are as follows
S Name Amount Nature Year Forum No. of Statue Out of where standing Dues dispute (` in is Millions) pending
1 Finance 14.04 Income 1997- ITAT Act, 1994 Tax 98
2 Finance Act, 17.43 Income 2000- ITAT 1994 Tax 01
3 Finance 3.20 Income 2004- CIT(A) Act, 1994 Tax 05 viii) As per record, information and explanations This is a Statement of fact. available to us, we are of the opinion, the company has not defaulted in repayment of dues to a nancial institution, bank, Government or dues to debenture holders.
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Sl.No. Audit Observation Management Comments ix) The company has not raised moneys by way of initial This is a Statement of fact. public offer or further public offer (including debt instrument) or term loans and hence reporting under clause (ix) of paragraph 3 of the order is not applicable. x) According to information and explanations given to This is a Statement of fact. us, no fraud by the company or any fraud on the company by its ofcers or employees has been noticed or reported during the year. xi) As informed, the provisions of section 197 relating to This is a Statement of fact. managerial remuneration are not applicable to the Company, being a Government Company, in terms of MCA Notication no. G.S.R. 463(E) dated 5th June 2015. xii) The company is not a Nidhi Company. Therefore, the This is a Statement of fact. provision of clause 3(xii) of the order are not applicable to the Company and hence not commented upon. xiii) Based upon the audit procedures performed and This is a Statement of fact. according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Ind As standalone nancial statement etc. as required by the applicable accounting standards. xiv) According to the information and explanations and This is a Statement of fact. record available to us, the Company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirement under clause 3(xiv) are not applicable. xv) The company has not entered into any non-cash This is a Statement of fact. transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013. xvi) According to the information and explanation given to This is a Statement of fact. us, the provision of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
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ANNEXURE “B” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE Ind As STANDALONE FINANCIAL STATEMENT OF AIRLINE ALLIED SERVICES LIMITED
Referred to paragraph 2 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year ended 31st March 2018.
Based on the verication of records of the Company and according to information and explanation given to us, we give below a report on the directions issued by the Comptroller and Auditor-General of India in terms of Section 143(5) of the act in respect of M/s Airline Allied Services Limited:
Sl.No. Areas to be examined Observation/Findings Management’s Reply
1. Whether the company has clear As per information and record This is a Statement of fact. title/lease deeds for freehold and available to us no freehold/ leasehold land respectively? If not leasehold land is with Airline please state, the area of freehold and Allied Services Limited. leasehold land for which title/lease deeds are not available.
2. Whether there are any cases of As per information and record This is a Statement of fact. waiver/ write off debts/loans/ interest available to us, there is no etc., if yes, the reasons there for and waiver/write off of debts/ the amount involved. loans/ interest etc. during the year.
3. W h e t h e r p r o p e r r e c o r d s a r e As stated in Note no. 37(i) and Air India provides administr- maintained for inventories lying with in our report that aircraft ative support in procurement third parties & assets received as inventories are procured by & stocking of the aircraft gift/grant(s) from Government or Air India Ltd. and records inventory through a centrali- other authorities. relating to receipts, issues and zed Inventory Management closing stock are maintained System called “RAMCO”. AIL by Air India Ltd. Purchase, and its subsidiaries DATA are consumption, closing stock maintained separately thro- are accounted for on the basis ugh dedicated separate of data/advices received from inventory series allocated for AIL. Therefore, inventory AASL. records are not veried by us and we are unable to com- Monthly computerized state- ment whether the company ments of inventory showing has maintained proper re- opening stock, closing stock cords of inventory. and consumptions i.r.o. AASL eet are received from AIL periodically, as reected in RAMCO system after the procurement, receipt, custom clearance etc. which are used for accounting of inven- tory and consumption in AASL books. The vouchers sent to Finance for payment and accounting are
68 AASL
Sl.No. Areas to be examined Observation/Findings Management’s Reply
supported with purchase orders along with Invoices from respective vendors duly certied by the user depart- ment.
AIL systems have elaborate and adequate control and internal check procedures for procurement, issue, stocking, segregation etc. for all inven- tory which is subject to physical checks by internal audit and stock verication. Such controls are also app- lied on AASL inventory as a part of group.
Further, no assets was This is a Statement of fact. received as gift/ grant from the Govt. during the year 2017-18
69 AASL
ANNEXURE “C” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE IND AS STANDALONE FINANCIAL STATEMENT OF AIRLINE ALLIED SERVICES LIMITED Sl.No. Audit Observation Management Reply
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,2013 (“the Act”)
We have audited the internal nancial controls over nancial reporting of AIRLINE ALLIED SERVICES LIMITED (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind As standalone nancial statement of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for This is a statement of fact. establishing and maintaining internal nancial controls based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal nancial controls that were operating effectively for ensuring the orderly and efcient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable nancial information, as required under the Companies Act, 2013.
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal nancial controls over nancial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal nancial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate
70 AASL
Sl.No. Audit Observation Management Reply internal nancial controls over nancial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal nancial controls system over nancial reporting and their operating effectiveness.
Our audit of internal nancial controls over nancial reporting included obtaining an understanding of internal nancial controls over nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone Ind As nancial statement, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualied audit opinion on the Company's internal nancial controls system over nancial reporting.
Meaning of Internal Financial Controls Over Over Financial Reporting
A company's internal nancial control over nancial This is a statement of fact. reporting is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of Ind As standalone nancial statement for external purposes in accordance with generally accepted accounting principles. A company's internal nancial control over nancial reporting includes those policies and procedures that
1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reect the transactions and dispositions of the assets of the company;
2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind As standalone nancial statement in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
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Sl.No. Audit Observation Management Reply
with authorizations of management and directors of the company; and
3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the standalone Ind As nancial statement.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal nancial controls over nancial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal nancial controls over nancial reporting to future periods are subject to the risk that the internal nancial control over nancial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Basis for Qualified Opinion
In our opinion, according to the information and explanations given to us and based on our audit, the following material weaknesses have been identied as at March 31, 2018. The Company did not have appropriate internal nancial controls in under mentioned processes:
(i) The Company did not have an interface between Since AASL does not have any exclusive various functional software relating to Sales/ Ticketing and Reservation System of its own, the Revenue and Inventory Management with the ticketing of the AASL sectors are also through accounting software resulting in accounting numeric code 098 of its parent company AIL. The entries made manually. Further consistent delay reservation is handled through a dynamic has been observed in the accounting of revenue software provided by M/S SITA under a long term instead of real time basis/regular periodic contract. All the reservation and ticket data are interval. System of verication of data provided pushed by SITA to the Revenue Accounting by out source agency relating to revenue needs software system of outsourced agency of AIL, to be strengthen. Reconciliation with regard to M/s Accellya Kale for necessary segregation of revenue accounted for in the Company's account the respective sale and uplift data through a AI with the parent Company (AIL) is after the year code separator (9I) for AASL. Air India's end only. Revenue has been accounted for on inventory (Ticket stock) is being used under the basis of data uploaded on FTP Server. numeric code 098 for sales and refunds of Control on ticket price applicable for ights on passenger tickets on AASL ights/sectors. The RCS sector is inadequate. revenue collected on AASL sectors are reported
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Sl.No. Audit Observation Management Reply
and uploaded on FTV server online along with ight wise, passenger wise/ ticket wise/coupon wise on monthly basis by which the necessary entries are passed in AIL and as well as AASL books.
Since the tickets are electronically generated, the data are seamlessly processed in the system. There are several validations/ checks/controls as regards to authority of DATA right from capturing till it is reported and accounted with audit trail. The errors are negligible.
Reconciliation of revenue credit between its parent company AIL and AASL takes place on monthly basis.
The company is in process of implementing its own revenue system RADIXX in the year 2018- 19, which will have an interface with the SAP accounting package.
Similarly, the inventory of AASL maintained in RAMCO system is reconciled in the group level with separate reports generated and provided for AASL inventories. Further, the RAMCO system is under upgradation, whereby it will be interfaced with SAP.
(ii) Internal control system is decient in respect of Suitable disclosure has been made in Notes to payment on account of remuneration to Expat Accounts No. 53. Pilots (refer note no. 53 of notes on accounts).
(iii) Internal control system is decient in respect of Suitable disclosure has been made in Notes to salary payment of Indian pilots (refer note no. 54 Accounts No. 54. of notes forming part of the nancial statement).
(iv) Internal control system is decient in respect of Due to the severe scarcity of ATR Commanders, utilization of services of pilots as services of some the company has employed expatriate pilots as of the pilots are utilized over and above their Commanders on Fixed Term Employment normal working hours by buying their leaves and Agreement (FTEA). To meet the operational services of other pilots remain unutilized/ requirements. The Board of Directors of the underutilized below than the minimum hours. company in their 146th meeting held on 21st (refer note no 55) March 2017 noted and conveyed the encouragement of buying leaves of expatriate pilots.
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Sl.No. Audit Observation Management Reply
(v) Internal control system is decient in respect of During the year 2017-18, half yearly reconciliation with parent Company and reconciliation was carried out with parent Associates Companies as it takes place only at company. As on 31.03.2018, reconciliation with the year end. Signicant impact on the parent company and all associated companies Company's books of account has been observed were done. on reconciliation of account with the Parent Company and Associate Companies. Regarding reconciliation with AIL and Reconciliation of account with AAI is pending subsidiaries, suitable disclosure has been made since past many years. in Notes to Accounts No.40.
Regarding AAI reconciliation, suitable disclosure is made in Note no 38.
(vi) The Company did not have an appropriate Accounting entries for all the statutory internal control system for reconciliation of deductions based on the invoices received from statutory dues. various vendors including payroll, are duly accounted through SAP system of accounting under various tax slabs. The monthly statements are downloaded, cross checked with the invoices and paid to respective authorities on due dates and accordingly returns are led periodically as per due dates, which are audited by Internal Auditors, Statutory Auditors, Tax Auditors and Govt.. Auditors.
(vii) The Company did not have an appropriate The company has reconciled a substantial internal audit control system for obtaining percentage of receivables and payables in SAP conrmation of balances on a periodic basis and for all major customers and vendors such as OIL reconciliation of unmatched Receivables and companies, Airport operators, Handling Service Payables. providers, related parties etc. However, in respect of remaining small Vendor's accounts necessary reconciliation is in process.
The company has hired an external Independent Agency to certify and authenticate the balances which will facilitate the reconciliation and necessary accounting action thereof.
(viii) The Company did not have an effective An effective SAP system has been installed and Information system audit to evaluate and test the all the accounts were migrated in 2013-14. This IT general controls, which may affect the system is being supported by IBM team. Several completeness, accuracy and reliability of the Computer related applications are checked for reports generated from IT System. accuracy and control by the service providers. The reliability reports are also checked. There has been no irregularities detected in the System so far.
AASL has an also a functional IT department to additionally co-ordinate with IBM for control and ensuring accuracy.
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Sl.No. Audit Observation Management Reply
(ix) Internal Control System is decient that maker The company is in the process of implementation checker concept is missing in SAP accounting. of maker checker concept in SAP.
(x) The Company does not have proper internal The company has an advanced inventory control for procuring goods and process of management software called “RAMCO” used in invoice/expenses in respect of aircraft inventory. group level for AIL and its subsidiaries.
Monthly computerized statements of inventory showing opening stock, closing stock and consumptions i.r.o. AASL eet are received from AIL periodically, as reected in RAMCO system after the procurement, receipt, custom clearance etc. which are used for accounting of inventory and consumption in AASL books. The details are sent to AASL Finance for payment and accounting are supported with purchase orders along with Invoices from respective vendors duly certied by the user department.
AIL systems have elaborate and adequate control and internal check procedures for procurement, issue, stocking, segregation etc. for all inventories. Such controls are also exercised for AASL inventories.
A 'material weakness' is a deciency, or a combination of deciencies, in internal nancial control over nancial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual Ind As standalone nancial statement will not be prevented or detected on a timely basis.
Qualified Opinion
In our opinion, except for the effects of material weaknesses described in “basis of qualied opinion” paragraph above, the Company has, in all material respects, an adequate internal nancial controls system over nancial reporting and such internal nancial controls over nancial reporting were operating effectively as at March 31, 2018, based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
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Sl.No. Audit Observation Management Reply
We have considered the material weaknesses identied and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2018 Ind As standalone nancial statement of the Company, and these material weaknesses have affected our opinion on the Ind As standalone nancial statement of the Company we have issued a qualied opinion on the standalone Ind As nancial statement.
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BALANCE SHEET AS AT 31 MARCH 2018 (Amount in Rupees) Particulars Note As at 31st March 2018 As at 31st March 2017 As at 1st April 2016
ASSETS : 1 Non-current Assets (i) Property, Plant & Equipment 2 77,435,673 42,293,967 44,099,566 (ii) Financial Assets: a) Trade Receivables - - - b) Loans - - - c) Others 3 1,280,294,155 537,434,034 439,805,188 (iii) Income Tax Assets (net) 4 170,692,013 132,869,928 126,641,590 (iv) Deferred Tax Assets (net) (v) Other Non-Current Assets 1,528,421,841 712,597,928 610,546,344 2. Current Assets (i) Inventories 5 349,665,367 164,157,062 190,436,575 (ii) Financial Assets: a) Trade Receivables 6 801,488,487 1,046,313,210 1,250,726,373 b) Cash and Cash equivalents 7 269,737,944 14,383,688 2,975,183 c) Bank balances other than (b) above 8 12,656,696 - - d) Loans 9 103,609,809 46,386,368 30,779,250 e) Others includes Adv. To Vendor and other dues 10 690,011,180 758,569,884 547,145,420 (iii) Current Tax Assets (iv) Other Current Assets 11 21,322,793 2,248,492,276 54,488,423 2,084,298,635 72,135,546 2,094,198,347 Total Assets 3,776,914,117 2,796,896,563 2,704,744,690 EQUITY AND LIABILITIES : 1 Equity a) Equity Share Capital 12 4,022,500,000 4,022,500,000 4,022,500,000 b) Other Equity 13 (20,982,784,501) (16,960,284,501) (18,345,144,417) (14,322,644,417) (15,478,086,706) (11,455,586,706)
2 Liabilities : (i) Non-current Liabilities a) Financial Liabilities i) Other - - - b) Provisions 14 323,302,659 291,352,237 234,241,628 c) Other non Current Liabilities - 323,302,659 - 291,352,237 - 234,241,628 (ii) Current Liabilities a) Financial Liabilities i) Borrowings 15 15,426,165,941 13,823,327,399 10,838,457,671 ii) Trade Payables 16 2,964,477,326 2,170,541,791 2,170,885,983 iii) Other 17 1,647,111,165 570,630,290 603,269,383 b) Provisions 18 110,194,979 50,814,978 126,749,537 c) Other Current Liabilities 19 265,946,548 20,413,895,959 212,874,285 16,828,188,743 186,727,195 13,926,089,768 Total Equity & Liabilities 3,776,914,117 2,796,896,563 2,704,744,690
This is the Balance Sheet referred to in our report of even date. Signicant Accounting Policies in Note no. 1 and notes refered to above form an integral part of these Financial Statements. As per our report of even date attached For and on behalf of For and on behalf of the Board of Directors of For M. Verma & Associates Airline Allied Services Limited Chartered Accountants Sd/- Sd/- Sd/- Firm Reg. No 501433C (Pradeerp Singh Kharola) (Vinod Hejmadi) (C.S. Subbiah ) Chairman Director CEO, AASL DIN : 05347746 DIN : 07346490 Sd/- Sd/- Sd/- (Mohender Gandhi) (Manjiree M. Vaze) (Kamal Roul) Partner Company Secretary Chief Financial Ofcer Membership No. 088396
Place : New Delhi Date : 6 November 2018 77 AASL
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2018 (Amount in Rupees) Particulars Note No 2017-2018 2016-2017 I. Revenue 1 From Operations 20 i) Scheduled Trafc Services 4,947,371,620 3,091,382,082 ii) Non Schedule Trafc Services 777,705,633 558,689,148 iii) Other Operating Revenue 206,375,469 26,586,062 2 Other Income 21 86,282,305 291,815,539 II Total Revenue (1+2) 6,017,735,027 3,968,472,831 III. Expenses Aircraft Fuel & Oil 1,254,789,490 716,526,505 Other Operating Expense 22 4,334,185,488 3,452,101,623 Employee benet expense 23 1,129,448,468 739,480,891 Finance Costs 24 1,380,947,979 1,382,425,222 Depreciation and amortization expense 10,744,105 7,275,684 Other expenses 25 549,350,733 550,922,977 IV. Total Expenses 8,659,466,262 6,848,732,902 V. (Loss) before exceptional items and tax (II - IV) (2,641,731,235) (2,880,260,072) VI. Exceptional Items 26 - (302,539) VII. Prot before tax (VII - VIII) (2,641,731,235) (2,880,562,611) VIII. Tax expense: IX. (Loss) for the year after tax ( VII-VIII) (2,641,731,235) (2,880,562,611) X. Other Comprehensive Income Actuarial Gain/(Loss) on Post Retirement Benet Plans 4,091,151 13,504,900 XI. Total Comprehensive Income (2,637,640,084) (2,867,057,711) XII. Earning per equity share: 27 (1) Basic (65.57) (71.28) (2) Diluted (65.57) (71.28)
Signicant Accounting Policies in Note no. 1 and notes refered to above form an integral part of these Financial Statements. As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors of For M. Verma & Associates Airline Allied Services Limited Chartered Accountants Sd/- Sd/- Sd/- Firm Reg. No 501433C (Pradeerp Singh Kharola) (Vinod Hejmadi) (C.S. Subbiah ) Chairman Director CEO, AASL DIN : 05347746 DIN : 07346490
Sd/- Sd/- Sd/- (Mohender Gandhi) (Manjiree M. Vaze) (Kamal Roul) Partner Company Secretary Chief Financial Ofcer Membership No. 088396
Place : New Delhi Date : 6 November 2018 78 AASL
STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2018
(Amount in Rupees) A. Equity Share Capital As at 31.03.2018 As at 31.03.2017 As at 31.03.2016 No. of Shares Amount in No. of Shares Amount in No. of Amount in Rupees Rupees Shares Rupees Balance at the beginning of the reporting period 40,225,000 40,225,00000 40,225,000 40,225,00000 40,225,000 40,225,00000 Changes in the Equity Share Capital during the year Add : 0 0 0 0 0 0 Less : 0 0 0 0 0 0 Balance at the end of reporting period 40225000 4022500000 40225000 4022500000 40225000 4022500000
(Amount in Rupees) Other Total B. Other Equity Capital Reserve Retained Earnings Comprehensive Income Balance as at 31.03.2017 Nil (18,358,649,317) 13,504,900 (18,345,144,417) Prior Period Adjustments - - Restated Balances as on 31.03.2017 Nil (18,358,649,317) 13,504,900 (18,345,144,417) To/From Prot for the year (2,641,731,235) 4,091,151 (2,637,640,084) Balance as at 31.03.2018 Nil (21,000,380,552) 17,596,051 (20,982,784,501) Balance as at 01.04.2016 Nil (14,631,234,347) (14,631,234,347) Prior Period Adjustments (846,852,358) (846,852,358) Restated Balances as on 01.04.2016 Nil (15,478,086,706) (15,478,086,706) To/From Prot for the year (2,880,562,611) 13,504,900 (2,867,057,711) Balance as at 31.03.2017 Nil (18,358,649,317) 13,504,900 (18,345,144,417)
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors of For M. Verma & Associates Airline Allied Services Limited Chartered Accountants Sd/- Sd/- Sd/- Firm Reg. No 501433C (Pradeerp Singh Kharola) (Vinod Hejmadi) (C.S. Subbiah ) Chairman Director CEO, AASL DIN : 05347746 DIN : 07346490
Sd/- Sd/- Sd/- (Mohender Gandhi) (Manjiree M. Vaze) (Kamal Roul) Partner Company Secretary Chief Financial Ofcer Membership No. 088396
Place : New Delhi Date : 6 November 2018
79 AASL
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2018 (Amount in Rupees) Particulars 2017-2018 2016-2017 A. CASH FLOW FROM OPERATING ACTIVITIES a) Profit/(Loss) before tax for the year as per Profit & Loss A/C (2,637,640,084) (2,867,057,711) b) Add:- Adjustment for : 1 Depreciation and amortisation expenses 10,744,105 7,275,684 2 Provisions/Un-claimed Liabilities Written Back (23,510,833) (99,882,171) 3 Interest Paid 1,435,373,905 1,403,761,248 4 Interest Earned (62,771,472) (50,904,329) 5 Provision for obsolescence of spares (124,989,141) (39,605,635) 6 Loss or Gain on Assets held for disposal 1,167,619 1,222,821 1,236,014,183 1,221,867,619 c) Operating Profit/(Loss) before Changes in working capital: (1,401,625,901) (1,645,190,092) ADD: Adjustments for (increase) / decrease in operating assets: Other non-current assets Inventories (60,519,164) 65,885,148 Trade receivables 244,824,723 204,413,163 Loans (57,223,441) (15,607,118) Others 68,558,705 (211,424,464) Other current assets 33,165,629.94 17,647,124 Income Tax Assets (net) (37,822,085.49) (6,228,338) ADD: Adjustments for increase / (decrease) in operating liabilities: Trade payables 817,446,368 99,537,978 Other current liabilities 1,076,480,875 (32,639,093) Short-term borrowing 1,602,838,542 2,984,869,728 Short-term provisions 59,380,001 (75,934,559) Other current liabilities 53,072,263 26,147,090.32 Long-term provisions 31,950,422 57,110,609 d) Cash generated from operations 3,832,152,838 3,113,777,268 e) Net Cash from Operating Activities 2,430,526,937 1,468,587,176
B. CASH FLOW FROM INVESTING ACTIVITES a) Purchase of Fixed Assets (47,053,430) (6,692,906) b) Addition in SBLC (742,860,121) (97,628,846) c) Interest Income 62,771,472 50,904,329 d) Sale of xed Asset (727,142,079) (53,417,423)
C. CASH FLOW FROM FINANCING ACTIVITES a) Conversion of Current Liability into Equity b) Interest Paid (1,435,373,905) (1,435,373,905) (1,403,761,248) (1,403,761,248)
D. NET INCREASE IN CASH & CASH EQUIVALENTS (A+B+C) 268,010,953 11,408,505
E. CASH & CASH EQUIVALENTS AT BEGINNING OF THE YEAR 14,383,688 2,975,183
F. CASH & CASH EQUIVALENTS AT THE END OF THE YEAR (E + D) 282,394,640 14,383,688
Note :- The above Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the AS-3 (Revised 1997) on "Cash Flow Statements" issued by ICAI. Previous year gures have been regrouped /rearranged wherever necessary. AUDIT REPORT : This is the Cash Flow Statement referred to in our audit report of even date
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors of For M. Verma & Associates Airline Allied Services Limited Chartered Accountants Sd/- Sd/- Sd/- Firm Reg. No 501433C (Pradeerp Singh Kharola) (Vinod Hejmadi) (C.S. Subbiah ) Chairman Director CEO, AASL DIN : 05347746 DIN : 07346490
Sd/- Sd/- Sd/- (Mohender Gandhi) (Manjiree M. Vaze) (Kamal Roul) Partner Company Secretary Chief Financial Ofcer Membership No. 088396 Place : New Delhi Date : 6 November 2018 80 AASL
NOTE-1:
Accounting Policies forming part of the financial statements for the year ended 31 March 2018
(Rupees in millions except otherwise stated)
1. Company Information / Overview:
i. Background :
Airline Allied Services Limited, (a Government of India Company) is a wholly owned subsidiary of Air India Limited incorporated in India, registered under the Companies Act, 1956. The company provides domestic air transport services. The company is in the business of air transportation which includes mainly passenger and cargo services and other related services. The Company mainly operates between Tier-2 and Tier-3 cities in India. As at year end, the Company has a eet of 14 no of ATR – 72-600 aircraft and 2 no. of ATR – 42-320 aircraft. The registered ofce of the company is situated at Alliance Bhawan, Domestic Terminal-1, I.G.I. Airport, New Delhi – 110 037.
2. Basis of preparation of Financial Statements:
(i) Statement of Compliance:
The Financial Statements of the company for the year ended 31st March 2018 have been prepared in accordance with Indian Accounting Standards (Ind AS) specied under Section 133 of the Act, read with relevant rules issued thereunder, pursuant to the notication issued by Ministry of Corporate Affairs dated 16 February 2015, in conjunction with notifying the Companies (Indian Accounting Standards) Rules, 2015 relevant provisions of the Act and other accounting principles generally accepted in India.
These nancial statements are the rst nancial statements prepared in accordance with Ind AS, as notied under the Companies Act 2013.Therefore Ind As 101” First time adoption of Indian Accounting Standards” has been applied. The date of transition to the Ind AS is 1st April 2016. Details of exemptions and exceptions availed by the company in preparing the rst nancial statement is given in Note No. 28.
(ii) Basis of measurement:
The nancial statements have been prepared under the historical cost convention on accrual basis except for certain nancial assets and liabilities which are measured at fair value or amortized cost at the end of each nancial year.
(iii) Critical accounting estimates / judgments:
In preparing these nancial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. However the actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates where necessary are recognized prospectively.
81 AASL
Signicant areas of estimation and judgments (as stated in the respective Accounting Policies) that have the most signicant effect on the Financial Statements are as follows:
a) Impairment of Assets
b) Measurement of useful life and residual values of property, plant and equipment and the assessment as to which components of the cost may be capitalized.
c) Basis of classication of a Property as Investment Property.
d) Basis of classication of Non-Current Assets held for sale.
e) Estimation of Costs of Re-delivery.
f) Recognition of Deferred Tax Assets.
g) Recognition and measurement of dened benet obligations.
h) Judgment required to ascertain lease classication.
i) Measurement of Fair Values and Expected Credit Loss (ECL).
j) Judgment is required to ascertain whether it is probable or not that an outow of resources embodying economic benets will be required to settle the taxation disputes and legal claim.
(iv) Operating cycle & Classification of Current & Non Current :
Presentation of assets and liabilities in the nancial statement has been made based on current / non-current classication provided under the Company Act 2013.The Company being in service sector, there is no specic operating cycle; however, 12 months period has been adopted as “the Operating Cycle” in-terms of the provisions of Schedule III to the Companies Act 2013. Accordingly, current liabilities and current assets include the current portion of non-current nancial liabilities and assets.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these nancial statements and in preparing the opening Ind AS Balance Sheet as at 1 April 2016 for the purposes of the transition to Ind AS.
I. Property, Plant and Equipment
a. Property, Plant and Equipment ( PPE) are stated at cost including incidental costs incurred pertaining to the acquisition and bringing them to the location for use and interest on loans borrowed where ever applicable, upto the date of putting the concerned asset to its working condition for its intended use.
b. Assets under leases, in respect of which substantially all the risks and rewards of ownership are transferred to the Company, are considered as 'Finance Leases' and are capitalized. However, Company is operating Aircraft, taken on operating lease under Dry Lease arrangement.
82 AASL c. Physical Verication of Assets : Physical Verication of Assets is done on a rotational basis so that every asset is veried in every two years and the discrepancies observed in the course of the verication adjusted in the year in which report is submitted and nalised.
Depreciation / Amortization a) Depreciation is provided on straight-line method over the useful life of the Property, Plant and Equipment as prescribed in the Schedule II of the Companies Act 2013 (except as otherwise stated), keeping a residual value of 5% of the original cost. . Depreciation method, useful lives and residual value are reviewed by the management at each year end. b) In the case where life of the Plant, Property and Equipment has not been prescribed under Schedule II of the Companies Act, 2013 the same have been determined by technically qualied persons and approved by the Board of Directors, keeping a residual value of 5% of the original cost as stated hereunder:
i) Rotables:
Aircraft Rotables are depreciated over the residual average useful life of the related 'aircraft eet' from the relevant year of purchase.
ii) Ground Support Equipment (GSE):
Depreciation on Ground Support Equipment specic to leased CRJ & ATR aircraft is provided based on the completed aircraft lease months over the total aircraft lease months from the date of use. c) In respect of operating leases of aircraft/engines in which the company acquires, a residual right in the aircraft by paying a termination/release sum, such amount is treated as PPE and amortized over the remaining useful life of the aircraft/engines determined by ying hours. d) Major overhaul costs relating to engine and airframe are identied as separate components for owned aircraft and aircraft under nance lease and are depreciated over the expected lives between major overhauls. e) Cost incurred on major modications/refurbishment, modernization/conversion carried to owned and leased assets are depreciated over the useful life/period of lease of the asset. f) Leasehold Property, plant and equipment (including land other than perpetual lease) is amortized over the period of lease. g) Non – Current Assets held for Sale
Assets are classied as held for sale if it is highly probable that they will be recovered primarily through sale in its present condition rather than through continuing use. The net book value of such assets, are transferred from the block of xed assets to “Assets held for Sale” at lower of the carrying value or Fair Value less cost to sell. No depreciation is provided, once the asset is transferred to Assets Held for Sale. h) Intangible Assets
Intangible assets are recorded at cost of acquisition including incidental costs related to acquisition and installation and are carried at cost less accumulated amortization and impairment losses, if any.
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Intangible assets which have nite useful lives are amortized on straight line method over the estimated useful life. i) Leases
a. Finance lease :
- A lease is classied as nance lease or operating lease at the inception date. Leases of property, plant and equipment, that transfer to the Company, substantially all of the risks and rewards of ownership, are classied as nance lease.
- Assets held under nance lease are initially capitalized at the fair value at the inception of lease or at the present value of the minimum lease payments whichever is lower.
- Minimum lease payments made under nance lease are apportioned between the nance costs and the reduction of the outstanding liability treated as loan. The nance cost is allocated to each period during the lease term. However, if they are directly attributable to qualifying assets, then they are capitalized in accordance with the company's general policy on borrowing cost.
b. Operating lease :
- Leases where the Lessor effectively retains substantially all the risks and rewards of ownership of the leased assets are classied as Operating Lease.
- Lease payments in respect of assets taken on operating lease are charged to the Statement of Prot and Loss on a straight line basis over the period of the lease unless the payment are structured to increase in line with the expected general ination to compensate the lessor expected in inationary cost increases. Any change in the lease term is accounted prospectively over the remaining term of lease.
- Contributions made to lessors on account of Maintenance Reserve for which, maintenance is expected to arise during the lease period is treated as Expense.
- The Company has in its eet, aircraft on operating lease. As contractually agreed under the lease contracts, the aircraft have to be redelivered to the lessors at the end of the lease term under stipulated contractual return conditions. The redelivery costs are estimated by management based on historical trends and data, and are charged to Statement of Prot & Loss in proportion to the expired lease period. These are recorded at the discounted value, where effect of the time value of money is material. j) INVENTORIES:
a. Inventories primarily (include) consists of stores and spares and loose tools (other than those which meet the criteria of property, plant and equipment) & ATF. Cost of inventories comprise all costs of purchase after deducting non refundable rebates and discounts and all other costs incurred in bringing the inventories to their present location and condition and is determined on weighted average basis.
84 AASL
b. Inventories are valued at lower of cost and Net Realizable Value ('NRV'). NRV for stores and spares, loose tools and fuel used in rendering of services are not written down below cost except in cases where the price of such materials have declined and it is estimated that the cost of rendering of services will exceed their selling price.
c. Expendable / consumables are charged off in case of initial issue, except issued for capital works which are expensed off when the work order is closed on the completion of repair work.
d. Obsolescence provision for aircraft stores and spare parts:
i. Provision is made for the non-moving inventory exceeding a period of ve years (net realizable value of 5%) except for (ii) & (iii) below and netted off from the value of inventory.
ii. Inventory of Aircraft Fleet which has been phased out, is shown at estimated realizable value unless the same can be used in other Aircraft.
iii. Provision in respect of inventories exclusively relating to aircraft on dry/wet lease, is made on the basis of the completed lease period compared to the total lease period as at the year-end.
e. Full Obsolescence Provision for non-aircraft stores and spares is made for non-moving inventory exceeding a period of ve years.
f. Spares retrieved from the cannibalization of the scrapped aircraft are accounted for at Rupee One. k) IMPAIRMENT OF NON FINANCIAL ASSETS
The Company assesses at each Balance Sheet date whether there is any indication that carrying amount of its non- nancial asset has been impaired. If any such indication exists, the provision for impairment is made in accordance with Ind AS-36. l) GOVERNMENT GRANTS
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Government grants shall be recognized in prot or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants that become receivable as compensation for expenses or losses incurred in a previous period are recognized in prot or loss of the period in which it becomes receivable.
Government grants related to assets are presented in the balance sheet as deferred income and are recognized in prot or loss on a systematic basis over the expected useful life of the related assets.
85 AASL m) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benets will ow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, net of discounts. Revenue is recorded when the recovery of consideration is probable and determinable.
a) Passenger, Cargo and Mail Revenue are recognized at initial stage when transportation service is provided.
b) Income from Interest is recognized using the effective interest method on a time proportion basis. Income from Rentals is recognized on a time proportion basis.
c) The claims receivable from Insurance Company are accounted for on the acceptance by the Insurance Company of such claims.
d) Warranty claims/credit notes received from vendors are recognized on acceptance of claim/receipt of credit note.
e) Other Operating Revenue is recognized when goods are delivered or services are rendered.
f) Gain or loss arising out of sale/scrap of PPE including aircraft over the net depreciated value is taken to Statement of Prot & Loss as Non-Operating Revenue or Expenses..
g) Viability Gap Funding (VGF) and Regional Connectivity Scheme (RCS) are accounted for on the basis of difference between revenue and cost of operations on accrual basis and the same is treated as Operating Income.
h) Other Items :
i) Scrap sales, reimbursement from employees availing medical, educational and other leave without pay, claims of interest from suppliers, other staff claims and lost baggage claims, are recognized on cash basis.
ii) Liability for amounts payable towards IATA dues, liabilities for expenses are recognized to the extent of claims/ invoices received. n) MANUFACTURER'S CREDIT (CASH & NON CASH INCENTIVES):
Manufacturer's/Lessors' credit entitlements are accounted for on accrual basis and credited to 'Incidental Revenue' by contra debit to 'Advances'; when the credit entitlement are used, the 'advances' are adjusted against the liability created for either acquiring an asset or incurring an expenditure. o) BORROWING COST
a) Borrowing cost that are directly attributable to acquisition, construction of qualifying assets including capital work–in-progress are capitalized, as part of the cost of assets, up to the date of commencement of commercial use of the assets.
86 AASL
b) Interest incurred on borrowed funds or other temporary borrowings in anticipation of the receipt of long term borrowings that are used for acquisition of qualifying assets exceeding the value of Rs.10.0 million is capitalized at the weighted average borrowing rate on loans outstanding at the time of acquisition. p) FOREIGN CURRENCY MONETARY ITEMS
The management has determined the currency of the primary economic environment in which the company operates i.e. functional currency, to be Indian Rupees (Rs). The nancial statements are presented in Indian Rupees, which is company's functional and presentation currency.
a) Foreign Currency Monetary Items
i) Foreign currency Revenue and Expenditure transactions relating to Foreign Stations are recorded at established monthly rates (based on published IATA rates). Interline settlement with Airlines for transportation is carried out at the exchange rate published by IATA for respective month.
ii) Foreign currency monetary items are translated using the exchange rate circulated by Foreign Exchange Dealers Association of India (FEDAI). Gains/ (losses) arising on account of realisation/settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the Statement of Prot and Loss.
iii) In respect of long term foreign currency monetary items originating before 1st April, 2016, the effect of exchange differences arising on settlement or reporting of long term monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous nancial statements, is accounted as addition or deduction to the cost of the assets so far as it relates to acquisition of depreciable capital assets and is depreciated over the balance useful life of the concerned asset and in other cases such difference is accumulated by transfer to “Foreign Currency Monetary Items Translation Difference Account” to be amortized over the balance period of such long term Assets or Liability.
b) Exchange variation is not considered at the year-end in respect of Debts and Loans & Advances for which doubtful provision exists since they are not expected to be realized. q) EMPLOYEE BENEFITS
The Retirement Benets to the employees comprise of Dened Contribution Plans and Dened Benet Plans.
a) Defined Contribution Plans consist of contributions to Employees Provident Fund and Employees State Insurance Scheme. The Company has created separate Trusts to administer Provident Fund contributions to which contributions are made regularly. ESI dues are regularly deposited with government authorities.
b) Defined Benefit Plans, which are not funded, consist of Gratuity & Leave Encashment. The liability for these benets except for (c) below is actuarially determined under the Projected Unit Credit Method at the year end as per Indian Laws.
87 AASL
The obligation is measured at the present value of estimated future cash ows. The discount rates used for determining the present value of obligation under dened benet plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Re- measurements gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in Other Comprehensive Income. They are included in “Other Equity” in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the dened benet obligation resulting from settlement or curtailments are recognized immediately in Statement of Prot and Loss as past service cost.
c) Other Long-Term Employee Benefits :
Benets in the form of Leave Encashment are accounted as other long-term employee benets. The Company's net obligation in respect of Leave Encashment is the amount of benet to be settled in future, that employees have earned in return for their service in the current and previous years. The benet is discounted to determine its present value. The obligation is measured on the basis of an actuarial valuation using the projected unit credit method. Re-measurement are recognised in Statement of Prot and Loss in the period in which they arise. r. TAXES ON INCOME
(i) Current Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognised outside prot or loss is recognised outside prot or loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for nancial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for unused tax losses, unused tax credits and deductable temporary differences to the extent that is probable that future taxable prots will be available against which they can be used. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufcient taxable prots will be available to allow all or part of the asset to be recovered.
Deferred tax is measured at the tax rates that are expected to apply to the period when the assets are realized or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
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The measurement of deferred tax reects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. s) PROVISIONS, CONTINGENT LIABILITIES / CAPITAL COMMITMENTS & CONTINGENT ASSETS :
a) Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation (legal or constructive)as a result of past events and it is probable that there will be an outow of resources. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reects, when appropriate, the risks specic to the liability. These estimates are reviewed at each reporting date and adjusted to reect the current best estimates. The expense relating to a provision is presented in the statement of prot and loss.
b) Contingent liabilities are disclosed by way of a note in respect of possible obligations that may arise from past events but their existence is conrmed by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Company.
c) Contingent Assets are neither recognized nor disclosed in the nancial statements. t) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignicant risk of changes in value. u) EARNING PER SHARE
The Company presents basic and diluted earnings/ (loss) per share (EPS) data for its equity shares. Basic earnings per equity share are computed by dividing the net prot after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net prot after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year. v) FAIR VALUE MEASUREMENT
The Company measures nancial instruments and specic investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the nancial statements are categorized within the fair value hierarchy, described as below, based on the lowest level input that is signicant to the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
89 Level 2 – Valuation techniques for which the lowest level input that is signicant to the fair value measurement is directly or indirectly observable.
Level 3 – Valuation techniques for which the lowest level input that is signicant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re- assessing categorization (based on the lowest level input that is signicant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Financial instruments
A nancial instrument is any contract that gives rise to a nancial asset of one entity and a nancial liability or equity instrument of another entity.
a. Financial assets
(i) Classification
The Company classies nancial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Prot and Loss on the basis of its business model for managing the nancial assets and the contractual cash ows characteristics of the nancial asset.
(ii) Initial recognition and measurement
All nancial assets are recognized initially at fair value plus, in the case of nancial assets not recorded at fair value through Statement of Prot and Loss, transaction costs that are an attributable to the acquisition of the nancial asset.
(iii) Subsequent measurement
For purposes of subsequent measurement nancial assets are classied in below categories:
a. Financial assets carried at amortized cost
A nancial asset other than derivatives and specic investments, is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash ows and the contractual terms of the nancial asset give rise on specied dates to cash ows that are solely payments of principal and interest on the principal amount outstanding.
b. Financial assets at fair value through other comprehensive income
A nancial asset comprising specic investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash ows and selling AASL
nancial assets and the contractual terms of the nancial asset give rise on specied dates to cash ows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classied as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
c. Financial assets at fair value through Statement of Profit and Loss
A nancial asset comprising derivatives which is not classied in any of the above categories are subsequently fair valued through prot or loss.
(iv) De-recognition
A nancial asset is primarily derecognized when the rights to receive cash ows from the asset have expired or the Company has transferred its rights to receive cash ows from the asset.
(v) Impairment of other financial assets
The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the nancial assets that are trade receivables or contract revenue receivables and all lease receivables etc.
(vi) Write-off
The gross carrying amount of a nancial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the counter party does not have assets or sources of income that could generate sufcient cash ows to repay the amounts subject to the write-off. However, nancial assets that are written off, could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due. b. Financial Liabilities
(i) Initial recognition and measurement
All nancial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's nancial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative nancial instruments.
(ii) Classification
The Company classies all nancial liabilities as subsequently measured at amortized cost, except for nancial liabilities at fair value through Statement of Prot and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.
(iii) Subsequent measurement
The measurement of nancial liabilities depends on their classication, as described below.
91 - Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in Statement of Prot and Loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as nance costs in The Statement of Prot and Loss.
- Financial liabilities at fair value through Statement of Profit and Loss
Financial liabilities at fair value through Statement of Prot and Loss include nancial liabilities held for trading and nancial liabilities designated upon initial recognition as at fair value through Statement of Prot and Loss. Financial liabilities are classied as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative nancial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as dened by Ind AS 109. Separated embedded derivatives are also classied as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Prot and Loss.
(iv) Derecognition
A nancial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.
(v) Offsetting of financial instruments
Financial assets and nancial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to sale on a net basis, to realize the assets and sale the liabilities simultaneously w. MATERIALITY THRESHOLD LIMITS:
The Company has adopted following materiality thresh hold limits in the classication of expenses/incomes and disclosure: Thresh hold Items Unit Thresh hold Value Prepaid Expense
Foreign Stations Million 00.05
Domestic Stations Million 00.01
Contingent Liability & Capital Commitments Million 00.10
Fair Valuation of Financial Instruments Million 50.00 AASL
NOTE “02” : FIXED ASSETS & DEPRECIATION SCHEDULE (Amount in Rupees)
Useful Gross Additions Sold/ Gross Accumul- Depreciation PARTICULARS OF Life as Block During Discarded Block ated Dep. for the ASSETS per Sch- As on 2017-18 During As on Upto Year edule-II 31.03.2017 2017-18 31.03.2018 01.04.2017 2017-18
1. 2. 3. 4. 5. 6. 7. 8.
PLANT & EQUIPMENT 15 Years 1,161,367 2,335,752 964,356 2,532,763 146,453 124,405
FURNITURE & FIXTURES 10 years 427,556 4,209,304 49,506 4,587,354 22,910 196,596
VEHICLE 8 Years 1,491,427 428,451 - 1,919,878 173,544 191,275
DATA PROCESSING EQUIPMENT 3 Years 2,945,405 7,092,125 153,757 9,883,772 647,912 1,926,901
GROUND SUPPORT (as per EQUIPMENT(ATR) policy) 1 - - 1 - -
MEDICAL EQUIPMENT 15 Years 19,237 - - 19,237 - -
AIRFRAME ROTABLES 43,524,657 32,987,799 - 76,512,456 6,284,865 8,304,928
TOTAL 49,569,651 47,053,430 1,167,619 95,455,462 7,275,684 10,744,105
Useful Accum. Excess Depreci- Cumula- Net Block Net PARTICULARS OF Life as Dep. on Dep. of ation Dis- tive Dep- As on Block ASSETS Per Sch- Assets Previous carded dur- reciation 31.03.2018 As on edul-II Dis- Year wrt. ing the yr. as on 1.4.17 carded Off 31.03.2018
9. 10. 11. 12. 13. 14.
PLANT & EQUIPMENT 15 Years 270,858 2,261,906 1,014,914
FURNITURE & 10 Years 219,506 4,367,848 404,646 FIXTURES
VEHICLE 8 Years 364,819 1,555,059 1,317,883
DATA PROCESSING 3 Years 2,574,813 7,308,959 2,297,493 EQUIPMENT
GROUND SUPPORT (as per - 1 1 EQUIPMENT(ATR) policy)
MEDICAL EQUIPMENT 15 Years - 19,237 19,237
AIRFRAME ROTABLES 14,589,793 61,922,663 37,239,792
TOTAL - 18,019,789 77,435,673 42,293,967
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FIXED ASSETS & DEPRECIATION SCHEDULE AS ON 31.03.2017 (Amount in Rupees)
Useful Gross Additions Sold/ Gross Accumul- Depreciation PARTICULARS OF Life as Block During Discarded Block ated Dep. for the ASSETS per Sch- As on 2016-17 During As on Upto Year edule-II 01.04.2016 2016-17 31.03.2017 01.04.2016 2016-17
1. 2. 3. 4. 5. 6. 7. 8.
PLANT & EQUIPMENT 15 Years 1,580,910 671,933 1,091,476 1,161,367 - 146,453 FURNITURE & 10 years 424,225 41,500 38,169 427,556 - 22,910 FIXTURES
VEHICLE 8 Years 1,491,427 - - 1,491,427 - 173,544 DATA PROCESSING EQUIPMENT 3 Years 1,367,976 1,642,483 65,054 2,945,405 - 647,912
GROUND SUPPORT (as per EQUIPMENT(ATR) policy) 1 - - 1 - -
MEDICAL EQUIPMENT 15 Years 47,359 - 28,122 19,237 - -
AIRFRAME ROTABLES 39,187,667 4,336,990 - 43,524,657 - 6,284,865 AERO ENGINE
TOTAL 44,099,565 6,692,906 1,222,820 49,569,651 - 7,275,684
Useful Accum. Excess Depreci- Cumula- Net Block Net PARTICULARS OF Life as Dep. on Dep. of ation Dis- tive Dep- As on Block ASSETS Per Sch- Assets Previous carded dur- reciation 31.03.2017 As on edul-II Dis- Year wrt. ing the yr. as on 01.04.2016 carded Off 31.03.2017
9. 10. 11. 12. 13. 14.
PLANT & EQUIPMENT 15 Years 146,453 1,014,914 1,580,910
FURNITURE & 10 Years 22,910 404,646 424,227 FIXTURES
VEHICLE 8 Years 173,544 1,317,883 1,491,427
DATA PROCESSING 3 Years 647,912 2,297,493 1,367,976 EQUIPMENT
GROUND SUPPORT (as per - 1 - EQUIPMENT(ATR) policy)
MEDICAL EQUIPMENT 15 Years - 19,237 47,359
AIRFRAME ROTABLES 6,284,865 37,239,792 39,187,667
TOTAL 7,275,684 42,293,967 44,099,566
94 AASL
1. Gross Block as on 31.03.2017 includes Rs. 2355916 which were purchased during the year and the depreciation on these assets has been calculated on the basis of days in accordance with their useful life.
2. Fixed Assets includes items procured by IA , accounted on the basis of debits.
The Company has elected to use the exemption available under IND AS 101 to continue the carrying value for all of its Property, Plant and Equipments as recognized in the nancial statements as at date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at date of transition (as at 01.04.2016) as per the following details:
Net Block as Net Block as per Previous per Previous Accumulated Ind AS Particulars Gross Block GAAP/ GAAP/ Depreciation Adjustments Deemed cost Deemed cost as per Ind AS as per Ind AS
As on 01/04/2016
PLANT & EQUIPMENT 6,858,941 5,278,031 1,580,910 - 1,580,910
FURNITURE & FIXTURES 5,913,837 5,489,612 424,225 - 424,225
VEHICLE 5,059,212 3,567,785 1,491,427 - 1,491,427
DATA PROCESSING EQUIPMENT 10,000,956 8,632,981 1,367,976 - 1,367,976
GROUND SUPPORT EQUIPMENT(ATR) 15,261,820 15,261,819 1 - 1
MEDICAL EQUIPMENT 271,500 224,141 47,359 - 47,359
ROTABLES 96,965,420 57,777,753 39,187,667 - 39,187,667
140,331,686 96,232,121 44,099,565 - 44,099,565
95 AASL
NOTE "3" : OTHER NON-CURRENT FINANCIAL ASSETS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Deposits ( Maturity more than 12 months) 1,280,294,155 537,434,034 439,805,188
TOTAL 1,280,294,155 537,434,034 439,805,188
NOTE "4" : INCOME TAX ASSETS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Advance Payment of Income Tax and TDS (net of Provision for taxation) 93,167,593 79,319,489 80,101,580 Balances with Statutory / Govt Authorities - Income Tax Deducted At Source 77,524,420 53,550,439 46,540,010 TOTAL 170,692,013 132,869,928 126,641,590
NOTE "5" : INVENTORIES (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Stores and Spare Parts 501,805,794 436,527,265 488,127,194 Loose Tools 239,564 239,564 239,564 Goods in Transit 1,847,061 6,606,426 20,589,106 Less: Allowance for Obsolescence (154,227,052) (279,216,193) (318,519,289) TOTAL 349,665,367 164,157,062 190,436,575
NOTE "6" : TRADE RECEIVABLES (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Secured, considered good - - - Unsecured, considered good 804,219,683 1,049,044,406 1,253,457,569 Doubtful Less: Impairment Allowance for doubtful receivables (2,731,196) (2,731,196) (2,731,196) TOTAL 801,488,487 1,046,313,210 1,250,726,373
NOTE "7" : CASH AND CASH EQUIVALENTS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Balance with Banks In Current Accounts 266,848,382 14,349,287 1,490,984 Cash on hand 2,889,562 34,401 1,484,199 TOTAL 269,737,944 14,383,688 2,975,183
96 AASL
NOTE "8" : BANK BALANCES OTHER THAN CASH EQUIVALENTS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Balance with Banks In Margin Money Deposits (3 < Maturity < 12) 12,656,696 - - TOTAL 12,656,696 - -
NOTE "9" : CURRENT LOANS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Unsecured, Considered Goods Security Deposits 103,609,809 46,386,368 30,779,250 Advances/Imprest to Employee - - - TOTAL 103,609,809 46,386,368 30,779,250
NOTE "10" : OTHER FINANCIAL ASSETS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Advances Recoverable in Cash 690,011,180 758,569,884 547,145,420
TOTAL 690,011,180 758,569,884 547,145,420
NOTE "11" : OTHER CURRENT ASSETS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Prepaid Expenses 19,049,705 51,177,840 41,178,256 Outstanding Recoveries - 0 27,943,010 Security Deposits 2,273,088 3,310,583 3,014,280
TOTAL 21,322,793 54,488,423 72,135,546
97 AASL
NOTE “12” : EQUITY (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Authorised Share Capital 500,00,000 Equity Shares of Rs.100/- each 5,000,000,000 5,000,000,000 5,000,000,000 (Previous Year 500,00,000 Equity Shares of Rs. 100/- each) 5,000,000,000 5,000,000,000 5,000,000,000 Issued, Subscribed & Paid up Share Capital 402,25,000 Equity Shares of Rs.100/- each, fully paid-up 4,022,500,000 4,022,500,000 4,022,500,000 (Previous Year 402,25,000 Equity Shares of Rs. 100/- each) 4,022,500,000 4,022,500,000 4,022,500,000
12(a) Reconciliation of no. of shares (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
No. of equity shares at the beginning of year 40,225,000 40,225,000 225,000 Add No. of equity shares issued - 40,000,000 Less No. of equity shares redeemed - - No. of equity shares at the closing of the year 40,225,000 40,225,000 40,225,000
12(b) Equity Shares
12(c) Equity Shares held by its Holding Company
402,25,000 Equity Shares (Previous Year 4,02,25,000 equity shares) are held by Air India Limited, the holding company and its nominees (on behalf of holding company)
Following are the Shareholders who hold more than 5% shares in share capital of company.
Company has only one class of equity shares having a par value of Rs. 100/-. Each equity share holder is entitiled to one vote per share.
12(d) Details of shareholder holding more than 5% of Equity Shares:
Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Air India Limited, Holding Company and its nominees (on behalf of holding company) 40,225,000 40,225,000 40,225,000 No. Of Share 40,225,000 40,225,000 40,225,000 Percentage of Holding 100% 100% 100%
98 AASL
NOTE “13” : OTHER EQUITY (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
1. Surplus /(Deficit) in statement of profit & loss Opening balance (18,358,649,317) (15,478,086,706) (12,643,369,185) Add:Prot / (Loss) for the year (2,641,731,235) (2,880,562,611) (1,987,509,430) Less: Depreciation adjustment 355,733 Add: Prior Period Adjustments 143,456,821 Less: Prior period Adjustments 990,309,179 Closing balance (21,000,380,552) (18,358,649,317) (15,478,086,706) 2. Other Comprehensive Income Opening balance 13,504,900 Add: For the Year 4,091,151 13,504,900 Closing balance 17,596,051 13,504,900 TOTAL (20,982,784,501) (18,345,144,417) (15,478,086,706)
NOTE “14” : NON CURRENT PROVISION (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Provision for Gratuity 32,429,798 38,003,678 47,750,926 Provision for Leave Enchashment 15,624,250 15,329,070 - Provision for Re-delivery 275,248,611 238,019,489 186,490,702 TOTAL 323,302,659 291,352,237 234,241,628
NOTE “15” : CURRENT BORROWINGS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Air India Ltd. (Holding Company) 15,426,165,941 13,823,327,399 10,838,457,671
TOTAL 15,426,165,941 13,823,327,399 10,838,457,671
99 AASL
NOTE “16” : TRADE PAYABLES (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Provision for Expenses 1,097,969,138 848,345,226 538,193,484 Vendor India 1,401,668,988 906,773,875 1,023,022,629 Vendor Outside India 419,342,139 357,990,613 580,346,314 Supplier-MRO-RAMCO 45,497,061 57,432,077 29,323,556 TOTAL 2,964,477,326 2,170,541,791 2,170,885,983
NOTE “17” : OTHER CURRENT FINANCIAL LIABILITIES (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Earnest Money Deposit 9,790,001 1,983,100 3,067,630 Security Deposits 307,284,723 320,051,490 322,882,214 Others 1,330,036,441 248,595,700 277,319,539 TOTAL 1,647,111,165 570,630,290 603,269,383
NOTE “18” : CURRENT PROVISIONS (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Provision for Gratuity Liability 1,469,282 1,949,014 2,375,442 Provision for Leave Enchashment 488,544 745,406 - Provision for Re-delivery 108,237,153 48,120,558 124,374,095 TOTAL 110,194,979 50,814,978 126,749,537
NOTE “19” : OTHER CURRENT LIABILITIES (Amount in Rupees) Particulars As at As at As at March 31, 2018 March 31, 2017 April 01, 2016
Advance From Customers 231,346,985 156,076,389 102,027,210 Others 34,599,563 56,797,896 84,699,985
TOTAL 265,946,548 212,874,285 186,727,195
100 AASL
NOTE “20” : REVENUE FROM OPERATIONS (Amount in Rupees) Particulars As at March 31, 2018 As at March 31, 2017 1. Operational Revenue i) Scheduled Trafc Services a) Passenger 4,942,460,508 3,081,292,310 b) Excess Baggage 1,513,450 1,595,153 c) Mail 15,237 217,421 d) Cargo 3,382,425 8,277,198 4,947,371,620 3,091,382,082 Less- Related to Previous Year - - 4,947,371,620 3,091,382,082 ii) Non-Schedule Trafc Services a) Charter 2,501,250 22,642,619 b) Subsidy for Operation from Government 775,204,383 536,046,529 777,705,633 558,689,148 iii) Other Operating Revenue Handling Servicing and Incidental Revenue 206,375,469 26,586,062 206,375,469 26,586,062
TOTAL 5,931,452,722 3,676,657,292
NOTE “21” : OTHER INCOME (Amount in Rupees) Particulars As at March 31, 2018 As at March 31, 2017 1. Interest Income from I). Bank Interest Interest on Call & Fixed Deposit-India 62,771,472 45,324,939 ii). Others Interest on Other Sundry Accounts - 50,904,329 2. Prot on Sale of Fixed Asset (Net) Loss or Gain on Assets held for disposal - - Provisions No Longer Required 23,510,833 99,882,171 Other miscellaneous Income 0 95704100
TOTAL 86,282,305 291,815,539
101 AASL
NOTE “22” : COST OF MATERIAL CONSUMED/OPERATIONAL EXPENSES (Amount in Rupees) Particulars 2017-18 2016-17 I) Aircraft Lease, Handling & Maintenance charges Lease 1,804,154,432 1,563,497,213 Handling 209,808,754 123,648,411 Maintenance 1,593,786,526 1,431,673,839 3,607,749,712 3,118,819,463 ii) Navigation, Landing, Housing & Parking Landing Fees - Scheduled & Other Ops 41,547,373 52,686,854 Housing & Parking Fees 9,090,867 15,092,987 Flight Comm & Navigation Charges 195,302,706 96,388,334 245,940,946 164,168,175 iii) Other Communication Charges Telephone Equipment Rental 200,113 47,627 Expenses on Reservation System 246,245,293 - Postage Telegram & Courier Charges 73,753 119,977 Telephone & Trunk Call Charges 1,265,406 1,334,136 247,784,565 1,501,740 iv) Passenger Amenities Inight & Hotel Consumables Consumption - - Pax Amenities - Catering On Ground 12,812,316 10,821,363 Pax Amenities - Catering On Board 87,491,053 56,398,742 Pax Amenities - Hotel Expenses 1,460 11,523 Pax Amenities - Inight Programme - - Pax Amenities - News Paper & Magazines 624,732 2,815,657 100,929,562 70,047,285 v) Insurance Insurance - Aircraft 23,972,654 26,606,650 Insurance General 23,756 87,724 23,996,410 26,694,374 vi) Inventory Consumption Material Consumed-Aircraft 123,107,336 83,792,045 Provision for Obsolescence (Net) (124,989,141) (39,605,635) (1,881,805) 44,186,410 vii) Service charge Misc. Taxes paid on Revenue Items - PO Based Inv 109,666,099 26,684,176 109,666,099 26,684,176 TOTAL 4,334,185,488 3,452,101,623
102 AASL
NOTE “23” : EMPLOYEE BENEFIT EXPENSES (Amount in Rupees) Particulars 2017-18 2016-17 1. Salary, Wages and Bonus Salaries - Staff In India 666,171,101 419,413,977 Bonus Expense 4,610,000 4,367,991 670,781,101 423,781,968 2. Crew Allowances Hourly Payments - 6,751,333 Foreign Contract Pilots Fees & Claims 417,341,772 159,770,292 417,341,772 166,521,625 3. Contribution to Provident and Other Funds CC Provident Fund-Staff in India 8,533,007 10,428,530 8,533,007 10,428,530 4. Staff Welfare Expenses (Net) Other Staff Welfare Expenses 9,029,268 10,852,031 Staff Training Expenses 15,515,404 91,548,966 24,544,672 102,400,997 5. Gratuity 7,840,241 20,273,295 6. Leave Enchashment 407,675 16,074,476
TOTAL 1,129,448,468 739,480,891
NOTE “24” : FINANCE COSTS (Amount in Rupees) Particulars 2017-18 2016-17 (I) Interest on Loans:
Interest on AI Loan (Holding Company) 1,340,706,606 1,364,184,093
Bank Charges 17,653,036 18,241,129
Interest Charges - Others 22,588,337 -
1,380,947,979 1,382,425,222
103 AASL
NOTE “25” : OTHER EXPENSES (Amount in Rupees) Particulars 2017-18 2016-17 Travelling Expenses 152,639,919 102,928,308 Rent 24,534,447 14,976,837 Repair Charges 20,143,131 8,216,093 Hire of Transport 27,077,224 22,537,139 Electricity / Heating & Fuel Charges 3,388,592 2,974,880 Water Charges 9,600 - Printing and Stationary 3,813,401 1,681,273 Publicity and Sales Promotion 1,086,328 1,310,698 Legal Charges 2,385,360 1,430,365 Audit & Other Fees - Audit Fees 646,000 517,500 - Reimbursement of Expenses - - Provision for Redelivery & other charges 219,909,016 308,045,441 Exchange Variation (Net) 7,951,897 (52,177) Professional / Consultation Fees & Expenses 1,298,619 9,253,951 Fees to DGCA 3,970,795 264,000 Ofce Cleaning Expenses 5,771,597 29,107,805 Entertainment Expenses - General 249,296 752,422 Books & Periodicals - Jeppesen / Technical 12,904,171 4,393,237 Loss on Sale of Assets 1,167,619 1,222,821 Other Misc. Expenses 5,977,794 20,026,358 Delayed Payment Charges to Fuel Companies and other Interest 51,574,983 18,252,629 Interest on delayed payment of TDS 2,647,625 2,555,939 Interest on delayed payment of Service Tax 203,319 527,458 549,350,733 550,922,977
NOTE “26” : EXCEPTIONAL ITEM (Amount in Rupees) Particulars 2017-18 2016-17
Provision for Inventory Reconciliation (Expenses) - 302,539
- 302,539
104 AASL
NOTE “27” : DISCLOSURE OF EARNING PER SHARE (Amount in Rupees) Particulars 2017-18 2016-17 a) Weighted average number of shares at the beginning of year 40,225,000 40,225,000 b) Weighted average number of shares at the end of year 40,225,000 40,225,000 c) Net prot after tax available for equity shareholders (Rupees) (2,637,640,084) (2,867,057,711) d) Basic and Diluted Earning Per Share (Rupees) (65.57) (71.28) e) Par Value of Share (Rupees) 100 100
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2018 28 (i) Transitions to Ind AS : These are the Company's first financial statements prepared in accordance with Ind AS : These are the Company's Financial Statement in accordance with Ind AS and adoption was carried out in accordance with Ind AS 101 First Time Adoption Indian Accounting Standard. The transition was carried out from Indian GAAP as prescribed under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Account) Rules, 2014 which was the previous GAAP. The Signicant Accounting Policies set out in Note No. 1 have been applied in preparing the nancial statement for the year ended 31st March 2018, 31st March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1st April 2016. In preparing opening Ind AS balance sheet as on 1st April 2016 and in presenting the comparative information for the year ended 31st March 2017, the Company have adjusted amounts reported previously in the nancial statements prepared in accordance with the Indian GAAP. This note explains the principal adjustment made by the company in restating its nancial statement prepared in accordance with previous GAAP, and how the transition from Indian GAAP to Ind AS has affected company's nancial position, nancial performance and cash ows. A. Exemptions and Exception availed : Ind AS 101 allows rst-time adopters certain optional exemptions and mandatory exception from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions: (i) Ind AS optional exemptions : a) Property, Plant and Equipment, Investment Property and Intangible Assets as Deemed Cost The company has opted to avail the exemption made available under Ind AS 101 to continue the carrying value of all property, plant and equipment, Investment properties and intangible assets as recognized in the nancial statements as at the date of transition to Ind AS, measured as per the previous Indian GAAP and use that as deemed cost as at the date of transition i.e. 1st April 2016.
105 AASL
b) Exchange differences arising from translation of long-term foreign currency monetary items: The Company has opted to avail the exemption under Ind AS 101 to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in nancial statements for period ending immediately before beginning of rst Ind AS nancial reporting period as per Indian GAAP (i.e. till March 31, 2016). Consequent to which: - Exchange differences arising on long-term foreign currency monetary items outstanding as on 1st April 2016 related to acquisition of Depreciable Assets are capitalized and depreciated over the remaining useful life of the asset. - Exchange differences arising on other long-term foreign currency monetary items outstanding as on 1st April 2016 are accumulated in the “Foreign Currency Monetary Item Translation Difference Account” and amortized over the remaining life of the concerned monetary item. c) Determining whether an arrangement contains a lease The Company has elected to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether a contract or an arrangement existing at the date of transition contains a lease on the basis of facts and circumstances existing as at the transition date. (ii) Ind AS mandatory exceptions a) Estimates The estimates at April 01, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP apart from the following items where application of Indian GAAP did not require estimation: a) Impairment of nancial assets based on expected credit loss model b) Fair valuation of nancial instruments carried at FVTPL / FVOCI. c) Determination of the discounted values is carried out for (i) Financial instruments at amortized cost and (ii) Provisions. d) Fair Valuation of Frequent Flyer Programme b) Classification and measurement of financial asset As required under Ind AS 101, the company has classied and measured the nancial assets in accordance with the Ind AS 109 on the basis of the facts and circumstances that exists at the date of transition to Ind AS. c) Reconciliations between Previous Indian GAAP and Ind AS Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash ows for previous periods. The following tables and notes represent the reconciliations from Previous Indian GAAP to Ind AS: (i) Effect of IND-AS adoption on the Balance Sheet as on 1 April, 2016 : (*Previous Indian GAAP gures have been reclassied to conform to Ind AS presentation requirements for the purpose of this Note.)
106 AASL
Particulars Note Amount as Effects of Amount as As on 01.04.2016 Reference per IGAAP* transition per Ind AS (in Rupees) to Ind AS (in Rupees) (in Rupees) ASSETS : (1) Non-current Assets Property, Plant & Equipment 28 II(b) 4,911,899 39,187,667 44,099,566 Financial Assets: a) Trade Receivables b) Loans c) Others 439,805,188 - 439,805,188 Income Tax Assets (net) 126,641,590 - 126,641,590 Deferred Tax Assets (net) Other Non-Current Assets Total Non-Current Assets 571,358,677 39,187,667 610,546,344 (2) Current Assets Inventories 28 II(b) 177,405,906 13,030,669 190,436,575 Financial Assets: a) Trade Receivables 28 II(a) 1,279,796,982 (29,070,609) 1,250,726,373 b) Cash and Cash equivalents 28 II(a) 1,490,984 1,484,199 2,975,183 c) Bank balances other than (b) above d) Loans 30,779,250 - 30,779,250 e) Others 547,145,420 - 547,145,420 Current Tax Assets - Other Current Assets 28 II(a) 345,838,082 (273,702,536) 72,135,546 Total Current Assets 2,382,456,624 (288,258,278) 2,094,198,346 TOTAL ASSETS 2,953,815,301 (249,070,611) 2,704,744,690 EQUITY AND LIABILITIES Equity a) Equity Share Capital 4,022,500,000 - 4,022,500,000 b) Other Equity 28 II(a), (f) (14,631,234,348) (846,852,358) (15,478,086,706) Total Equity (10,608,734,348) (846,852,358) (11,455,586,706)
107 AASL
Particulars Note Amount as Effects of Amount as As on 01.04.2016 Reference per IGAAP* transition per Ind AS (in Rupees) to Ind AS (in Rupees) (in Rupees) Liabilities Non-current Liabilities a) Financial Liabilities I) Other b) Provisions 28 II(a), (c) 498,083,296 (263,841,668) 234,241,628 Total Non-Current Liabilities 498,083,296 (263,841,668) 234,241,628 (2) Current Liabilities a) Financial Liabilities i) Borrowings 28 II(a) 10,584,577,251 253,880,419 10,838,457,670 ii) Trade Payables 28 II(a) 1,691,144,105 479,741,878 2,170,885,983 iii) Other 603,269,383 603,269,383 b) Provisions 28 II(a), (c) 2,375,442 124,374,095 126,749,537 c) Other Current Liabilities 28 II(a) 183,100,172 3,627,023 186,727,195 Total Current Liabilities 13,064,466,353 861,623,415 13,926,089,768 Total Equity and Liabilities 2,953,815,301 (249,070,611) 2,704,744,690
(ii) Effect of IND-AS adoption on the Balance Sheet as on 31 March, 2017: (*Previous Indian GAAP gures have been reclassied to conform to Ind AS presentation requirements for the purpose of this Note.) Particulars Note Amount as Effects of Amount as As on 31.03.2017 Reference per IGAAP* transition per Ind AS (in Rupees) to Ind AS (in Rupees) (in Rupees) ASSETS : (1) Non-current Assets Property, Plant & Equipment 28 II(b) 5,054,175 37,239,792 42,293,967 Financial Assets: a) Trade Receivables — — — b) Loans — — — c) Others 28 II(a) 567,229,720 (29,795,687) 537,434,033 Income Tax Assets (net) 28II(a) 133,652,019 (782,091) 132,869,928 Deferred Tax Assets (net) Other Non-Current Assets -
108 AASL
Particulars Note Amount as Effects of Amount as As on 31.03.2017 Reference per IGAAP* transition per Ind AS (in Rupees) to Ind AS (in Rupees) (in Rupees) Total Non-Current Assets 705,935,914 6,662,014 712,597,928 (2) Current Assets Inventories 28 II(b) 157,035,649 7,121,413 164,157,062 Financial Assets: - a) Trade Receivables 28 II(a) 1,054,170,868 (7,857,658) 1,046,313,210 b) Cash and Cash equivalents 28 II(a) 8,877,819 5,505,869 14,383,688 c) Bank balances other than (b) above d) Loans 46,386,368 - 46,386,368 e) Others 758,569,884 - 758,569,884 Current Tax Assets - Other Current Assets 28 II(a) 318,884,029 (264,395,606) 54,488,423 Total Current Assets 2,343,924,617 (259,625,982) 2,084,298,635 TOTAL ASSETS 3,049,860,532 (252,963,969) 2,796,896,563 EQUITY AND LIABILITIES Equity a) Equity Share Capital 4,022,500,000 - 4,022,500,000 b) Other Equity 28 II(a), (f) (17,458,455,502) (886,688,915) (18,345,144,417) Total Equity (13,435,955,502) (886,688,915) (14,322,644,417) Liabilities Non-current Liabilities a) Financial Liabilities - - - I) Other b) Provisions 28 II(a), (c) 493,514,499 (202,162,262) 291,352,237 Total Non-Current Liabilities 493,514,499 (202,162,262) 291,352,237 (2) Current Liabilities a) Financial Liabilities i) Borrowings 28 II(a) 13,517,525,677 305,801,722 13,823,327,399 ii) Trade Payables 28 II(a) 1,725,261,684 445,280,107 2,170,541,791 iii) Other 28 II(a) 545,613,984 25,016,306 570,630,290 b) Provisions 28 II(a), (c) 2,694,420 48,120,558 50,814,978 c) Other Current Liabilities 28 II(a) 201,205,768 11,668,517 212,874,285 Total Current Liabilities 15,992,301,533 835,887,210 16,828,188,743 Total Equity and Liabilities 3,049,860,530 (252,963,967) 2,796,896,563
109 AASL
(iii) Reconciliation of Total Comprehensive Income for the year ended 31 March, 2017 Particulars Note Amount as Effects of Amount as Reference per IGAAP* transition per Ind AS (in Rupees) to Ind AS (in Rupees) (in Rupees) Revenue From Operations i) Scheduled Trafc Services 28 II(a) 3,091,720,966 (338,884) 3,091,382,082 ii) Non Schedule Trafc Services 28 II(a) 559,463,722 (774,574) 558,689,148 iii) Other Operating Revenue 28 II(a) 10,727,236 15,858,826 26,586,062 Other Income 28 II(a) 96,229,268 195,586,270 291,815,538 Total Revenue (1+2) 3,758,141,192 210,331,638 3,968,472,830 Expenses Aircraft Fuel & Oil 716,526,505 - 716,526,505 Other Operating Expense 28 II(a) 3,100,044,232 352,057,391 3,452,101,623 Employee benet expense 28 II(a), (d) 721,504,610 17,976,281 739,480,891 Finance Costs 28 II(a) 1,371,875,655 10,549,567 1,382,425,222 Depreciation and amortization 990,819 6,284,865 7,275,684 expense Other expenses 28 II(a) 553,048,000 (2,125,023) 550,922,977 Prior Period Expenses 28 II(a) 220,789,772 (220,789,772) - Total Expenses 6,684,779,593 163,953,309 6,848,732,902 (Loss) before exceptional items and tax (II - IV) (2,926,638,401) 46,378,329 (2,880,260,072) Exceptional Items 99,417,247 (99,719,786) (302,539) Prot before tax (VII - VIII) (2,827,221,154) (53,341,457) (2,880,562,611) Tax expense: (Loss) for the year after (2,827,221,154) (53,341,457) (2,880,562,611) tax ( VII-VIII) Re-measurements of dened benets plans 28 II(d), (e) - 13,504,900 13,504,900 Total Comprehensive Income (2,827,221,154) (39,836,557) (2,867,057,711)
110 AASL
(iv) On account of transition to Ind AS, there are no material adjustments to the statement of Cash Flow for the year ended 31 March 2017. (v) Reconciliation of total equity as at 31 March 2017 and 1 April 2016 (Amount in Rupees) Particulars As at 31st March, 2017 As at 1st April, 2016 Equity Under Previous Indian GAAP (13,435,955,502) (10,608,734,348) Prior Period Expenses (Net) (886,688,915) (846,852,358) Actuarial Valuation of Dened benet (13,504,900) - plan reclassied in Other Comprehensive Income Other Comprehensive Income 13,504,900 - Equity Under Ind AS (14,322,644,417) (11,455,586,706)
(vi) Reconciliation of Prot or Loss for the year ended 31st March 2017 (Amount in Rupees) Particulars 2016-17 Net Prot for the year as per Previous Indian GAAP (2,827,221,154) Prior Period Expenses (Net) (260,626,329) Prior Period Expenses for 2016-17 restated at 220,789,772 Opening balance at 1st April, 2016 Security Deposit Discounting Actuarial Valuation of Dened benet plan reclassied (13,504,900) in Other Comprehensive Income Net Profit for the year as per Ind AS Other Comprehensive Income 13,504,900 Total Comprehensive Income as per Ind AS (2,867,057,711)
28 II) Notes to Reconciliation a. Prior Period Under Ind AS – 8, Accounting Policy, Change in Accounting Estimates and Errors, shall be corrected by retrospective restatement. A prior period expense of Rs 220.78 Million, which was recognized in F.Y. 2016-17, has been restated as at 1 April, 2016, this restatement result in to decrease in retained earnings with corresponding increase/decrease in asset / liability by Rs. 220.78 Million as at 1st April, 2016.
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Prior period expenses (net) of Rs. 886.68 Million for the year ended 31st March 2018 has been reversed during FY 2017-18, out of which expense of Rs. 626.07 Million adjusted in retained earnings in the opening balance sheet and expenses of Rs. 260.63 Million has been recognized in FY 2016-17 with corresponding increase / decrease in Assets / Liabilities.
b. Property Plant and Equipment
Under Ind AS, Property, plant and equipment (“PPE”) including rotables, consumables and non-aircraft equipment that meet the criteria of PPE are capitalised as part of cost of PPE. The Company, in accordance with Ind AS 16 - Property, Plant and Equipment, has identied certain spare parts and stand-by equipment as they meet the denition of PPE, which were earlier classied as inventories in the Previous Indian GAAP, have been reclassied/ capitalised as rotables and non-aircraft equipment, amounting to Rs. 39.19 Million (1 April 2016) and Rs. 43.52 Million (31 March 2017) under PPE and depreciated over its remaining useful life.
c. Long term provisions and trade payables
Under Indian GAAP, the Company has accounted for trade payables and provisions, including long-term provision, at the undiscounted amount. Under Ind AS, where the effect of time value of money is material, the amount of provision and trade payables has been recorded at the present value of the expected outow required to settle the obligation. Also, where discounting is used, the carrying amount of the provision and trade payable increases in each period to reect the passage of time. This increase is recognized as nance cost.
d. Re-measurement of Post-Employment Benefit Plans
Under Ind AS, re-measurements i.e. actuarial gains and losses on the net dened benet obligation are recognized in Other Comprehensive Income instead of Statement of Prot and Loss as per the previous Indian GAAP. As a result of this change, the employee benet expense to the extent of actuarial losses/gain amounting to Rs. 13.50 million for the year ended 31 March 2017 has been reclassied to Other Comprehensive Income. There is no impact on the other equity due to this as at 31 March 2017.
e. Retained Earnings
Retained earnings as on 1st April 2016 and 31st March 2017 have been appropriately adjusted consequent to the above Ind AS transition adjustments.
29 Contingent Liabilities
A. In compliance of Ind AS 37 on “Provisions, Contingent Liabilities and Contingent Assets”, the required information is as under:
Claims against AASL not acknowledged as debts (excluding interest and penalty wherever likely to be applicable) and being contested to the extent ascertainable and quantiable.
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(Rupees in Million) No Description Opening Additions Utilisation Reversals As at 31st Balance during the during the during the March 2018 year year year
(i) Income Tax Demand 3,373.78 3331.81 41.97 Notices received by the Company which are under Appeal
(ii)** Other Claims on account of:- 914.04 528.21 89.48 1,352.77
Total 4,287.82 528.21 - 3,421.29 1,394.74
Previous year
No Description As at Additions Utilisation Reversals As at 31st 1st April during the during the during the March 2017 2016 year year year
(i) Income Tax Demand 3,368.84 4.94 3,373.78 Notices received by the Company which are under Appeal (ii) Other Claims on account of:- 655.32 237.97 914.04 Total 4,024.16 242.91 - 0.00 4,287.82
B. ** Explanatory Statement in respect of Other Contingent Liabilities
Standby Letter of Credits under Aircraft Lease and Maintenance Support Agreement for ATR and CRJ operations Rs.1178.18 Million (Rs. 813.05 Million )
(Based on guarantee given by Air India Ltd. the parent company)
Interest liability on account of delay in foreign remittance calculated at LIBOR rate amounts to Rs.10.68 Million (Rs. 5.25 Million in 2016-17 and Rs 53.94 upto 31.03.2016 ).
Miscellaneous claim Rs. 163.91 Million (Rs.95.74 Million) includes unsettled legal claims of Rs.19.10 Million (Rs. 6.26 Million) and amount of MR on delayed payments for Rs.144.81 Million.
No provision has been considered necessary in respect of disputed demand of Income tax amounting Rs. 41.97 Million (Rs.3331.25 Million) in view of company's appeals pending with appellate authorities. However, the same is shown above under contingent Liabilities. (The disputed demands shown above are excluding interest on demand). 30. Commitments: a. Capital Commitments Estimated amount of contracts remaining to be executed on Capital Account are given hereunder:
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(Rupees in Million) Particulars As at 31st As at 31st As at 1 April, March 2018 March 2017 2016
Others Nil Nil Nil b. Other Long Term Commitments: i) Operating Lease: The Company has taken six ATR 72-600 Aircraft, during the year 2017-18 (during the year 2016-17 – three ATR-72-600 Aircraft) and (during 2015-16 - three ATR 72-600 aircrafts on non- cancelable operating lease. Liabilities on account of future minimum lease rentals in respect of leases are as under: (Rupees in Million) No. Particulars As at 31st As at 31st As at 1 April, March 2018 March 2017 2016 i) Not later than one year 3196.72 1759.81 1626.61 ii) Later than one year and not later 12050.51 6681.58 4168.32 than ve years iii) Later than ve years 14498.31 8020.91 5181.42
Total 29745.54 16462.30 10976.35
*Includes aircraft lease, maintenance/others, GMSA
However, in case of premature termination, the Lessee is required to pay compensation to the Lessors of the aircraft as per the terms of the agreement, which may differ from Lessor to Lessor, quantum of above is not ascertainable at this stage.
Lease rent expenses, in respect of aircraft taken on operating lease recognized in Statement of Prot & Loss for the year under the head 'Hire of Aircraft' is Rs 1804.15 Million, (Previous Year: Rs 1563.49 Million).
(ii) Redelivery of Aircraft:
The proportionate expenditure for redelivery cost for leased ATR and CRJ aircraft has been worked out for Rs.592.76 Million (Rs.436.09 Million ) up to 31.03.2018 on the basis of aircraft months in terms of the agreements executed with the parties and provision made for the same in the accounts.
The future commitments on account of re-delivery of aircrafts are as under:
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Year FY.2017-18 FY.2016-17 01.04.2016 No. of Amount No. of Amount No. of Amount Aircrafts (Rs. in Aircrafts (Rs. in Aircrafts (Rs. in Million) Million) Million) 2016-17 - - - - 2 31.87 2017-18 - - 1 75.09 1 86.89 2018-19 3 69.38 3 159.14 3 226.34 2024-25 2 231.43 2 246.83 2 254.71 2027-28 3 368.15 3 382.54 3 389.7 2028-29 3 376.21 3 388.82 – – 2029-30 6 775.53 - - - -
31. Disinvestment of Air India Ltd In view of the NITI Aayog recommendations on the disinvestment of AI and its Subsidiary including AASL and followed by the recommendations of the Core Group of Secretaries on disinvestment (CGD), the Cabinet Committee on Economic Affairs (CCEA) has given an 'In-Principle' approval for considering the strategic disinvestment of AI, ve of its Subsidiaries and a Joint Venture in it's meeting held on 28th June 2017. CCEA also constituted the Air India Specic Alternative Mechanism (AISAM) to guide the process of strategic disinvestment. The Transaction Advisor, Legal Advisor and Asset Valuer had also been appointed to guide the Govt and to carry forward the process of Disinvestment. In the AISAM Meeting held on 18th June 2018 it was decided that: a) In view of the volatile crude prices and adverse uctuation in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in the near future. b) To undertake near and medium-term efforts to capture operational efciencies and to improve the performance of Air India. c) To monetize non-core land and building assets. d) To separately decide the contours of the mode of disposal of the subsidiaries viz. Air India Engineering Services Ltd (AIESL), Air India Transport Services Ltd (AIATSL) and Airline Allied Services Ltd (AASL). e) Once the global economic indicators including oil prices and the forex regime stabilizes, the option of strategic disinvestment of Air India should be brought before AISAM, for deliberating the future course of action. 32. Compensation/Credits A. Grants Receivable by AASL i) The grant receivable from NEC for ATR North East operations was accounted for as income taking into accounts, the operations of ATR for the year ending 31st December 2012 amounting to Rs. 495.44 Million. NEC contested the claim of Grant support for the year 2012, however, the committee set up under Planning Commission to resolve the issue, has recommended for Rs. 609.10 Million based on actual decit that MOCA may provide
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budgetary support to meet the VGF for the year 2012. In terms of the above, AASL is entitled to receive a claim of Rs. 609.10 Million. Out of above Rs. 184.57 Million has been received in the year 2017-18. However the company as prudence continues to account for Rs. 495.44 Million as was originally accounted for. ii) AASL is operating following sectors under VGF Arrangements with respective Govt. authorities: No. VGF Signed Sectors Operated Period From I North-East Council North-East August 2014 II UT-Lakshadweep Agatti 2017-18 III UT-Daman & Diu Diu 2017-18 IV Govt. of Punjab Delhi-Bathinda-Delhi December 2016
B. Delhi International Airport Ltd (DIAL) The Honorable Supreme Court vide its judgment dated 03rd July 2017 vacated the stay granted by the Honorable High Court against the implementation of the 2nd control period tariff (01/04/2014 to 31/03/2019) xed by AERA (Airport Economic Regulatory Authority of India) vide its Order No. 40/2015-16 dated 08th December 2015 (applicable from 01/01/2016). In view of this judgment, DGCA issued AIC SI.No.13/2017 dated 07th July 2017 for the implementation of 2nd control period tariff with immediate effect. As a result of the above said AIC, DIAL has implemented the rate for the 2nd control period with effect from 08th July 2017. Due to Stay by Honorable High Court for implementation of tariff xed by AERA with effect from 01/01/2016 has resulted into over recovery of Landing charges by DIAL from Airline Allied Services Ltd., the over recovery is to the tune of approximately Rs. 63.48 Million. Details are mentioned below:- (Amount in Rupees) Grand Total of 2015-16, Amount Billed Paid Amount against 2016-17& 2017-18 Towards Landing Landing Landing in 2015-16 8343273 3981739 Landing in 2016-17 42124310 42124310 Landing in 2017-18 13009675 13009675 Total Amount 63477258 59115724
33. Physical Verification & Reconciliation a) Plant, Property and Equipment The physical verication of PPE for the biennial period ended 2017-18 had been completed for Delhi and Chennai stations and assets amounting to Rs.8.41 Million (Gross value) (Previous year Rs.10.14 Million ) reported as obsolete/unserviceable/untraceable, were written off during the year with the approval from the appropriate authority. The accumulated depreciation of said assets amounts to Rs. 7.24 Million. The physical verication of PPE of Kolkata ofce was carried in 2016- 17. The Mumbai ofce PPE detail has been obtained from In-charge Mumbai ofce.
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b) Physical Verification of aircraft/non-aircraft inventory No physical verication of inventory is carried during 2017-18. 34. Effect of changes in Exchange rates Transactions relating to Foreign Inventory Procurements and closing balances of certain foreign currency monetary items have not been translated at the date of transaction/in accordance with the provisions of IND AS due to complexity of transactions. The impact of translation of the same is not ascertained; however, the same is not likely to be material. 35. Confirmations/Reconciliations a) The outstanding balances with Oil Companies viz. Indian Oil Corporation Ltd. Rs. 283.14 Million, Bharat Petroleum Corporation Ltd. Rs.48.02 Million, Hindustan Petroleum Corporation Ltd. Rs.121.42 Million, Reliance Industries Ltd. Rs. (0.37) Million and Shell MRPL Aviation Ltd. Rs.3.45 Million. The accounts of IOCL, RIL, BPCL, HPCL and Shell-MRPL have been reconciled till 31.03.2018. b) AASL has sought the conrmation of balances for most of the receivables and payables. However, only some of the parties have responded. Wherever the balances conrmed by the parties are not in agreement, the reconciliation is under process. c) GST, Tax Deducted at source (TDS), revenue related taxes, other statutory dues and Refunds in respect of Income Tax, are still pending to be reconciled with the Returns led/ statutory records maintained. 36. Internal Control The Company is in the process of strengthening the internal audit process so as to ensure the coverage of all the areas as envisaged in the Minimum Audit Programme and ensure effective internal controls at stations, regional ofces and user departments. To comply with the same, Independent Chartered Accountants rms have been appointed by the company. System for uniform and timely accounting entries of transactions in SAP as well as other software, including interface with each other, is under process of being strengthened. However, audit verifying the adequacy of internal nancial control is not conducted during the year to ensure the coverage of all the areas as envisaged in the Minimum Audit Program. 37. Inventories i) The inventories mainly include Aircraft spares, consumables and tools of ATR and CRJ aircrafts. The procurement is made by AIL on behalf of the company. Inventory of the company are maintained by AIL. The consumption and closing stock therefore is on the basis of records and details derived from the store records maintained by Air India Ltd. at Kolkata, Delhi and Hyderabad. ii) Goods in transit amounting to Rs.1.85 Million (Rs. 6.61 Million ) include items at High Seas, items lying with Customs and items under inspection based on certication by Air India Ltd. iii) Custom Duties, Freight & Incidentals have been allocated on pro-rata basis on year end value of closing Aircraft spares and consumption. Unallocated custom duty paid on aircraft spares is shown under inventory. iv) Reconciliation between Inventories as per SAO & RAMCO is under process at CAO level Air India.
v) As per accounting policy adopted till the year 2016-17, rotables and non rotables spares relating to the aircraft were treated as Inventory and provision for the obsolescence were provided according to the lease period of the aircraft. However, management is of the view that rotables, spares relating to aircraft should be capitalized and should be depreciated over the lease period of the aircraft as the
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same shall provide reliable and more relevant information. Accordingly, during the year 2017-18 accounting policy has been changed according to the which the rotables spares of the aircraft has been capitalized and depreciation has been provided according to the lease period of the Aircraft. Above has resulted into write back of obsolescence provision amounting to Rs. 124.99 Million, increase in accumulated depreciation amounting to Rs. 64.06 Million and increase in current year depreciation amounting to Rs. 8.30 Million.
38. Status of Reconciliation with Airport Operators
The accounts with BIAL, DIAL, HIAL and MIAL have been reconciled upto 31.03.2018. Reconciliation with Airports Authority of India (AAI) is under process.
Under the aegis of ministry of Civil Aviation, a Memorandum of Understanding (MoU) with Airports Authority of India (AAI) was signed by Headquarters on 26.08.2013 whereby the dues of AAI vis-a-vis Air India as on 31.03.2012 were adjudicated by the ministry.
As per above stated MOU dated 26.08.2013 an interest @ 9% p.a. is payable on delayed payments to AAI, however, no such provision for interest on delayed payment has been made in books of accounts as Joint Secretary MoCA directed that this issue be placed before Secretary MoCA for a nal decision.
As per Airline Allied Services Ltd books of Accounts, an amount of Rs. 652.84 Million (previous year Rs. 616.22 Million) was payable to AAI as on 31st March 2018. The accounting of landing, parking and other charges payable has been done to the extent of bills received and provisions made on estimated basis, wherever bills have not been received.
39. Segment Reporting:
a. In terms of IND AS – 108, the Company is engaged in airline related business, which is its primary business segment and hence segment results are not disclosed separately. The details of geographical area wise gross passenger revenue earned (derived by allocating revenue to the area from where the passenger has originated) are given here under: (Rupees in Million) Particulars FY-2017– 18 FY-2016– 17 FY - 2015 – 16 India 5931.45 3676.66 2682.02 TOTAL 5931.45 3676.66 2682.02
b. The major revenue earning asset of the Company is aircraft eet which is exibly and optimally deployed across its route network. There is no suitable basis for allocation of assets and liabilities to geographical segment, consequently, area-wise assets and liabilities are not disclosed.,
40. Related Party Transactions
Disclosure of the names and designations of the Related Parties as required by Indian Accounting Standard (Ind AS-24) during the year 2017-18.
A. Related parties:
i. In terms of Ind AS 24, following are related parties which are parties (Government) i.e. Signicantly controlled and inuenced entities (Government of India) :
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Name Nature of Relationship Influence Air India Limited Holding Company Entity having signicance inuence on the company Air India Engineering Associates Entity having no signicance Services Ltd. inuence on the company
Air India Air Transport Ltd. Associates Entity having no signicance inuence on the company
Hotel Corporation of India Associates Entity having no signicance inuence on the company
Air India Express Limited Associates Entity having no signicance inuence on the company
ii. Parties (other than Government)
Air India SATS Associates Entity having no signicance inuence on the company .
B. Board of Directors
Sr. Name Designation Date of Date of No. Appointment Cessation
1 Shri Ashwani Lohani Chairman 31/08/2015 23/08/2017 CMD, Air India Ltd.
2 Shri Rajiv Bansal Chairman 23/08/2017 12/12/2017 CMD, Air India Ltd.
3. Shri Pradeep Singh Kharola Chairman 12/12/2017 Till Date CMD, Air India Ltd.
4 Shri Vinod S Hejmadi Director 20/11/2015 Till Date Director (Finance), Air India Ltd.
5 Shri Pankaj Srivastava Director 11/11/2013 30/04/2018 Director (Commercial), Air India Ltd.
6 Capt A. K. Govil Director 03/03/2017 31/05/2018 Executive Director (Operations), Air India Ltd.
7 Smt. Meenakshi Dua Director 21/10/2014 29/09/2017 Executive Director (Northern region), Air India Ltd.
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Sr. Name Designation Date of Date of No. Appointment Cessation
8. Shri Sarabjot Singh Uberoi Director 29/09/2017 01/05/2018 Executive Director (Northern region), Air India Ltd.
9. Smt. (Dr.) Shefali Juneja, Director 12/12/2012 12/05/2017 Director (Finance), Ministry of Civil Aviation
10 Shri Angshumali Rastogi Director 12/05/2017 Till Date Director (Finance), Ministry of Civil Aviation
11 Shri K V Unnikrishnan Director 12/05/2017 18/12/2017 Director, Ministry of Civil Aviation
12 Smt. (Dr.) Shefali Juneja, Director 18/12/2017 Till Date Joint Secretary, Ministry of Civil Aviation
C. Key Managerial Personnel & Relatives
Sr. No. Name of Key Managerial Personnel Designation
1. Mr. C.S. Subbiah Chief Executive Ofcer
2. Mr. Kamal Roul Chief Financial Ofcer
3. Ms. Manjiree M. Vaze Company Secretary
D. Related Party Transactions
i. There are no transactions with Key Managerial Personnel except remuneration and perquisites to Chief Executive Ofcer. During the year 2017-18, an amount of Rs. 2.33 Million has been paid as remuneration to Chief Financial Ofcer.
ii. Transactions such as providing airline related services in the normal course of airline business are not included above.
iii. No Loans or Credit Transactions were outstanding with Directors or Ofcers of the Company or their relatives at the end of the year.
iv. In term of Ind AS 24, following are the disclosure requirements related to transactions with certain Government Related entities i.e. Signicantly controlled and inuenced entities (Government of India) and non Govt. related parties:
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E. (1) Transaction details - Related Parties
a.) Parent Company i.e Air India Ltd.:
Sr. Name of the Entities and Nature of transactions 2017-18 2016-17 No. (Rs. in Million) (Rs. in Million)
1. AIR INDIA LIMITED Opening Balance (Cr.) 13517.53 10584.58
A. Expenditure/Debits received
I. Debits for Services Rendered Funds Transfer 7060.76 6268.00 Funds transfer through Bank 4372.09 3916.31 Payments made to Foreign Vendors 270.59 402.27 Payments made to Foreign Vendors 473.08 306.98 (Stores) Payments made to Oil Companies - 265.56 Payments made to Indian Vendors 42.72 -10.79 Interest Charged by AIL 1340.71 1353.63 Prior Period 306.99 - SAP Maintenance 8.33 14.04 GSD & SITA 246.25 -
II. Services Provided 182.53 58.14 Handling 76.83 - SOD 76.91 58.14 Corporate Guarantee charges 28.79 -
III. Manpower Billing Salary of AIL Personnel working for AASL 31.59 34.83
B. Revenue/ Credits Received
I Revenue 5307.78 3212.41
Trafc Revenue 4947.01 3087.07 JN Tax/ GST 234.14 150.33 Commission -109.24 -24.98 PSF/UDF (Credit) 235.87 -
II Insurance Claim - 95.52
III. Manpower billing Salary of AASL Personnel working for AIL 58.45 100.09
Net (A-B) 1908.65 2932.35
Closing Balance(Cr.) 15426.17 13517.53
Note: Corporate Guarantee given by AIL on behalf of AASL. 1178.18 813.05
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b.) Air India Engineering Services Ltd (AIESL)
Rupees in Rupees in Million Million
Opening Balance(Dr.) 575.53 05.73
Expenditure Repair Other 92.23 Nil Closing Balance (Dr.) 483.30 5.73 Bills booked through provisions 754.93 2.36
c.) Air India Air Transport Services Ltd (AIATSL)
Rupees in Rupees in Million Million
Expenditure
Opening balance 135.93 75.19 Handling Charges 112.17 60.74 Payment made (17.86) (Nil) Closing Balance 230.24 135.93 Booked through Provision (interest charged) 14.21 -
d.) Air India Express Limited
Rupees in Rupees in Million Million
Opening Balance Nil
Credit for Spares 0.10
Closing Balance (Cr.) 0.10
e.) Air India SATS Airport Services Pvt. Ltd.
Rupees in Rupees in Million Million
Opening Balance 33.58 24.69 Expenditure Handling Charges 53.09 8.89 Payment made (9.56) (nil) Closing Balance 77.11 33.58
(3.) Transactions with Provident Fund Trusts
Particulars 2017-18 2016-17 PF Contribution Outstanding as PF Contribution Outstanding as during the Year on 31.3.18 during the Year on 31.3.17
AASL PF Trust 8.54 0.011 11.06 0.001
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(2.) Major Transactions with Government Related Entities
The details of the major transactions of revenue and expenditure of the company with Govt Related Entities are given hereunder: (Rupees in Million)
No Name of Entity 2017-18 2016-17
Expenditure
i) Airport Authority of India 223.66 101.92
ii) Oil Companies
Indian Oil Co Ltd 834.02 535.24
Hindustan Petroleum Co Ltd 250.35 104.37
Bharat Petroleum Co Ltd 113.96 44.51
Revenue
i) Subsidy for Operation from Govt. 775.20 536.05 Govt of India
ii) Charter Revenue - Others Govt of India Nil Nil
41.) Re-Delivery Charges
As per the terms of the lease agreements, the aircrafts have to be redelivered to the lessor at the end of the lease period as per the redelivery conditions stipulated. Such redelivery conditions would entail costs for technical inspection, maintenance checks, repainting costs and cost of ferrying the aircraft to the locations stipulated in the agreement. The Company therefore provides for such redelivery expenses, as contractually agreed, on estimate provided by the engineering department, in proportion to the expired lease period. (Rupees in Million)
Particulars FY 2017-18 FY 2016-17 01.04.2016
Opening Balance 286.14 310.86 310.86
Add: Additional Provisions during the year 145.46 99.64 -
Less: Amounts used during the year (48.12) (124.36) -
Less: Amounts reversed during the year — — —
Closing balance 383.48 286.14 310.86
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42. Employee Benefits
i. Contributions to Dened Contribution Schemes such as Provident Fund are charged to the Prot & Loss Account as follows:
Provident Fund Rs.8.53 Million (Previous Year Rs. 10.43 Million )
ii. The Company also provides retirement benets in the form of Gratuity and Leave Encashment on the basis of valuation, as at the Balance Sheet Date, carried out by independent Actuaries, as per Ind AS19 issued by the Institute of Chartered Accountants of India.
a. Privilege Leave Encashment is payable to all eligible employees at the time of retirement up to a maximum of 300 days. Leave Encashment liability for the current nancial year is Rs. 0.41 Million (Previous Year Rs. 16.07 Million).
b. Dened Benet Plan-Gratuity (Unfunded)
The Company has a dened benet gratuity plan in India (unfunded). The company's dened benet gratuity plan is a nal salary plan for employees, which requires contributions to be made to a separately administered fund. Gratuity is paid from company as and when it becomes due and is paid as per company scheme for Gratuity. During the year, there were no plan amendments, curtailments and settlements.
Movement in net Defined Benefit (Asset) / Liability
a) Reconciliation of balances of Dened Benet Obligation
(Rupees in Million)
Particulars Gratuity – Unfunded
2017-18 2016-17
Dened Obligation at the beginning of the year 44.04 50.13
Interest Cost 3.41 3.76
Current Service Cost 4.43 3.77
Liability transferred out/Disinvestments – –
Benets Paid (9.80) (0.10)
Actuarial (Gain) / Losses on obligation (4.09) (13.50)
Demographic Assumptions – –
Changes in nancial Assumptions – –
Experience Adjustments – –
Defined Benefit Obligation at the end of the year 37.99 44.04
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b) Amount recognized in Balance Sheet:
(Rupees in Million)
Particulars Gratuity – Unfunded
2017-18 2016-17
Liability at the end of the year 37.99 44.04
Fair value of Plan Assets at the end of the year - -
Amount Recognized in the Balance Sheet 37.99 44.04
c) Amount Recognized in Statement of Prot & Loss
(Rupees in Million)
Particulars Gratuity – Unfunded
2017-18 2016-17
Current Service Cost 4.43 3.77
Interest Cost 3.41 3.76
Interest Income - -
Expenses for the year 7.84 7.53
d) Amount Recognized in Other Comprehensive Income
(Rupees in Million)
Particulars Gratuity – Unfunded
2017-18 2016-17
Actuarial (Gain) / Losses – Obligation (4.09) (13.50)
Return on Plan Assets - -
Total (4.09) (13.50)
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e) Major Actuarial Assumptions
Particulars Gratuity – Unfunded
2017-18 2016-17
Discount Rate (%) 7.75% 7.50%
Salary Escalation / Ination (%) 8.00% 8.00%
Withdrawal rate (Per Annum) 5.00% p.a. 3.00% p.a. (18 to 30 years)
Withdrawal rate (Per Annum) 3.00% p.a. (30 to 44 years)
Withdrawal rate (Per Annum) 2.00% p.a. (44 to 60 years)
Mortality IALM 2006-08 IALM 2006-08 Ultimate Ultimate
f) Sensitivity Analysis
Sensitivity Analysis for signicant actuarial assumptions, showing how the dened benet obligation would be affected, considering increase / decrease of 1% as at 31 March 2018 and 31 March 2017 is given below:
(Rupees in Million)
Particulars Gratuity
2017-18 2016-17
+1 % change in rate of Discounting (36.64) (39.08)
-1 % change in rate of Discounting 43.13 49.89
+1 % change in rate of Salary Increase 43.07 49.80
-1 % change in rate of Salary Increase (33.61) 39.06
+1 % change in rate of Withdrawal Rate (37.79) (43.81)
-1 % change in rate of Withdrawal Rate 38.20 44.31
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g) Projected benefits payable in the future years from the date of reporting
Year 2017-18 2016-17
1st Following year 1,458,414 1,909,328
2nd Following year 1,031,363 1,478,038
3rd Following year 947,959 1,365,059
4th Following year 1,189,665 1,263,193
5th Following year 1,009,386 1,436,580
Year 6 onwards 31,610,018 34,117,354
43. Deferred Tax Liability/Assets- Considering the past trends and projected budgeted revenue and expenditure, AASL is unlikely to generate net prot in next few years. The capital is eroded due to accumulated losses. The company has very nominal xed Assets. In view of the reasons stated, the deferred asset has not been provided in books of account.
44. Earnings per Share
Details As at March 31, 2018 As at March 31, 2017
Prot/ (Loss) after tax In Million (2637.64) (2867.06)
Weighted Average no. of equity shares In Million 4022.50 4022.50
EPS Basic & Diluted (In Rs.) In Rupees (65.57) (71.28)
45. Balance Outstanding with MSME's
In terms of Section 22 of the Micro, Small and Medium Enterprises development Act 2006, the outstanding to these enterprises are required to be disclosed. However, these enterprises are required to be registered under the Act. In the absence of the information about registration of the enterprises under the above act, the required information could not be furnished.
46. Remuneration to Auditors:
The details of the audit fees and expenses of the Auditors:-
(Rupees in Million)
Particulars 2017-18 2016-17
Audit Fees - For the Year 0.65 0.52
Total 0.65 0.52
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47. Going Concern:
Air India Limited had formulated a Turn Around Plan (TAP) applicable to its group companies in order to improve their operational and nancial performance. The Government of India had approved the Turn Around Plan (TAP) in February 2012 with the intention to turn around Air India Limited and its subsidiaries.
Alliance Air, with the induction of 10 new ATR-72-600 aircraft will have a eet of 16 aircraft in 2017-18 and 20 aircraft in 2018-19.
Alliance Air is presently operating to 51 destinations with 110 departures per day and 602 ights per week. It is projected to carry approximately 1.6 million passengers in Financial Year 2018-19, which is a 22% growth year on year over Financial Year 2017-18. The projected capacity increase for Financial Year 2018-19 is 30 % over Financial Year 2017-18. The aircraft utilization has increased close to 75% in rst half of 2018-19 as compared to 2017-18.
Alliance Air is budgeting revenue of around Rs. 8766 Million in 2018-19 compared to the actual operating revenue of Rs. 5931 Million and Rs. 3676 Million in 2017-18 and 2016-17 respectively. This is principally due increase in effective utilization of aircraft from the average 6.4 hours to 8.52 hours per day and 10.09 per day in September'2018 apart from increase in ASKM. The Revenue PER Kilometer (RPK), Performance (OTP) and Passenger Load Factor (PLF) had shown upward trend and is par or higher than industry standard, which has led to reduction in operating loss compared to the last year.
The company has continued to operate to the North Eastern region like Guwahati, Lilabari, Tezpur in Assam, Shillong in Meghalaya and Agatti and Diu on request from NEC and MHA under Viability Gap Funding (VGF) arrangements. These routes are operationally protable.
The company has emerged as a major player in the Government of India's premier scheme UDAN, which connects to various Tier II and Tier III cities with the development of unserved / underserved airports. The growth in Tier II and Tier III cities is still largely untapped and Alliance Air is likely to emerge as a largest player with its ATR 72-600 eet suitable for serving these smaller airports.
The company has strategized itself to invest major resources in Government of India's UDAN scheme and presently it is operating 19 routes and is expected to increase it to 23 routes shortly. The airline is poised to launch another 10 routes under UDAN scheme in the next 2-3 months thereby increasing our presence to 33 routes under UDAN scheme. This is 23.74% of the total routes Alliance Air is operating presently and which shows that Alliance air is fully committed towards increasing its presence under UDAN. The performance of the airline under UDAN has been excellent wherein the company has been operationally positive.
The company has also earmarked specic routes, which were loss making and have consciously shifted the operations from these routes to potentially higher revenue earning routes. The airline is also planning to participate heavily in the coming UDAN 3rd round, so that majority of the routes are able to meet total cost of operation thereby enabling the airline to turnaround and declare operating prot.
The airline is consciously increasing the yield and as on date the average yield at Rs. 9.05 per Kilometre, which is about 13% higher than the previous year. With the increase of additional two aircraft by December' 2018,more routes are being deployed under UDAN. The airline also has the Board approval to further lease 15 aircraft in the near future and expand under UDAN, which will add substantially to the bottom line.
With the support of Air India Limited in providing corporate guarantee for aircraft leases, reservation systems, inventory management, SAP etc. and other various measures taken towards improving
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company's operational and nancial activities, it is expected that the nancial position of the company would improve in future.
With all the above measures and the Tier II & III market growing at a fast pace, Alliance Air is in the threshold of becoming one of the top regional airline in India and become a protable airline operationally in near future.
48. Regional Connectivity Scheme
Under Regional Connectivity Scheme that was introduced in April' 2017 by Government of India, AASL was awarded fteen routes through bidding process. As per understanding of the agreement (with AAI), AASL has raised invoices based on parameter / clauses applicable to RCS operator (i.e. AASL). The amount is duly paid by AAI based on invoice submitted. However, AASL is in the process of reconciling claimed amount based on the parameter and other related criteria applicable as per agreement.
49. M/s GATI:
An agreement for freighter charter operations (undertaken by AASL) between Air India Ltd and M/s GATI was terminated by GATI in March 2009, consequent to which AI invoked the Bank Guarantee of Rs. 300 Million deposited by GATI. The Arbitral Tribunal has given it's award against which an appeal has been led by Air India Limited before the Hon'ble Delhi High Court which has also upheld the decision of Arbitral Tribunal. To le an appeal in Delhi High court (Double Bench) against the subject order, AIL has deposited Rs. 220 Million with Hon'ble High Court as deposit money on 17.11.2015. Against this deposit, Provision for Doubtful Security Deposit has been made for Rs. 220.0 Million as prudence, although the matter is sub-judiced.
50. One aircraft ATR-42, MSN 406 (VT-ABO) taken on lease from M/s Abric was involved in an incident on 22.12.2015 at Kolkata. Since the aircraft was damaged extensively, the settlement agreement was signed with the lessor with the payable amount of US$ 3.3635 Million in lieu of the damage and release of aircraft. The claim under Hull insurance was lodged with the insurers company and an amount of US$ 1.4726 Million was accepted by Insurers after a deductible of US$ 100,000 and was received in the year 2016-17.
Since the aircraft was damaged due to the negligence of Jet Airways, the claim was lodged with the Jet Airways for consequential damages / losses suffered by the Company. An amount of US$ 1.7989 Million equivalent to INR 120.5 Million at the exchange rate of Rs. 67 per US$ was lodged. Out of the above claim, after negotiation with Jet Airways an amount of US $ 1.2129 Million was agreed and the same amount was accepted by AASL after obtaining the internal approval. This claim was settled and paid by Jet Airways in 2017-18.
The scrap value of the non-operational damaged Aircraft is being ascertained through internal and external sources and appropriate accounting action will be taken accordingly after disposal.
51. From 1st Aug 2017 to 1st Nov 2017, fty one employees has been transferred from AASL to AIL with all their corresponding terminal benets. Accordingly a sum of Rs.8.57 Millions outstanding provisions for gratuity for the said employees has been transferred to AIL during the year.
52. The company has registered charges of Rs. 2601.46 Millions (Previous Year Rs.3437.06 Million) with the Registrar of Companies. This charge is not towards any Fixed Asset of the company. The company is in the process of getting the said charges satised by following the procedure.
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53. Due to the severe scarcity of ATR Commanders, the company has employed expatriate pilots as Commanders on Fixed Term Employment Agreement (FTEA). As per agreement these pilots are initially being provided hotel accommodation since application to DGCA, training, Foreigner Air Temporary Authorisation (FATA) license etc. takes time before they are released online for ying duty. Till such time the cost of Hotel is being borne by the Company. After FATA, Expat Pilots are shifted to designated base station where such pilots arrange their own accommodation. Thereafter, they are paid living allowance, and are not eligible for Hotel accommodation. In some of the cases, hotel accommodation has been allowed after FATA. Company is in the process to review all such cases and shall initiate recovery proceedings wherever it is found unreasonable.
54. As per contract of employment for Indian pilots, it is being stated that guaranteed 70 hours will be payable to pilots if actual ying is more than 40 hours. Due to unavoidable circumstances ying allowance for guaranteed 70 hours were paid towards pilots despite their actual ying hours are less then 40 hours or even nil. Company is in the process to review all such cases and shall initiate for approval of such appropriate authority for relaxation or recovery proceeding after completion of review process.
55. The company can buy the rotational leave from expatriate pilots subject to the consent of the pilot to meet the operational requirements. The Board of Directors of the company in their 146th meeting held on 21st March 2017 noted and conveyed the encouragement of buying leaves of expatriate pilots. The procedural deviation in some cases regarding approvals of payments is being regularised.
56. AASL has accounted revenue on own coupons basis. AASL does not have its own reservation/ booking system. Air India's inventory (Ticket stock) is being used under numeric code 098 for sales and refunds of passenger tickets on AASL ights/sectors. Besides, tickets may be issued on their respective inventories for AASL sectors by any IATA/ applicable NCH (non clearing house) airlines before or on 31st March 2018 for travel on after 1st April 2018. Therefore, any collection on this account is retained by respective carriers and accordingly no Advance Pax Receipt is ascertainable and recorded in the books.
57. Capital Management:
The objective of the company is to maximize the shareholders' value by maintaining an optimum capital structure. Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital structure for the development of the business.
During the nancial year ended 31 March 2018, no signicant changes were made in the objectives, policies or processes relating to the management of the Company's capital structure.
Debt-Equity Ratio: (Rupees in Million)
Particulars As at 31st As at 31st As at 1st March 2018 March 2017 April 2016
Borrowings 15,426.2 13,823.3 10,838.4
Total Debt (A) 15,426.2 13,823.3 10,838.4
Equity Share Capital 4,022.5 4,022.5 4,022.5
Other Equity (20,982.7) (18,345.1) (15,478.1)
Total Equity (B) (16,960.2) (14,322.6) (11,455.6)
Debt Equity Ratio (A/B) (0.91) (0.96) (0.95)
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58. Fair value measurement and financial instruments
a. Financial instruments – by category and fair value hierarchy
The following table shows the carrying amounts and fair value of nancial assets and nancial liabilities, including their levels in the fair value hierarchy.
i) As on 1 April, 2016 (Amount in Rupees)
Particulars Carrying Value Fair value measurement using
FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost
Financial Assets
Non-Current
Others 4,398,05,188 4,398,05,188
Current
Trade Receivables* 1,250,726,373 1,250,726,373
Cash and Cash equivalents* 2,975,183 2,975,183
Bank balances nil nil other than (b) above*
Loans* 30,779,250 30,779,250
Other 547,145,420 547,145,420
Financial liabilities
Non-Current
Other
Current
Borrowings 10,838,457,671 10,838,457,671 10,838,457,671
Trade Payables 2,170,885,983 2,170,885,983
Other 603,269,383 603,269,383
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Particulars Carrying Value Fair value measurement using
FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost
Financial Assets
Non-Current
Others 537,434,034 537,434,034
Current
Trade Receivables* 1,046,313,210 1,046,313,210
Cash and Cash 14,383,688 14,383,688 equivalents*
Bank balances nil nil other than (b) above*
Loans* 46,386,368 46,386,368
Other 758,569,884 758,569,884
Financial liabilities
Non-Current
Other
Current
Borrowings 13,823,327,399 13,823,327,399 13,823,327,399
Trade Payables 2,170,541,791 2,170,541,791
Other 570,630,290 570,630,290
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iii) As on 31 March 2018
(Amount in Rupees)
Particulars Carrying Value Fair value measurement using
FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost
Financial Assets
Non-Current
Others 1,280,294,155 1,280,294,155
Current
Trade Receivables* 801,488,487 801,488,487
Cash and Cash equivalents*(b) 269,737,944 269,737,944
Bank balances 12,656,696 12,656,696 other than (b) above*
Loans* 103,609,809 103,609,809
Other 690,011,180 690,011,180
Financial liabilities
Non-Current
Other
Current
Borrowings 15,426,165,941 15,426,165,941 15,426,165,941
Trade Payables 2,964,477,326 2,964,477,326
Other 1,647,111,165 1,647,111,165
*The Carrying amounts of trade receivable, trade payable, cash and cash equivalent, bank balance other than cash and cash equivalent and other nancial assets and liabilities, approximates the fair values, due to their short term nature.
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59. Financial Risk Management Objective and Policies:
a. The company has exposure to following risks arising from nancial instruments:
i. Credit Risk
ii. Liquidity Risk
iii. Market Risk – a. Foreign Currency, and
b. Interest Rate
The Company's principal nancial liabilities comprise of loan and borrowings, trade and other payables and derivatives. The main purpose of these nancial liabilities is to nance receivable, and cash and cash equivalents that derive directly from its operations.
The Company is exposed to credit risk, liquidity risk and market risk. The Company's senior management oversees the management of these risks. The Company's senior management is supported by a treasury team. The treasury team provides assurance to the Company's senior management that the company's nancial risk activities are governed by appropriate policies and procedure and that nancial risks are identied, measured and managed in accordance with the Company's policies and risk objective. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivative for speculative purpose may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which summarized below:
(i) Credit Risk
Credit risk is the risk of nancial loss to the company if a customer or counter party to a nancial instrument fails to meet its contractual obligation.
The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and nancial institutions, foreign exchange transactions and other nancial instruments.
The maximum exposure to the credit at the reporting date is primarily from trade receivables. Trade receivables are typically unsecured are derived from revenue earned from customers .The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company brands credit terms in the normal course of the business.
The company sells majority of its passenger service against deposits made by agents (customers) and through online channels.
On adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivable. The provision matrix takes into account available internal credit risk factors such as the Company's historical experience for customers. Based on the business environment in which the company operates, management considers that the trade receivable (other than receivables from government departments) are in default (credit impaired) if the payments are more than 36 months past due.
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Trade receivable as at year end primarily includes Rs 801.49 Million (31st March 2017; Rs 1046.31 Million 1 April 2016; Rs 1250.73 Million) relating to revenue generated from passenger services.
The Companies exposure to credit risk for trade receivables is as follows:
(Rupees in Million)
Particulars As at 31/03/2018 As at 31/03/2017 As at 01/04/2016
Gross Loss Gross Loss Gross Loss Carrying Allowance Carrying Allowance Carrying Allowance Amount Amount Amount
Debts not due
Debts over due 804.22 (2.73) 1049.04 (2.73) 1253.46 (2.73)
Movement in the allowance for impairment in respect of trade receivables
(Rupees in Million)
Particulars For the year ended For the year ended 31st March 2018 31st March 2017
Balance at the beginning of the Year 1,046.31 1,250.73
Movement during the year (244.82) (204.41)
Balance at the end of the Year 801.49 1,046.32
(ii) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difculty in meeting the obligation associated with its nancial liabilities that are settled by delivering cash or another nancial asset.
The Company's approach to manage Liquidity is to have sufcient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company believes that its liquidity position, including cash (including unencumbered bank deposit and excluding interest accrued but not due), anticipated future internally generated funds from operations, and its fully available, revolving undrawn credit facility of Rs. Nil (31 March 2017: Rs nil 1st April 2016 Rs Nil) will enable it to meet its future known obligation in the ordinary course of business. However, if a liquidity needs were to arise, the Company believes it has access to nancing arrangement with parent company, which should enable it to meet its ongoing capital, operating, and liquidity requirement. The Company will continue to consider various borrowing or leasing options to maximize liquidity and supplement cash requirement as necessary.
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The Company's liquidity management process as monitored by management includes the following:
l Day to day funding, managed by monitoring future cash ows to ensure that requirement can be met.
l Maintaining rolling forecast of the Company's liquidity position on the basis of expected cash ows.
l Maintaining diversied credit lines.
Exposure to Liquidity risk
The following are the remaining contractual maturities of nancial liabilities at the reporting data. The contractual cash ow amount are gross and undiscounted, and includes interest accrued but not due.
(Rupees in Million)
As at 31st March 2018 Carrying amount Contractual Cash Flows
Upto 1 Year 1-5 Year More than Total 5 Years Payable to Holding Company 15,426.17 15,426.17 15,426.17 Trade payables 2964.48 2,964.48 2,964.48 Other Financial Liabilities 1,647.11 1,647.11 1,647.11 Aircraft Lease 2,014.28 7,806.85 9,347.03 19,168.17 Maint./Other 881.84 3,295.98 4,047.80 8,225.62 GMSA 300.60 947.68 1,103.47 2,351.75
Totals 20,037.76 23234.48 12,050.51 14,498.30 49783.30
As at 31st March 2017 Carrying Contractual Cash Flows amount Upto 1-3 Year 3-5 Year More than Total 1 year 5 years
Payable to Holding Company 13,823.33 13,823.33 13,823.33
Trade payables 2,170.54 2,170.54 2,170.54
Other Financial Liabilities 570.63 570.63 570.63
Totals 16,564.50 16,564.50 16,564.50
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As at 1st April 2016 Carrying Contractual Cash Flows amount Upto 1-3 Year 3-5 Year More than Total 1 year 5 years
Payable to Holding Company 10,838.46 10,838.46 10,838.46
Trade payables 2,170.89 2,170.89 2,170.89
Other Financial Liabilities 603.27 603.27 603.27
Totals 13,612.62 13,612.62 13,612.62
(iii) Market risk
Market risk is that the fair value and future cash ows of nancial instrument will uctuate because of changes in market prices. Market risk comprises two type of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return.
a. Interest rate risk
Interest rate risk is the risk that the future cash ows of a nancial instrument will uctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's borrowings with oating interest rates.
The exposure the company's borrowings to interest rate changes as reported to the management at the end of the reporting period are as follows:
(Rupees in Million)
Variable-rate As at 31st March 2018 As at 31 March 2017 As at 1 April 2016 instruments
Payable to Holding Company 15,426.17 13,823.33 10,838.46
Total 15,426.17 13,823.33 10,838.46
Interest rate sensitivity analysis
A reasonably possible change of 0.50 % in interest rates at the reporting date would have affected the prot or loss by the amounts shown below. This analysis assumes that all other variables, in particulars foreign currency exchange rates, remains constant.
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(Rupees in Million)
Particulars Statement of Profit and losses.
Increase / (decrease) in the interest on foreign Increase by .50 % Decrease by .50 % currency term loans-from others and on nance lease obligation.
For the year ended 31 March 2018 77.13 (77.13)
For the year ended 31 March 2017 69.12 (69.12)
For the year ended 31 March 2016 54.19 (54.19)
b. Currency risk
Currency risk is the risk that the future cash ows of a nancial instrument will uctuate because of changes in foreign exchange rates. The company is exposed to the effects of uctuation in the prevailing foreign currency rates on its nancial position and cash ows. Exposure arises primarily due to exchange rate uctuation between the functional currency and other currencies from the company's operating, investing and nancing activities.
60. Standards Issued but not effective:
Appendix B to Ind AS 21, Foreign Currency transactions and advance considerations:
On March 28, 2018, The Ministry of Corporate Affairs notied the Companies (Indian Accounting Standards) Rules, 2018 containing appendix B to IND AS 21, Foreign currency transactions and advance consideration which claries the date of transaction for the purpose of determining the exchange rates to use on initial recognition of related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018.
IND AS 115, Revenue from Contract with Customers:
On March 28, 2018, The Ministry of Corporate Affairs notied the IND AS 115. The core principal of new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customer in an amount that reects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash ows arising from the company's contracts with customers. The effective date of adoption of Ind AS 115 is a nancial period beginning on or after April 1, 2018.
61. The gures have been rounded off to the nearest rupee.
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62. Previous Years gures have been re-casted/re-arranged in line with IND-AS requirements.
Signatures to the Schedules forming part of the Balance Sheet and Statement of Prot and Loss and to the above notes.
As per our report of even date attached
For and on behalf of For and on behalf of the Board of Directors of For M. Verma & Associates Airline Allied Services Limited Chartered Accountants Sd/- Sd/- Sd/- Firm Reg. No 501433C (Pradeerp Singh Kharola) (Vinod Hejmadi) (C.S. Subbiah ) Chairman Director CEO, AASL DIN : 05347746 DIN : 07346490 Sd/- Sd/- Sd/- (Mohender Gandhi) (Manjiree M. Vaze) (Kamal Roul) Partner Company Secretary Chief Financial Ofcer Membership No. 088396
Place : New Delhi Date : 6 November 2018
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