BOARD of DIRECTORS (As on 30 December 2019)

BOARD OF DIRECTORS (as on 30 December 2019)

Shri Ashwani Lohani Chairman & Managing Director Shri Vinod Hejmadi Shri Praveen Garg Shri Satyendra Kumar Mishra Dr. Ravindra Kumar Tyagi Dr. Syed Zafar Islam Shri Kumar Mangalam Birla Smt. Daggubati Purandeswari

Company Secretary Smt. Kalpana Rao

Auditors M/s. Varma & Varma, Kochi M/s. Khandelwal Jain & Co., Mumbai M/s. Jagdish Chand & Co., New Delhi

Solicitors M/s. M.V. Kini & Co. M/s. Suri & Co.

Bankers Allahabad Bank Andhra Bank Bank of Baroda Bank of India Canara Bank Central Bank of India Citibank Corporation Bank Dena Bank Deutche Bank EXIM Bank Federal Bank First Abudhabi Bank- PJSC HDFC Bank JP Morgan Bank IDBI Bank Indian Bank Indian Overseas Bank Investec Bank IndusInd Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sindh Bank State Bank of India Standard Chartered Bank Syndicate Bank UCO Bank United Bank of India Union Bank of India

Registered Office Airlines House 113, Gurudwara Rakabganj Road New Delhi 110 001

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MANAGEMENT (as on 30 December 2019)

Shri Ashwani Lohani Chairman & Managing Director Shri Vinod Hejmadi Director (Finance) Smt. Amrita Sharan Director (Personnel)-Additional Charge Capt. Amitabh Singh Director (Operations) - Additional Charge Ms. Meenakshi Mallik Director ( Commercial)-Additional Charge Ms. Arti Bhatnagar CVO

EXECUTIVE DIRECTORS

Capt. A.S. Soman ED - HQ Smt. H.A. De Singh ED - Flight Safety Capt. Arvind Kathpalia ED - Special Project Smt. Aruna Gopalakrishnan ED - Corporate Affairs Smt. Kalpana Rao ED - Finance & Company Secretary Shri Madhu C Mathen ED - Inflight Services Shri Arun Kumar Bansal ED - Engineering Smt. Shobha Ohatker Dy. CVO & ED - Security (Addl. Charge) Capt. R S Sandhu ED - Operations (Offg.) Shri Mukesh Sareen ED - IT (Offg.) Shri Nirbhik Rai Narang ED - Cargo (Offg.) Shri V M Palwankar ED - MMD (Offg.) Smt. Sangeeta Singh ED - Finance (Offg.) Shri Harish Pai ED - Finance (Offg.)

REGIONAL EXECUTIVE DIRECTORS

Shri P.S. Negi RD - Northern Region Shri Ravi O Bodade RD - Western Region (Offg.) Smt. C N Hemalatha RD - Southern Region (Offg.) Shri Sanjay Misra RD - Eastern Region (Offg.)

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CHAIRMAN’S MESSAGE

Dear Shareholders, It gives me great pleasure to present to you the 12th Annual Report of the Company for the year 2018-19. I wish to now present the Civil Aviation scenario globally and within India to give a brief background and thereafter, the results of Air India Limited for the financial year 2018-19:

CIVIL AVIATION SCENARIO WORLD The global passenger air market size was 4.3 Billion in 2018. The network expanded to exceed 22,000 unique city pairs. This is an increase of 2,000 over the number of city-pair connections in 2017. Over this same period, the cost of air travel for consumers has decreased by more than half in real (inflation-adjusted) terms. The demand for air passenger services grew in 2018 with industry-wide Revenue Passenger Kilometers (RPKs) increasing 7.4%. Airlines transported over 52 Million metric tons of goods this year. Thus, the airline industry is supporting more jobs and GDP throughout the world’s economies. Airlines made a net profit of USD 28 Billion in 2018, however, lower than in 2017 (at USD 38 Billion). This was the third consecutive year of robust financial outcome in the broader historical context of the industry. For a third year in a row, the return on invested capital (7.4%) exceeded the cost of capital. However, fuel and other input prices are climbing higher. 2018 saw a deterioration across the all accident rate, jet hull loss rate and fatality risk. In addition to monitoring the long-term aviation trends and identifying emerging risk for the industry, 2018’s performance has reinforced the need to continue identifying risks and threats and find innovative new ways to improve safety.

INDIA One nation – many worlds is how India, with it’s rich and varied attractions be best described. With it’s rich treasure trove of heritage, religion, leisure and wild life destinations, snow clad mountains and immensely varied and rich cultural heritage, India indeed offers the finest kaleidoscope experience to tourists who seek to explore it. Aviation sector in the country continues to grow rapidly. With number of aircraft in India now touching 650 and with almost 1100 on order, flying is going to become more and more economical, easier and comfortable. The aviation sector has played a crucial role in enhancing the economy and tourism in the country. The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India is currently the third largest domestic civil aviation market in the world and is expected to become the world's largest domestic civil aviation market in the next 10 to 15 years. According to IATA, India will displace the UK for the third place in 2025. The civil aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers, modern airports, advanced information technology interventions and growing emphasis on regional connectivity.

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The aviation sector is on an upswing in India, registering over 16% growth per annum. The nation has indeed witnessed tremendous improvements at the airports and is also rapidly improving domestic and international connectivity. Air traffic in India rose 11% year-on-year to 206 Million during FY18-19. The Government aims to take the industry to the next level with expected remarkable achievements like:

The Government has been encouraging private sector participation. In November 2018, the Government of India approved a proposal to manage six AAI airports under public private partnership (PPP). These airports are situated in Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru; In January 2019, the Government of India released the National Air Cargo Policy Outline 2019 which envisages making Indian air cargo and logistics the most efficient, seamless, cost and time effective globally by the end of the next decade; In February 2019, the Government of India sanctioned the development of a new greenfield airport in Hirasar, Gujarat, with an estimated investment of Rs 1,405 Crore (USD 194.73 Million).; Under Union Budget 2018-19, the Government introduced NextGen Airports for Bharat (NABH) - Nirman Scheme which aims a five-fold increase in India’s airport capacity to handle a billion trips per year; The Indian Government is planning to invest USD 1.83 Billion for development of airport infrastructure along with aviation navigation services by 2026. Strong GDP growth, a young population and the expansion of India’s vibrant middle class is expected to see India achieve some of the fastest growth of any aviation market in the world over the next 20 years. And if costs can be continually brought down and competition remains strong, low fares should serve to stimulate new demand. Aviation, the most complex of all businesses is high on technology, very competitive with complex regulations and low profit margins. This challenge is often reflected in airlines going under as also witnessed in the country's aviation sector. Indian market has witnessed significant changes this year – with the sudden reduction of capacity due to closure of Jet Airways. Despite severe constraints, the national carrier continues to be a symbol of stability and good service and remains focussed on enhancing customer satisfaction. Air India’s strategy was to first fill the vacuum created by Jet’s closure to minimize passenger inconvenience since April this year. Air India is the only airline in India with long haul operations and we have been able to step in to effectively bridge the gap between demand and supply post April. Within the capacity constraints, we have restructured some routes to offer non-stop services – which is our strategy. We have also added some capacity into the system with which we have been able to launch the non-stop Delhi - Toronto (DEL - YYZ), Bombay - Kuwait (BOM - KWI), Delhi - Doha (DEL - DOH), Delhi - Seoul (DEL - ICN) and Bombay - Nairobi (BOM - NBO) flights. In the India/UK market, we have further added capacity to Heathrow & Stansted and adding Amritsar as one more point to UK. For Dubai, the growth opportunity came up with Jet’s closure and we have added more direct points from interior points in India to connect Dubai. Regular introduction of new international flights are indicative of it’s commitment and concern for passengers, even in these trying times of ensuing disinvestment.

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Performance of the Company Stand-alone During the financial year 2018-19 the Company had incurred a net loss of Rs.85,563.6 Million as against Rs.53,481.7 Million in the year 2017-18, representing an increase of Rs.32,081.9 Million. Number of passengers carried (Scheduled Services) during 2018-19 increased to 21.8 Million as against 20.7 Million during 2017-18. Passenger Revenue increased from Rs.177,740.9 Million in 2017-18 to Rs.207,741.6 Million in 2018-19. Total Revenue increased from Rs.238,449.4 Million in 2017-18 to Rs.264,305.9 Million in 2018-19.

Consolidated Results The CFS represented consolidation of parent company’s financials with the financials of 5 subsidiary companies viz. Airline Allied Services Limited (AASL), Air India Express Limited (AIXL), Air India Engineering Services Limited (AIESL), Air India Air Transport Services Limited (AIATSL) & Hotel Corporation of India Limited (HCI) and one joint venture viz. Air India SATS Services Private Limited (AISATS). The Consolidated Net Loss of the Group for 2018-19 was Rs.88,802.2 Million which was more by Rs.30,493.30 Million compared to the previous year's loss of Rs.58,308.9 Million.

Challenges Air India suffered a net loss of Rs 85,563.6 Million in the year 2018-19. This was primarily due to a huge outstanding debt on which total interest charges of Rs.47,113.0 Million were incurred. Our well trained human resources as well as the continued patronage from public was our greatest strength. One of our subsidiaries, Air India Express Ltd, performed extremely well and has been rated as one of the most economical airlines in the world. Air India’s direct long distance connections to USA as well as Australia, remained our prime products. In spite of these, the huge loss indicated that Air India needs to take immediate steps for improving its revenue as well as bringing internal efficiencies.

PROPOSED DISINVESTMENT You would have seen the report on the proposed disinvestment of Air India, the successful conclusion of which will bring out in full measure, its true potential. In the interim, the national carrier will strive for impetus in services improving domestic and international connectivity. Air India Special Alternate Mechanism (AISAM) was constituted last year to guide the process of strategic disinvestment. As no response was received from prospective bidders in the previous exercise held last year, the Government decided to undertake near and medium-term efforts to capture operational efficiencies and to improve the performance of Air India, to monetize non-core land and building assets and to separately decide the contours of the mode of disposal of the subsidiaries. In line with the decision of AISAM, a Company by the name of Air India Assets Holding Ltd (AIAHL) has been incorporated with 100% shareholding held by the Government. This entity is an SPV specially formed for the purpose of acquiring from Air India Limited: a) Its shares held in AIATSL, AASL, AIESL and HCI

5 AIR INDIA b) Paintings artifacts and other non-operational assets as may be decided by Air India Ltd and the Government of India c) Non-core assets as may be decided by Air India Ltd and the Government of India d) Immoveable properties whether leasehold or freehold e) Accumulated working capital loans not backed by any asset and f) Other assets / liabilities or of its subsidiaries, as may be decided by Air India Ltd. / Government of India Pursuant to the decisions taken in the various AISAM meetings stated above, Air India began the exercise of transfer of identified debt amounting to Rs 294,640.0 Million as on 1 October 2018. However, in view of lenders approval for transfer not forthcoming, the debt transfer could not take place and the debt continued to be in the books of Air India Limited. Air India continued to service the interest due on these loans identified for transfer to AIAHL. In view of the constraints faced in the transfer of loan from Air India Ltd to AIAHL, the Ministry of Finance approved a refinancing strategy for the identified debt. Based on the Meeting heldon 30 May, 2019 in the Ministry of Finance, it was decided that the SPV would raise finances in the following manner to refinance the identified debt of Air India amounting to Rs 294,640.0 Million: a) Non Convertible Debentures (NCD) of Rs 74,000.0 Million to be novated to AIAHL against GoI guarantee b) Issue of Govt Fully Serviced Bonds for Rs 70,000.0 Million against Letter of Authorization c) Issue of Bonds worth Rs 150,640.0 Million with full Government Guarantee for the payment of interest and principal thereof, Accordingly, AIAHL has raised funds through Bonds of Rs 21,985 Crore to repay Working Capital and Aircraft loans of Air India. NCDs amounting to Rs 7,400 Crore is in the process of Novation from Air India to AIAHL. The other procedures relating to disinvestment are in progress.

ACKNOWLEDGEMENT I take this opportunity to thank the Ministry of Civil Aviation and Ministry of Finance 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 course on a growth trajectory, taking Air India to greater heights. I would like to thank my colleagues on the Board for their valuable guidance. I mention with deep regret about the sad demise of Shri Y.C.Deveshwar, Independent Director on the Board of Air India on May 11, 2019 and would like to place on record valuable contribution during his tenure on the Board.

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I would like to thank all employees of Air India Limited for their exemplary efforts to show the world the strength and resilience of our team spirit in pursuit of excellence. I want to thank each one of our employees for his/her contribution and for always rising to the occasion to uphold the image of Air India. On behalf of the Board, I seek continued support, as always. Sd/- Ashwani Lohani

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VISION Dil mein India, aasmaan mein Air India To be the leader in Indian aviation and India’s Ambassador to the world.

MISSION Leadership Customer

Provide safe, reliable and on-time services Deliver the highest quality of service around the world Be the epitome of Indian hospitality Processes Continuously improve standards of safety and efficiency Operate and maintain a young and modern fleet Provide the best and most efficient network Create economic value People To be the employer of choice Build a highly motivated and professional team Maintain highest degree of transparency and ethics Be a responsible corporate citizen India’s Ambassador Be India’s flag carrier in spirit and action Provide seamless travel within India and the world Connect Indians worldwide Values Zeal to excel and zest for change Integrity and fairness in all matters Respect for dignity and potential of individuals Strict adherence to commitments Ensure speed of response Foster learning, creativity and team-work Loyalty and pride in the Company

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DIRECTORS' REPORT

The Shareholders, On behalf of the Board of Directors, it gives me immense pleasure in presenting to you, the Eleventh Annual Report on the performance of the Company together with the Audited Accounts, Auditors’ Report and Comments of the Comptroller and Auditor General of India on the accounts for the financial year ended 31 March 2019.

1. REVIEW OF PERFORMANCE – HIGHLIGHTS 1.1 Financial Performance The financial performance of the Company during the year 2018-19 was as under: (Rupees in Million)

Particulars 2018-19 2017-18 Total Revenue 264305.9 238449.4 Total Expenses 349053.9 291826.9 Profit/(Loss) before Exceptional Items, Tax & Comprehensive Income (84748.0) (53377.4) Exceptional Items - - Profit/(Loss) before Tax & Comprehensive Income (84748.0) (53377.4) Less: Provision for Tax - - Profit/(Loss) before Comprehensive Income (84748.0) (53377.4) Comprehensive Income (815.6) (104.3) Net Profit/(Loss) (85563.6) (53481.7)

1.2 Physical Performance Particulars Unit 2018-19 2017-18 ASKMs(Scheduled Services) Million 62134 57722 ASKMs (Total) Million 62442 57943 PKMs (Scheduled Services) Million 49063 45970 PKMs (Total) Million 49064 45970 ATKMs(Scheduled Services) Million 8340 7781 ATKMs (Total) Million 8371 7805 RTKMs (Scheduled Services) Million 5758 5389 RTKMs (Total) Million 5758 5389 Passenger Load Factor (Scheduled Services) % 79.0 79.6 Overall Load Factor (Scheduled Services) % 69.0 69.3 No. of Passengers Carried (Scheduled Services) Million 21.8 20.7 No. of Passengers Carried (Total) Million 22.1 20.9 Freight Carried Tons 240656 219524 Total Revenue Hours Flown No. 469693 434955 9 AIR INDIA

2. OTHER FINANCIAL INFORMATION 2.1 Share Capital

Authorized Share Capital

The Authorised Share Capital of the Company is Rs.35,000,00,00,000/- divided into 3,500,00,00,000 equity shares of Rs.10/- each.

Issued, Subscribed & Paid-up Share Capital

As on 31 March, 2019 the Issued, Subscribed & Paid-up Share Capital of the Company was Rs.32,665,21,00,000/- divided into 3266,52,10,000 fully paid up equity shares of Rs.10 each. During the year 2018-19, Government of India infused Rs.39750 Million towards equity capital.

2.2 Debentures The Company has issued 136,000 Redeemable, Unsecured Non-Convertible Debentures of face value of Rs.1 Million each guaranteed by Government of India. Details regarding Maturity Profile and Rate of Interest have been given in Note 13.1 of the Financial Statement.

Debenture Redemption Reserve, as required under Section 71 (4) of the Companies Act, 2013, has not been created in view of the absence of any profits earned by the Company.

Debentures of the Company are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The address of the Transfer Agent of the Company is M/s Link Intime India Pvt. Ltd., C101, 247 Park, LBS Marg, Vikhroli (West), Mumbai 400 083.

2.3 Aircraft Project Loans As on 31 March 2019, the position of aircraft loans, including future lease obligations in respect of finance leases and Non Convertible Debentures issued for Aircraft financing, was as under: (Rs. in Million) Total Loan due as on 1 April 2018 181,965.0 Add: Amount drawn during 2018-19 - Less: Amount repaid during 2018-19 19,498.1 Add: Exchange adjustments due to revision in rates of Currencies 7,443.9 Balance as on 31 March 2019 169,910.8

2.4 Annual Plan Outlay 2018-19 (Rupees in Million) Approved Actual Aircraft Projects/Schemes Payment to aircraft/spare engine manufacturers 2,380.0 4,238.6 Non-Aircraft Projects Other capital expenditure 2,680.0 1,617.1 Equity infusion by Government of India 6,500.0 39,750.0 TOTAL PLAN OUTLAY 11,560.0 45,605.7

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Note: For the year 2018-19, the Govt. has approved a sum of Rs. 6500 Million as Budgetary Support for AI under TAP/FRP. However, after the approval of the Revival Plan for Air India Ltd. during the year a total amount of Rs. 39750.0 Million was approved and released to Air India as Equity Infusion during FY 2018-19.

2.5 Annual Plan Outlay 2019-20 The total budgeted IEBR expenditure of Air India during 2019-20 is approved at Rs. 4,340 Million. Out of this Rs. 2,520 Million is towards the procurement of Spare Engines by AIL and Rs.1,820.0 Million is towards Other Capital Expenditure. The Actual Plan outgo during the year, up to the end of September 2019 is Rs. 1,788.6 Million.

2.6 Financial Accounting The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time and other relevant provisions of the Act.

3. mEETINGS OF THE BOARD OF DIRECTORS Eight Meetings of the Board of Directors were held during the year, the details of which are given in the Corporate Governance Report that forms part of this Report. The intervening gap between the Meetings was within the limit prescribed under the Companies Act, 2013.

4. INFORMATION ABOUT SUBSIDIARY AND JOINT VENTURE COMPANIES The following are the wholly owned subsidiaries of the Company:

Air India Air Transport Services Limited

Air India Express Limited

Air India Engineering Services Limited

Airline Allied Services Limited

The Company also holds 80.38% Equity Shares of Hotel Corporation of India Limited and remaining 19.62% Shares are held by the President of India.

Further AISATS Airport Services Pvt. Ltd. is a Joint Venture between Air India Limited and Singapore Airport Terminal Services (SATS) in the ratio of 50:50. AISATS provides ground handling services to airlines at certain Metro airports in pursuance of Government of India Notification on the Ground Handling Policy.

5. INDUSTRIAL RELATIONS Relations with the work force continued to be cordial during the year 2018-19.

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6. ENCOURAGEMENT/ASSISTANCE TO MICRO & SMALL ENTERPRISES The Company continued to support the MSE Units (which includes SC/ST and women owned units) / Social Welfare / Charitable Organizations. The procurement from MSE Units and the selective sourcing / procurement from social / charitable organizations amounted to Rs.836.63 Million during the year 2018-2019.

7. ENVIRONMENT PROTECTION Environment Management System

As a part of Air India's vision to be the most environmentally effective international airline in the world:

Air India observed Green Week from 4 to 8 June 2018 as part of its vision to be the most environmentally sensitive international airline in the world. This year in – line with UN, the theme of the Green Week was “Beat Plastic Pollution”. Various activities were carried out during the Green Week at Delhi, Mumbai and other locations. On World Environment Day - 5 June 2018, trees were planted by CMD at Delhi Headquarters, followed by signing of environment pledge banner. Reusable cloth bags were distributed to promote “avoidance of single use plastic bags”. Also, 50 Kg of vermicompost manure produced from in-house facilities were distributed to employees. The Head of Corporate EMS presented various Environmental Management Activities carried out in Air India to the Green Initiatives Steering Committee members. In Mumbai, around 180 trees were planted in AIESL premises; supported with drip irrigation facility. It was inaugurated by Head of Corporate EMS and CEO of AIESL on 8 June 2018. Various environmental awareness lectures on Waste Management, Plastic Pollution and Marine Pollution were conducted in Delhi, Mumbai and Kolkata. Air India conducted a tree plantation drive along with an NGO “Hariyali” at Rabale, Navi Mumbai on 30 June 2018, around 60 varieties of trees were planted by Air India volunteers. On 2 November 2018 as part of the Swachh Bharat Fortnight, Cleaning of Premises and Tree Plantation was carried out by employees at Old Airport, Mumbai. On 22 March 2019 Air India Celebrated World Water Day. Awareness Campaign on Water Conservation was conducted. Posters were affixed at various locations for promoting the message for Water Savings and a Guest Lecture was delivered by Prof. Prasad Karnik an expert in Water Conservation. Air India participated in the Earth Hour Program on 30 March 2019. It was aimed to develop the public campaign to enhance awareness on Environment Conservation. All non-essential lights in our buildings, offices and homes were switched off between 8.30 pm to 9.30 pm (IST) to support the unique movement. Air India, has operations in different parts of the world but yet followed the timings i.e. 8.30 pm to 9.30 pm with local time. Air India has been recognised for its efforts in environment protection and quality management and was awarded the Global Award for Best Quality and Environment Management System for 12 AIR INDIA

the year 2018 by World Quality Congress on 5 July, 2018 at a prestigious event in Mumbai.

Air India reported Carbon Footprint of 0.91 CO2 tonnes per thousand RTKM (Revenue Tonne Kilo Metres) for 2018 as compared to 1.01 CO2 tonnes per thousand RTKM for the year 2017. Air India's Fuel efficiency has improved by utilising Fuel efficient aircraft and implementation of Fuel efficiency measures and better load factors.

European Union - Emission Trading Scheme (EU-ETS)

Air India submitted its Annual Emissions Report for emissions due to Intra-European Flights and surrendered the Carbon credits due to emissions from intra-Europe flights before the deadline of 30 April 2019. Air India is now fully compliant with EU-ETS Emissions Regulations.

Ranking of Air India by Heathrow Airport, London Heathrow Airport of London assessed the Fifty cleanest and quietest airlines based on the sustainability parameters based on seven noise and emissions metrics which include noise efficiency of an operator’s fleet with noise certification, NOx emissions, engine emissions certification, continuous descent approach, track keeping and early or late movements between 23:30 and 04:30 hours.

The report stated that Air India has improved its environmental performance from 42nd position in the ranking in first quarter of 2017 to 4th position in the 4th quarter (October to December 2018) ranking report due to the use of Boeing 787 Dreamliner at Heathrow, an aircraft that has 20-25% fewer CO2 emissions and a smaller noise effect than the airplanes it replaced.

8. VIGILANCE Air India strives in building a corruption free environment for all Indians.

The ultimate objective of Vigilance Department in a PSU is to empower the organization to do business within the extent framework of Systems, Rules and Procedures more efficiently, effectively, ethically and profitably by optimum utilization of productive resources; in doing so the Vigilance Department ensures transparency with a Stakeholder Centric Approach. During the year, Air India seamlessly transitioned to the online mode of submission of CVC Quarterly/Annual Reports which incorporates significant categories of management, control and monitoring.

As a part of Air India’s vision to create a corruption free nation, Vigilance Awareness Week 2018 was celebrated with the theme ‘Eradicate Corruption - Build a New India’. A week long program had several activities designed to sensitize the employees, promote integrity and eradicate corruption with active support of its employees and wholehearted public participation.

Highlights of the Vigilance Week 2018 (Activities Pan-India)

07 Workshops/Sensitization Programs 03 Cyclothons & a Walkathon Event League of Friendly Cricket Matches between PSUs Teams 13 AIR INDIA

Flash mobs and Street Plays at different locations Competitions at Schools & Colleges Vigilance envisages an instant resolution to the Grievances and Prevention of situations giving rise to Grievance. With a view to enhance its customer services and address vendor complaints Vigilance Department organized Grievance Redressal Camps for Air India Customers and its vendors during the Awareness Week .

A total of 37 Station inspections and 329 Surprise Checks were conducted by Vigilance Teams during the year resulting in a number of suggestions for System Improvements. A significant Recovery of Rs.5,47,33,534/- has been affected due to consistent checks and inspections by the Vigilance Department.

9. OFFICIAL LANGUAGE IMPLEMENTATION In order to monitor progressive use of Hindi in the office, meetings of 57 Official Language Implementation Committees constituted on all India level were held regularly.

In order to facilitate officers/employees in doing their official work in Hindi and to workon computers in Hindi, Desk-to-Desk programmes/workshops were organized for various departments at Hqrs and Regional level.

Under the category of Hindi Magazines published by subordinate organizations of Ministry of Civil Aviation, Air India’s Hindi Magazine “Vimanika” was awarded First Prize.

Information given on website was updated in Hindi on regular basis. Material related to inflight entertainment system in Hindi was also updated from time-to-time. Hindi fortnight was celebrated on all India level and competitions were organised for the employees. In addition, selected pilots and cabin crew from all the regions were awarded for the best Hindi announcements. All Special announcements and advertisements have been issued in Hindi also.

To give wings to creativity of employees, E-Poetry Magazine “Bhav Sangam” has been launched in February 2019.

10. 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 2019

Total No. of Total No. of SC % of SC Total No. % of ST Total No. % of OBC employees employees employees of ST employees of OBC employees employees employees 9993 2124 21.25 733 7.33 720 7.20

11. CORPORATE GOVERNANCE The Company’s Corporate Governance philosophy is to continuously strive to attain higher

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levels of accountability, transparency, responsibility and fairness in all aspects of its operations. The Company remained committed towards protection and enhancement of overall long term value for all its stakeholders – customers, lenders, employees and the society. The Company also acknowledges and appreciates its responsibility towards the society at large and has embarked upon various initiatives to accomplish this.

During the year under review, the Company continued its pursuit of achieving these objectives through adoption of competitive corporate strategies, prudent corporate and business policies and plans, strategic monitoring and mitigation of risks, while at the same time, creating checks and balances in an organization that values people, propriety, equity and fair play. The Company follows sound business practices and conducts its business in a transparent manner. The Company remained committed towards ensuring observance of Corporate Governance principles in all its dealings.

Integrity Pact Programme was implemented effective 8 February 2008. It has been made mandatory to incorporate Integrity Pact in respect of all contracts with a value of Rs.100 Million and above.

The detailed Corporate Governance Report attached separately forms part of this Annual Report.

12. CHANGE IN NATURE OF BUSINESS There is no change in the nature of business of the Company.

13. DIVIDEND In view of the losses suffered during the year 2018-19, the Directors have not recommended any dividend.

14. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION 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.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has provided loans / guarantees to its Subsidiaries and has made investment in compliance with the provisions of the Companies Act, 2013. The details of such investments made and loans / guarantees provided as on 31 March 2019 are given in the Stand-alone Financial Statements.

16. DEPOSITS The Company has not accepted any deposits during the year under review.

17. nOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee formulates and review policies related to

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remuneration / perquisites / incentives within the parameters of Guidelines issued by the Government of India. Air India being a Government Company, appointment / nomination of all the Directors is made by the President of India through the Ministry of Civil Aviation including fixation of remuneration of Directors and Employees.

As required under Section 178(1) of the Companies Act, 2013, as on 31 March 2019, the Nomination and Remuneration Committee comprised of three Non-Executive Directors :

Name of the Director Position held in the Committee Category of the Director Shri Y.C. Deveshwar Chairman Part Time Non Official Director Shri Ashwani Lohani Member Chairman & Managing Director Dr. R.K. Tyagi Member Part Time Non Official Director Dr. Syed Zafar Islam Member Part Time Non Official Director Shri K.M. Birla Member Part time Non Official Director Shri S. K. Mishra Member Non Executive Part time Director

Shri Y.C.Deveshwar ceased to be the Chairman of the Committee w.e.f. 11 May 2019 due to his sad demise and Dr R K Tyagi was appointed as Chairman in his place in the 96th Board Meeting held on 12 July 2019.

Air India is a Government Company and as per Ministry of Corporate Affairs' Notification dated 5 June 2015, exemptions have been given to Government Companies from the applicability of Section 178 (2) / (3) / (4) pertaining to Directors.

18. AUDIT COMMITTEE In compliance with the provisions of Section 177 of the Companies Act, 2013 and DPE Guidelines, the Company has constituted the Audit Committee of the Board. As on 31 March 2019, the following were the Members of the Audit Committee:

Name of the Director Position held in the Committee Category of the Director Dr. Syed Zafar Islam Chairman Part Time Non Official Director Dr. R. K. Tyagi Member Part Time Non Official Director Shri Arun Kumar Member Non Executive Part-time Director Shri Ashwani Lohani Permanent Invitee Chairman & Managing Director Shri Vinod Hejmadi Special Invitee Functional Director Shri A. K. Mondal Special Invitee GM Internal Audit

19. mANAGEMENT DISCUSSION & ANALYSIS REPORT A detailed Management Discussion and Analysis Report is given separately.

20. PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS As per the Notification dated 5 June 2015 of the Ministry of Corporate Affairs, provisions of Section 134(3) (p) of the Companies Act, 2013 shall not apply in case the Directors are evaluated by the Ministry, which is administratively in charge of the Company as per its own 16 AIR INDIA

evaluation methodology. Air India being a Government Company, the performance evaluation of the Directors is carried out by the Administrative Ministry (MOCA), Government of India, as per applicable Government guidelines.

21. POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION Air India being a Government Company, is exempted to furnish information under Section 134 (3) (e) of the Companies Act, 2013 as per the Notification dated 5 June 2015 of the Ministry of Corporate Affairs.

22. DECLARATION OF INDEPENDENCE As per the Notification dated 31 May 2017 issued by the Ministry of Civil Aviation, Government of India, Dr R K Tyagi and Dr Syed Zafar Islam were appointed as Independent Directors on the Board of the Company for a term of 3 years.

As per the Notification dated 8 August 2018 issued by the Ministry of Civil Aviation, Government of India, Shri Y C Deveshwar and Shri Kumar Mangalam Birla were appointed as Independent Directors on the Board of the Company for a term of 3 years.

As per the Notification dated 4 October 2018 issued by the Ministry of Civil Aviation, Government of India, Smt. Daggubati Purandeswari was appointed as Independent Director on the Board of the Company for a term of 3 years.

The Board of Directors confirms that the Independent Directors duly appointed by the Company have given the declaration and they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL The following changes have occurred in the constitution of the Board of Directors of the Company as on date:

Sr Name Designation Date of Date of Mode of No. Appointment Cessation Cessation 1 Shri Pankaj Srivastava Director (Commercial) 01.10.2013 01.05.2018 2 Capt A Kathpalia Director (Operations) 27.06.2017 13.11.2018 3 Ms.Gargi Kaul Government Nominee 06.05.2015 24.01.2019 4 Shri Arun Kumar Government Nominee 24.01.2019 Ceased w.e.f. 10.07.2019 5 Shri Pradeep Singh Chairman & Managing 12.12.2017 14.02.2019 Ceased w.e.f. Kharola Director 14.02.2019 6 Shri Ashwani Lohani Chairman & Managing 14.02.2019 Director

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Sr Name Designation Date of Date of Mode of No. Appointment Cessation Cessation 7 Shri Y.C. Deveshwar Independent Director 08.08.2018 Ceased w.e.f. 11.05.2019 8 Shri Kumar Mangalam Independent Director 08.08.2018 Birla 9 Smt. Daggubati Independent Director 04.10.2018 Purandeswari 10. Shri Praveen Garg Government Nominee 30.8.2019

24. SEXUAL HARASSMENT 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. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2018-19:

No. of Complaints received 14

No. of Complaints disposed off 11

25. DIRECTORS’ RESPONSIBILITY STATEMENT The Board of Directors of the Company confirms:

that in the preparation of the annual accounts, the applicable accounting standards had been followed and wherever there are deviations, necessary disclosures have been given; that the selected accounting policies were applied consistently, other than disclosed in the Notes to Accounts and the Directors made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2019 and of the profit or loss of the Company for the period ended on that date; that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; that the annual accounts have been prepared on a ‘going concern’ basis; and The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 26. COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA The comments of the Comptroller and Auditor General of India under Section 143(6) of the Companies Act, 2013 on the accounts of the Company for the year ended 31 March 2019 and the replies of the Management are annexed to this report. 18 AIR INDIA

27. AUDITORS M/s.Varma & Varma, Kochi, M/s.Khandelwal Jain & Co., Mumbai and M/s Jagdish Chand & Co., New Delhi were appointed Joint Statutory Auditors for the year 2018-19 by the Comptroller & Auditor General of India.

Management clarifications / explanations to the qualifications or adverse remarks in the Auditors’ Report is annexed to this Report. The Notes on financial statements are self-explanatory and need no further explanation.

28. SECRETARIAL AUDITORS The Board has appointed Shri Upendra Shukla, Practising Company Secretary, Mumbai to conduct the Secretarial Audit for the Financial Year 2018-19. The Secretarial Audit Report for the Financial Year ended 31 March 2019 along with Management clarifications / explanations to the qualifications or adverse remarks of the Auditor is annexed to this Report.

29. 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 i.e. Form MGT-9 is uploaded on the Company's website i.e. www.airindia.in.

30. mATERIAL CHANGES AND COMMITMENTS As required under the provisions of Section 134(3)(i) of the Companies Act, 2013, following changes have occurred between 31 March 2019 and the date of the Directors’ Report which have affected the financial position of the Company:

In view of the constraints faced in the transfer of Loan from Air India Ltd to AIAHL, the Ministry of Finance approved a refinancing strategy for the identified debt. Based on the Meeting held on 30 May, 2019 in the Ministry of Finance, it was decided that the SPV would raise finances in the following manner to refinance the identified debt of Air India amounting to Rs 294,640.0 Million:

a) Non Convertible Debentures (NCD) of Rs 74,000.0 Million to be novated to AIAHL against GoI guarantee b) Issue of Govt Fully Serviced Bonds for Rs 70,000.0 Million against Letter of Authorization c) Issue of Bonds worth Rs 150,640.0 Million with full Government guarantee for the payment of interest and principal thereof, Accordingly, AIAHL has raised funds through Bonds of Rs 21,985 Crore to repay Working Capital and Aircraft loans of Air India. NCDs amounting to Rs 7,400 Crore is in the process of Novation from Air India to AIAHL.

31. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm’s

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length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Exemption from the first and second proviso to sub-Section (1) of Section 188 with regard to obtaining approval of the Company in General Meeting, has been provided to a Government Company in respect of contracts or arrangements entered into by it with any other Government Company. The Company has obtained approval of the Board in its 90th Meeting held on 20 November 2018 to enter into contracts / arrangements with its subsidiary companies (Government Companies) and it’s JV Company for an estimated amount of approximately Rs.22,050 Million during 2018-19.

32. RISK MANAGEMENT The Compnay is in the process of formulating a policy on Risk Management to identify, assess and manage existing and new risks in a planned and co-ordinated manner. The risks are classified as financial risks, operational risks and market risks. The risks are taken into account while preparing the annual business plan for the year.

33. ORDERS OF COURT No significant and material orders were passed by the Regulators or Courts or Tribunals impacting the Going Concern status and Company’s operations in future.

34. ANNUAL REPORT OF SUBSIDIARIES AND CONSOLIDATED FINANCIAL STATEMENT In accordance with the provisions of Section 134 of the Companies Act, 2013 and the AS-21 on Consolidated Financial Statements read with AS–23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, audited Consolidated Financial Statement for the year ended 31 March 2019 of the Company and its Subsidiaries form part of the Annual Report.

The Annual Accounts of the Company for the year ended 31 March 2019 have been prepared in compliance with the Ind AS 101 (first time adoption of Indian Accounting Standard) as prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014.

35. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES As per Ministry of Corporate Affairs’ Notification dated 5 June 2015, provisions of Section 134(3)(e) are not applicable to a Government Company. Consequently, details on Company's policy on Directors' appointment and other matters are not provided under Section 178(3). Similarly, Section 197 shall not apply to a Government Company. Consequently, disclosure of the ratio of the remuneration of each Director to the median employee's remuneration and other such details including the statement showing the names and other particulars of every employee of the Company, who if employed throughout / part of the Financial Year, was in receipt of remuneration in excess of the limits set out in the Rules, are not provided in terms of Section 197(12) read with Rule 5(1) / (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Chairman & Managing Director and the Whole- time Directors of the Company did not receive any remuneration or commission from any of its Subsidiaries. Air India being a Government Company, its Directors are appointed / nominated 20 AIR INDIA

by the Government of India as per the Government / DPE Guidelines which also include fixation of pay criteria, determining qualifications and other matters.

36. CAUTIONARY STATEMENT Statement in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations may be “forward-looking” statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. The important factors that could make a difference to the Company’s operations include economic conditions affecting demand/supply, global economic condition and pricing in the domestic and overseas markets in which the Company operates, changes in the Government policies, regulations, tax laws and other statutes and other incidental factors. Fuel is a major determinant of the airline’s profitability constituting nearly 24% of its total costs and any major variation in its prices could impact the airline’s profitability. Besides this, global and economic factors like slowdown, liquidity crisis in the global markets, geo-political conditions and stability, exchange fluctuations in the US dollar in which most of the debts/expenses of the Company are denominated could also influence the airline’s performance.

37. ACKNOWLEDGEMENTS The Board sincerely appreciates the Company’s valued customers in India and abroad for using the services of the Company and looks forward to their continued support and confidence. The Board also expresses its deep sense of appreciation for the sincere and devoted service rendered by the employees of the Company at all levels.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, the Ministry of Civil Aviation and Ministry of Finance in relation to the implementation of the Company’s operations, Financial Restructuring Plan and growth plans. The Board expresses its gratitude to the DGCA, Comptroller and Auditor General of India, Ministry of Corporate Affairs, the Statutory Auditors, Airports Authority of India, other airport operators, other Government Departments, Airlines, Agents, Oil Companies, Reserve Bank of India, Indian and International Financial Institutions and Banks including the EXIM Bank, USA and Kfw Bank. For & on behalf of the Board

Sd/- (Ashwani Lohani) Chairman & Managing Director Place : New Delhi Date : 30 December 2019

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MANAGEMENT DISCUSSION & ANALYSIS REPORT

1. ANALYSIS OF THE FINANCIAL/PHYSICAL PERFORMANCE Stand-alone

I. REVENUE

Total revenue increased from Rs.238,449.4 Million in 2017-18 to Rs.264,305.9 Million during 2018-19 (increase of Rs.25,856.5 Million) Operating Revenue increased from Rs.229,481.3 Million in 2017-18 to Rs.255,088.3 Million during 2018-19 (increase of Rs.25,607.0 Million) Passenger Revenue increased from Rs.177,440.9 Million last year to Rs.207,741.6 Million during 2018-19 (increase of Rs.30300.7 Million).

AIXL

II EXPENDITURE

The total expenditure incurred during the year was Rs.349,053.9 Million as compared to the previous year’s figure of Rs.291,826.8 Million (increase of Rs.57,227.1 Million) Operating expenses increased from Rs.247,185.9 Million during 2017-18 to Rs.301,940.9 Million during 2018-19 (an increase of Rs.54,755.0 Million) There was an increase in staff cost by 2% from Rs.29,463.9 Million in 2017-18 to Rs.30052. 3 Million during 2018-19 Fuel cost increased by 36.3% from Rs.73,626.9 Million in 2017-18 to Rs.100,344.6 Million during 2018-19.

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COnSOLIDATED

I. REVENUE

Total Revenue increased from Rs.266,292.3 Million in 2017-18 to Rs.298,007.0 Million during 2018-19, an increase of 11.9%. Passenger Revenue increased from Rs.210,691.1 Million in 2017-18 to Rs.247,283.9 Million during 2018-19, an increase of 17.36%. Other Revenue decreased from Rs.20,909.1 Million during 2017-18 to Rs.12,242.4 Million during 2018-19, decrease of 41.45%. Group Operating Loss was Rs.28,757.5 Million in 2018-19 as against the Operating Loss of Rs.4,412.5 Million during previous year 2017-18. Group had shown Consolidated Net Loss for 2018-19 at Rs.88,802.2 Million which was more by Rs.30,493.3 Million compared to the previous year's loss of Rs.58,308.9 Million. II. EXPENDITURE

There was an increase in Total Expenses by 19.1% from Rs.310,752.6 Million during 2017- 18 to Rs.370,160.4 Million during 2018-19. There was an increase in Staff Cost by 3.4% from Rs.31,791.4 Million in 2017-18 to Rs.32,882.9 Million during 2018-19. Fuel Cost had increased by 37.3% from Rs.84,134.6 Million during 2017-18 to Rs.115,558.9 Million during 2018-19. 2. mEASURES TO ImPROVE PERFORmAnCE 2.1 Plans to turnaround performance The Company continued to take several initiatives to improve the performance of the Company including inter-alia

Rationalisation of Human Resources. Restructuring of city offi ces in India and abroad. Close monitoring of overtime allowances.

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Focus on sale of business class seats. Reducing cost of capital. Rationalising commission to agents. Rationalization of certain loss making routes. Induction of brand new fleet on several domestic & international routes their by increasing passenger appel. Phasing out old fleet and consequent reduction in maintenance cost. Reduction of contractual employment & outsourced agencies. Increase in passenger, cargo, excess baggage revenue through aggressive sales & marketing strategy. Upgradation of FFP and introduction of several marketing initiatives including Companion Free Schemes, Apex fare, GOI packages, Preferred Agents Partnership, Promotion of web bookings and other promotional schemes like AI Holidays, etc. Reduction in Cabin Crew Hotel Cost by shifting to lower priced hotels. 2.2 Infusion of Additional Equity- Linked to the Turnaround Plan of the Company

The Government infused Equity Capital of Rs.39750 Million during 2018-19. The paid up capital as on 31 March 2019 is Rs.32665.21 Million.

2.3 Going Concern The Company has received continuous support from the Government of India (GoI) though the implementation of Turnover Plan/ Financial Restrcuring Plan (TAP/FRP) approved in 2012 and then under the revival plan in FY 2018-19 which has helped the Company to improve its operating and financial performance.

Under the newly approved revival plan for Air India Limited the GoI has during FY 2018-19 infused equity to the tune of Rs.39,750 .0 Million. Accordingly, as on 31 March 2019, the total Equity infusion received by the comapny from the Government under TAP/FRP and the revival plan aggreagted to Rs. 305,202.1 Million. Further as part of the disinvestment process AISAM has aproved the transfer of debt of Air India to Rs. 294,640.0 Million to the SPV-AIAHL. The interest on these loans from 1 October 2018 will be met by AIAHL for which Rs.13,000.0 Million was provided in the budget and the same has been reimbursed to Air India by the SPV.

In view of the above and the financial support from the Government of India and various measures taken by the Company to improve its operational efficiencies, various revenue enhancing measures, cost control measures undertaken etc., the Comapny expects a substantial improvement in its operational and financial performance in the near future and hence the accounts have been prepared on a 'Going Concern' basis.

2.4 Product Development 24 AIR INDIA

Frequent Flyer Programme (Loyalty Programme)

Premier Clubs

The Flying Returns Programme of the Company has four levels of membership viz. Base, The Silver Edge Club, The Golden Edge Club and The Maharajah Club.

The Maharajah Club is the highest Tier in the Flying Returns Programme followed by The Golden Edge Club and The Silver Edge Club.

Membership of the Maharajah Club, Golden Edge Club and Silver Edge Club is on the basis of earning 75,000 miles, 50,000 miles and 25,000 miles, respectively, in a span of twelve months.

Membership of the Maharaja and Golden Edge Clubs entitles members to enhanced privileges like Bonus Flying Returns points, additional baggage allowance, priority check-in, priority confirmation from the waitlist, upgrade vouchers and lounge access at select airports, etc. Membership of Silver Edge Club entitles members to the privileges such as Bonus Flying Return points, additional baggage allowance, upgrade vouchers and priority check-in.

The membership base of the Clubs as on 31 March 2019 was as under The Maharaja Club 1,532 Golden Edge Club 2,329 Silver Edge Club 10,559

Flying Returns Programme:

Total Flying Returns membership (Including club members) as on 31 March 2019 was 25,18,130.

Flying Returns Programme (FRP) is designed to recognise and reward frequent flyers of Air India. The benefits and privileges of FRP include:

Increased check-in baggage allowance, tele check-in, personalized check-in counters at select airports, priority for confirmation from the waitlist, priority baggage handling, pooling of flying return points with spouse and wide array of special offers. Apart from earning and redeeming on Air India, Flying Return members can also earn and redeem on all 27 Star Alliance partner carriers. Members can accrue points while traveling on select flights of our code share partner airlines. Moratorium on expiry of points till 30 September 2019. Members can transfer reward points from our non-airline partners to Flying Returns. Non-airline partners are SBI Co Brand Cards, Citibank and Travel Connect. The highlights of Flying Returns Programme are as follows :

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Earn and redeem miles on 27 Star Alliance partner airlines. Access to more than 1000 airport lounges worldwide. Premium passenger benefits across the partner flights. Membership extended worldwide. Child Membership for individuals aged between 2 - 12 years of age Update profile details online. Claim missing miles online. Redeem miles online for flights and upgrades No redemption threshold limit for redemption tickets. Purchase miles at Rs.1.25 per point on shortfall of redemption and Expired Flying Return Points extension at Rs.0.60 per point. 2.5 marketing initiatives Brief:

Various Initiatives/promotions were undertaken to increase load factors and revenues of Air India. Passengers were offered competitive fares directly through Air India Website so as to make Air India their preferred choice. Marketing initiatives undertaken by Air India in the Financial Year 2018-2019 are enumerated below:

Ø Commission and Assured incentive were given to all travel agents in India for promoting Air India.

Ø Tie-ups with Travel Management Companies were strengthened to encourage MNCs and Corporate SMEs to make Air India as their preferred choice.

Ø FAM tours were organized for travel agents/tour operators to promote destinations on Air India’s network.

Ø Corporate customers were offered special fares and other soft benefits for their continuous patronage.

Ø Short term joint promotions were undertaken with leading OTAs in India for maximizing revenue from their instant and wider reach.

Ø Joint promotions with Tourism Boards/ International Airports/ Destination Management Companies for new routes like Washington, Stockholm, Copenhagen and Tel Aviv.

Ø To maximize Air India’s organic presence in the digital landscape, foray into digital marketing was made and many successful campaigns were undertaken to promote new routes and special fares online.

26 AIR INDIA

Initiatives undertaken by Air India to increase revenues and loads for the Financial Year 2018-19

Ø PLB scheme offered in India for Domestic & International Sales to travel agents: Commission and incentive of 1 % each was offered to agents in India. Top agents contributing sales of more than 100 Crores were offered 0.25 % extra back-end incentive.

Ø Corporate Policy: Corporate Policy was revised for the year 2018-19; the scheme offers volume based and front-end incentive of minimum 7 % to maximum 13 % for economy class and additional 5% for business class. Soft benefits like date change and FOCs were also offered in the policy.

Ø Deals with Travel Management Companies (TMCs): TMCs (like American Express, BCD Travels, FCM and Carlson Wagonlit) were renewed to expand Air India’s market presence in this untapped market. Tailor made customized remuneration packages (including soft benefits) were given to the TMCs for increasing Air India’s exposure to this new concept. A Global deal is signed with American Express.

Ø Ecommerce: Short term incentives were offered on Air India website to encourage direct sales.

Ø Bid & Fly - Airport Upgrade Scheme has been made more attractive for domestic and international airports. Bid N Fly scheme was also launched for metro stations in India and abroad.

Various short term promotion schemes launched and advertised:

Ø OTAs: To take advantage of instant and wider reach of the OTAs, a special incentive ranging from 10 % to 15 % was offered to them during the financial year.

Ø Half Yearly Scheme- Half Yearly incentive scheme was offered to top 50 agents in India. A Back end incentive ranging from 0.5% to 1% was offered to the agents. The scheme generated additional sales of approx INR 330 Crores during the period October 2018 – March 2019.

Ø Cut N Pay- Cut N Pay incentive was offered to all the travel agents in India to promote newly launched flights for both domestic and international sectors during the FY 2018-19.

Promotions on International Sectors:

Ø PLB Schemes for Germany, Australia, UK, Singapore, UAE, Saudi Arabia, Oman, Japan and other important markets offering volume based productivity linked bonus for agents were introduced.

Ø FAM tours were organised for travel agents/tour operators, promoting destinations like Denmark, Norway, Spain and Thailand.

PUBLIC GRIEVANCES/CALL CENTRE

During the year 2018-19, 1191 Public Grievances were received and 39 Public Grievances

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of the year 2017-18 were brought forward. Out of this, 1112 Public Grievances were disposed off and 118 Public Grievances were pending as on 31 March 2019. Air India is committed to fulfilling the Government's digital initiatives including Digi-Yatra, and NATGRID. The contact center vendor agreement is completing on 30 April 2019. A new tender has been uploaded on Air India website for appointment of suitable service provider from September 2019. Other Initiatives Taken

Revamping of Air India Website.

3 HIGHLIGHTS Awards & Recognition

Air India won “The Best Inflight Services” award at Today’s Traveler Award on 30 July 2019

Air India won the prestigious Best International Airlines Award from Tamil Nadu Tourism on 11 April 2019

Air India won the Best MICE Airline - Domestic Award at the 2nd BW Hotelier MICE Conclave and Awards 2018 presented by BW Business world. Air India has been awarded the Best Airline - South Asia second time in row by the Arabian Travel Awards, Dubai in October 2018. In JULY 2018, Air India was awarded “Superstar Airline of the Year Award” at the GMR- IGI Airport Annual Awards at Delhi It also won the International Cargo Airline of the Year Award and Airline of the Year India- International award. Air India was awarded the Global Award for Best Quality and Environment Management System for the year 2018 by World Quality Congress on 5 July 2018 at a prestigious event in Mumbai. Air India won the Gold Award in the Readers Digest Most Trusted Brand category. We have been winning this award consistently in the recent past. The Reader’s Digest Trusted Brand Award is a premier consumer-based international measure of brand preference. Air India awarded Global Star Award for the Best Airline Network. Air India awarded the Best Full Service International Airline 2018 by Air Passengers Association of India.Air 4. FLEET SIZE, NETWORK, JOINT VENTURES ETC.

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4.1 Fleet Size

As of 31 March 2019, Air India had the following aircraft in its fleet:

Aircraft Type Owned Leased Sale & Lease Back Total B777-200LR 3 - - 3 B777-300ER 15** - - 15 B747-400 2 - 2 4 B787-800 6 - 21 27 A320 5 31 - 36 A319 19 3 - 22 A321 20 - - 20 TOTAL 70 34 23 127

** Note: Fleet B777-300ER includes 2 aircraft sent for SESF modification to Boeing.

4.2 Market Planning

Network

The pattern of operations during 2018-19 for international operation was as under:

Routes Summer 2019 Summer 2018 Winter 2018 (Flights Per week) (Flights Per week) (Flights Per week) India / USA/India 36 33 33 India / UK/India 34 35 34 India / Europe/India 44 43 44 India/Gulf/India 153 137 137 India / FEA/India 16 16 16 India / SEA/India 56 56 64 India/Australia/India 8 8 India / SAARC/India 74 62 67

Initiatives taken by Revenue Management: a) Upgrade for sure (UFS) scheme reintroduced for Domestic and International travel launched with 10% higher amount above Get Upfront scheme charges in Apr 2018 to promote Business Class capacity. b) First class fares introduced on 18 select Domestic sectors on 10 April 18. c) Excess baggage rate revised from INR 400 to INR 500 (GST additional) per Kg per sector on the Domestic network on 6 June18 and Band wise Excess Baggage rates introduced on total AI network w.e.f. 1 February 19. d) In order to further promote Premium Classes (First & Business Class), Upgrade-Lite, a

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bidding scheme launched effective 27 December 18 covering entire AI network. e) Republic Day Sale launched from 26.1.19 till 31.1.19 for travel valid from 11 February 19 till 30 September 19. f) Stop-over facility (complimentary layover) provided in DEL/BOM to passengers travelling to/ from AI stations in US/ Europe/ Australia from all interior points with transit of Minimum 8 Hrs and Maximum 24 Hrs on tickets issued in RBD "L" and above w.e.f 15 March 19. 4.3 Joint Ventures and Code Share Arrangements As on 31 March 2019, Air India, a STAR Alliance Member, had a total of 23 Code-Share Agreements that included 15 alliances with STAR carriers and 8 with Non-STAR Carriers. All the Code-Share Arrangements are on Free Flow basis except that with Austrian Airlines and Swiss, which are on a Block Space basis.

The Code-Share with STAR Members include Lufthansa, Austrian Airlines, Swiss, Ethiopian Airlines, Singapore Airlines, Turkish Airlines, Egypt Air, Asiana Airlines, Air Canada, Adria Airways, EVA Air, Croatia Airlines, TAP Portugal, LOT Polish Airlines and Avianca.

In addition, Air India also had Free Flow Code Share arrangements with Non-STAR Airlines viz. Air Mauritius, Hong Kong Airlines, Air Astana, Flybe, Air Austral, Air India Express, SriLankan Airlines and Royal Brunei Airlines.

5. FINANCING INITIATIVES Boeing Aircraft Financing

Out of 27 B787-8 aircraft, the Sale and Lease Back transaction for 21 B787-8 aircraft was concluded in FY 2016-17. The delivery of remaining 6 B787-8 aircraft are taken through Bridge financing as per the following details-

Aircraft No. Delivery date Bridge loan lender 22nd 07 November 2016 Investec Bank plc 23rd 09 January 2017 First Abu Dhabi Bank consortium 24th 11 July 2017 First Abu Dhabi Bank consortium 25th 23 August 2017 Investec Bank plc 26th 30 August 2017 Investec Bank plc 27th 11 October 2017 Investec Bank plc

Out of the total 15 B777-300ER aircraft, 12 B777-300ER aircraft were already delivered to AI till July 2010. The EXIM guaranteed long term financing for the same is already in place.

Balance 3 B777-300ER aircraft (13th to 15th) were delivered to AI as under-

13th – Delivered on 23 January 2018 ) allocated for 14th – Delivered on 30 January 2018 ) for SESF Operations 15th – Delivered on 8 March 2018

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The 13th / 14th B777-300ER aircraft have been allocated for SESF Operations and funding for the same is received from Government of India. The 15thB777-300ER aircraft (being used for AI Operations) delivered through Bridge loan taken from First Abu Dhabi Bank consortium.

The Government of India issued one year guarantees for the Bridge loan financing of above mentioned aircraft. The Bridge loan and GOI guarantees are extended for further period till the time the long term financing is concluded.

6. AIR SAFETY A dedicated website [email protected] has been set up which aids dissemination of vital safety related information in a cost effective manner to all employees of the Company. Our mission is to

Ensure a sound Safety Management System Promote active participation of all departments in adopting optimum safety standards Introduce methods which enhance safety awareness Investigate Incidents / Accidents Recommend safety measures within the Training environment, thereby addressing known/perceived threats and errors 7. Quality Management System (QMS) ISO Certification of QMS Department

QMS Department was issued with QMSISOIS/ISO 9001:2008 License by the Bureau of Indian Standards (BIS). QMS has now changed over to IS/ISO 9001:2015 after clearing the ISO License Renewal Audit by the Bureau of Indian Standards (BIS) with NIL non-conformities. A fresh certificate has been issued extending the validity up to 8 December 2020. Documentation Management System (DMS)

A centralized Corporate Document Management System provides creation, version management, search, retrieval and dissemination of documents over a browser to all authorised personnel based on individual rights, across all Departments and all three AOP Holders and Strategic Business Units. It effectively complies with IOSA, DGCA, ISAGO, Star Alliance standards, Government as well as organization requirements.

DMS is a major initiative moving towards near paperless office, document repository to comply with Government and Regulatory requirements. This not only generates cost savings for the Company but also improves efficiency, saves times as well as environment.

QMS ensured that all the soft copies of the Manuals of 3 AOC and 2 SBU are reviewed, approved, uploaded and distributed through DMS.

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For optimum usage of DMS in stations, regular awareness drive is conducted through mails and phone calls. Generic DMS ID for international and domestic stations have also been created. Monthly currency of manuals is derived from 3 AOC and SBU and currency of manual is ensured. For wide distribution, EMM Part Contact list is also uploaded in DMS and made available in Public Domain. On regular basis AOC and SBU Nodal officers liaise for keeping the DMS in public domain with only current circulars and other documents. Upgradation of DMS through new product is also in pipeline.

IATA Operational Safety Audits (IOSA)

IOSA Registry of Air India is upto 16 January 2020. For renewal of Registry, the IOSA Renewal Audit has been planned from 26 to 30 August 2019 in coordination with M/s. Quali-Audit (IATA Accredited Agency).

8. INFORMATION TECHNOLOGY AVSEC online Exam portal

An in-house portal is developed by the Web Group of IT Department, Mumbai, for Air India Security Department which facilitates conducting online exams of various aviation courses viz. AVSEC Basic, AVSEC Induction for Air Crew. This portal is based on question banks in text format and complements the Computer Based Training (CBT) program, procured from third party which provides for online examinations with image based question banks.

Central Training Establishment (CTE) website made bilingual

CTE website which is developed and maintained in-house by Air India, DIT, Web Group, Mumbai. This website was converted bi-lingual (Hindi & English) and implemented on 14 September 2018.

Ground Handling Portal In-house portal developed by Web Group, which provides for –

Collection of data from all stations by GHAs for generation of DGCA CAR reports in COMPLIANCE OF C.A.R. SECTION-3, SERIES-M, PART-IV for Flight Delay, Flight Cancellation and Flight Denied Boarding. Collection of Airport Handling related information by all stations which typically includes Airport Revenue/ Seat Upgrades/ Unserviceable Seats and Baggage Discrepancy for generation of various MIS reports. mobile App for IGIA T3 Canteen

IGIA T3 canteen Mobile App is developed in-house to assist in smooth operation of the canteen in terms of managing discounts provided to Air India permanent staff deployed in the area.

migration of Air India Website to NIC Cloud

Air India corporate website www.airindia.in was successfully migrated from shared hosting at

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NIC Data Centre Delhi to NIC Cloud in Feb 2018. This has led to improvement in performance, security, flexibility of resources and DR setup for Air India Website.

Access of Air India Website through Akamai CDN Air India has migrated the website to Akamai CDN (Content Delivery Network), which ensures faster content delivery to the end user. This has led to better, consistent response to customers across the world.

Implementation of APT Solution APT (Advance Persistent Threat) Solution has been successfully implemented in Air India Network. It is Next generation intrusion prevention and breach detection to prevent targeted attacks, advanced threats and ransom ware from embedding or spreading within the network. The solution is comprehensive, automated security solution to protect enterprise workloads in the data centre and the cloud from critical new threats while helping to accelerate regulatory compliance.

9. HUMAN RESOURCES 9.1 Staff Strength The staff strength for Permanent Employees as on 1 April 2019 was 9993.

9.2 Long Service Mementoes Every year all the employees of the Company who have completed 25 years of service are presented with a long service memento on 27 August. Accordingly, during the year 2018-19, on 27 August, 2018, a total of 817 employees were felicitated.

10. SPORT Air India is proud of its 31 ARJUN AWARDEES, 11 PADMASHRI, 3 RAJIV KHEL RATNA and 1 DRONACHARYA AWARDEE. Among the elite group, we have Women/Men Chess Grandmasters, Olympians, World Cup players, Asian Games, Commonwealth Games Medal winners in various disciplines.

CRICKET (MEN) Air India Cricket Team (Men) won the prestigious All India Public Sector Cricket Tournament, Lala Raghubir Memorial and Goswami Ganesh Dutt Cricket Tournament, Uttarakhand Gold Cup and Justice S.N. Dwivedi Tournament.

CRICKET (WOMEN) Smt. Jhulan Goswami was ranked No.1 Women Bowler in ODI ICC ranking for scalping highest wickets in World Women ODI Cricket.

BADMINTON Air India Badminton team, as well as players in individual capacity participated in 11 events

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including Junior & Senior All India Major Ranking Badminton Tournament and other ranked Badminton Tournaments. Air India won Junior Nationals and All India Public Sector Badminton Tournaments. Air India Badminton players also won 22 Gold Medals, 13 Silver Medals and 1 Bronze Medal in the 11 events they participated.

SHOOTING Air India Shooting contingent is the biggest and brightest among all the Public Sector Companies. Air India team won the National Team Gold Medal 2018. Shooting Stars Shri Gagan Narang, Shri Deepak Sharma and Smt.Annu Raj Singh excelled in various national and international tournaments during the year.

CARROM Air India team won the National Carrom Championship after a gap of 6 years and also was winner of the Federation Cup. Riyaz Akbar Ali has been Ranked No. 1 in India & No. 2 in the world.

CHESS Air India Women Team won 2nd place in the 17th National Chess Championship held at Kolkata.

HOCKEY Air India Hockey team participated in 7 All India Hockey Tournaments out of which they reached in Semi Finals in 4 tournaments.

TABLE TENNIS Air India Table Tennis team won 2 Gold, 1 Silver and 2 Bronze medals in Inter District TT Tournament and Khelo India Youth Games.

KABADDI Air India Kabaddi team is the best Kabaddi team in the country that has won major Kabaddi Tournaments in the Country such as Dr. S R Patil Memory Trophy, Gaondevi Yuvak Mandal State, Shivneri Seva Mandal Gold Cup Trophy and Thane Mayor Cup. Air India was Runners up in Swarjya Pratishthan Kabaddi Championship. Vikas Kale was awarded “Shiv Chhatrapati Award” by the Government of Maharashtra for his outstanding performance.

FOOTBALL Air India Football team participated in All India Sonkar Memorial Tournament at Indore and was Runners Up in the prestigious Mumbai District Football Association League at Mumbai. Apart from recent times, Air India Football team has always been a premier and popular Football team in the country.

11. PUBLIC GRIEVANCS: During 2018-19, 1461 cases of RTI Requests and 234 Appeals were received.

34 AIR INDIA

Out of 234 Appeals, 232 were disposed off by the First Appellate Authorities.

12. STATUTORY COMPLIANCE RELATING TO SUBSIDIARIES Air India has five subsidiary companies. The financial statements of the subsidiaries are included in this Annual Report elsewhere. Their performance is briefly discussed here:

12.1 Air India Air Transport Services Limited (AIATSL) (Rs.in Million) Particulars 2018-19 2017-18 Air India’s investment in equity 1384.24 1384.24 Total Income 7071.64 6692.67 Total Comprehensive Income for the year 671.71 451.99

AIATSL, a wholly owned subsidiary of Air India Limited was operationalised on 1 February 2013 and started its independent operations effective April 2014. Presently, it provides ground handling services at 80 Airports in India. Apart from handling the flights of Air India and its Subsidiary Companies, ground handling is also provided to 37 Foreign Scheduled Airlines, 3 Domestic Scheduled Airlines, 4 Regional Airlines, 12 Seasonal Charter Airlines, 23 Foreign Airlines availing Perishable Cargo handling. Ground Handling was provided for 1,24,500 flights (Air India and Subsidiaries) and 24,000 flights of scheduled and non-scheduled customer airlines during 2018-19.

Further, AIATSL was considered favourably as Service Provider at the Greenfield Kannur Airport in Kerala which operationalised effective December 2018 whereby Revenue of AIATSL got booster.

12..2 Air India Express Limited (AIXL) (Rs.in Million) Particulars 2018-19 2017-18 Air India’s investment in equity 7800.0 7800.0 Total Income 42015.2 36184.76 Total Comprehensive Income for the Year 1615.88 2195.80

AIXL operates a Low Cost Airline under the brand name "Air India Express". Launched on 29 April 2005 with a fleet of 3 leased B737-800 aircraft, it operated from 3 stations in Kerala to 5 stations in the Gulf.

As on 31 March 2019, AIXL had a fleet of 25 B737-800 NG aircraft. The airline operated to 17 Indian and 13 foreign on-line stations.

The Airline continued to improve aircraft utilisation. Daily average aircraft utilisation went up from 12.7 hours recorded in 2017-18 to 13.3 hours per day per aircraft with a fleet of 25 aircraft taking the total block hours to 115,279 in 2018-19. The capacity offered by the Airline in terms of ASK in grew by 7% from 13,195 Million in FY 2017-18 to 14,173 Million in FY 2018-19. However, on the strength of increase in Passenger Load Factor from 76.2% to 79.6% the

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Airline was able to record a much higher growth amounting to 12.2% in RPK terms with the RPK rising from 10,051 Million in FY 2017-18 to 11,277 Million in FY 2018-19. There was also commensurate growth in the number of passengers carried by the Airline which grew from 3.89 Million to 4.36 Million in FY 2018-19. The Operating Revenue grew by 17.7% from Rs.35,444.3 Million to Rs.41,715.7 Million.

Air India Express began its Summer Schedule 2018 operations with 577 departures per week. By the end of the Winter Schedule 2018-19, the number of weekly departures rose to 615. The Company reported net profit for the fourth consecutive year besides generating substantial cash profit. The net profit for Financial Year 2018-19 was Rs.1,615.8 Million as against Rs.2,620.45 Million during the year 2017-18. The cash profit was Rs.4,293.7 Million.

12.3 Air India Engineering Services Limited (AIESL) (Rs.in Million) Particulars 2018-19 2017-18 Air India’s investment in equity 1666.67 1666.67 Total Income 12064.00 7944.32 Profit/(Loss) After Tax (2049.37) (4444.36)

AIESL is a leading MRO (Maintenance Repair and Overhaul) service provider in the Country providing both Line Maintenance and Major Maintenance for various types of aircraft for the fleet of Air India, Air India Express Limited, Alliance Air, third party airlines as well as Defense Forces.

Further, the Company had in past technical handling agreement with 15 International Airlines and 2 Domestic Airlines for Line Maintenance work. During the year 2017-2018, AIESL signed SGHAs (Standard Ground Handling Agreements) with new International Airlines namely- Bhutan Airlines, Thai Smile, Malaysian Airlines Berhad, Mahan Air of Iran and ANA of Japan for their Line maintenance.

The Company had approval from 8 foreign Civil Aviation authorities and in 2018-2019, it had submitted the application to 4 more foreign Civil Aviation authorities, viz. CAA of Seychelles, PACA Oman , CAA of Bangladesh and CAA Malaysia for addition of 9 stations in India.

At present, AIESL has 8 foreign CAA approvals namely Qatar, Kuwait, GACA(UAE), CAA Singapore, CAA Srilanka, CAA Nepal, CAA Thailand and CAA Malaysia.

The Company carried out base maintenance work for Domestic operators namely – Jet Airways, Go Air, TATA SIA Airlines, Air Asia India and Spicejet in 2018-2019. In addition, AIESL has also carried out major maintenance work for ARC, Indian Air Force, Indian Navy, Indian Coast Guard, HAL and Pawan Hans. In 2018-2019, AIESL undertook maintenance of private parties’ aircraft like – Reliance RCDL, Jindal Steel (JSW), Taj Air Charters and Bluedart Aircraft.

In December 2017, changes in CAR 147 Basic was made by DGCA and it was made mandatory for DGCA approved AME Institutes to undergo practical training at MROs with live aircraft. In 2018-2019, AIESL has signed up with 32 Institutes for imparting training (PTE) to their students. Each of these AME Institute has approx.60 to 100 students in every batch. 36 AIR INDIA

The AIESL has presence also in SAIFZONE, UAE and the Company is handling Certification and Technical handling of Air India and Air India Express flights at Sharjah, Dubai and Ras al Khaimah, UAE. Based on the experience and backed by cost benefit analysis, the opportunity to expand to other international stations like Dubai, Kathmandu, Colombo and Dhaka is being undertaken.

12.4 Airline Allied Services Limited (AASL) (Rs.in Million) Particulars 2018-19 2017-18 Air India’s investment in equity 4022.50 4022.50 Total Income 8362.78 6131.57 Total Comprehensive Income for rthe Year (2966.39) (2709.25)

The Company operates under the brand Alliance Air.

As on 31 March 2019 the Company had 2 ATR-42-320s and 18 ATR-72-600 leased aircraft in its fleet. It is presently operating to 55 destinations with 87 departures per day and 607 flights per week. As on 31 March 2019, the staff strength of the Company was 668 excluding 8 employees on deputation from the parent Company, 21 employees on deputation from AIESL and 02 employees deputed from AIATSL.

Alliance Air is one of the leading regional airlines in the Country providing connectivity to Tier II and Tier III cities in India as well as 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 fleet. These aircraft will serve shorter routes within the Country and also fly overseas in the near future.

12.5 Hotel Corporation of India Limited (HCI) (Rs.in Million) Particulars 2018-19 2017-18 Air India’s investment in equity 1106.00 1106.00 Government's investment in equity 270.00 270.00 Total Income 671.35 551.27 Total Comprehensive Income for the Year (712.04) (552.88)

HCI provides catering services to Air India Group at Mumbai and Delhi through Chefair, its Flight Catering Unit. In addition, HCI earns revenue through its two Hotels viz. Centaur Lake View Hotel, Srinagar and Centaur Hotel, Delhi and by operating Lounge at T3, Delhi.

With the fund received from the Government by way of Equity infusion, additional rooms were upgraded at Centaur Hotel Delhi Airport (CHDA) and Centaur Lake View Hotel, Srinagar (CLVH) which had resulted in better occupancy rate , having sold higher room nights, which in turn had augmented the revenue of these units. However, due to lack of fund, all these properties could not be upgraded fully to bring them at par with other in the Industry.

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Further, as per the direction of the Government, 45000 sq. mts land parcel leased from Airports Authority of India (AAI) for the Delhi units i.e. CHDA, Chefair Flight Catering, Delhi (CFCD) is required to be handed over to AAI by 30 November 2019. Accordingly, steps are being taken to ensure smooth handing over and also claim of appropriate compensation from AAI.

12.6 Joint Venture Agreement between Air India Limited and Singapore Airport Terminal Services (SATS) on ground handling The Company has entered into a Joint Venture (JV) agreement with SATS, Singapore in the equity ratio of 50:50 to provide ground handling services to airlines at certain metro airport. This was in pursuance of Government of India Notification on the Ground Handling policy.

13. RISK MITIGATION STRATEGIES The Company continuously monitored the risks perceptions and taken preventive action for mitigation of risks on various fronts.

14. INTERNAL CONTROL SYSTEMS The Company continues to ensure proper and adequate internal control systems and procedures commensurate with its size and nature of business to ensure that all assets are safeguarded and protected against loss from unauthorized use and that transactions are authorized, recorded and reported correctly. The internal control system enables documented policies, guidelines, authorization and approval procedures. Necessary actions were also being taken to address some of the concerns raised by the Auditors in this regard.

The Company has an extensive system of internal controls which ensures optimal utilization and protection of resources, IT security, accurate reporting of financial transactions and compliance with applicable laws and regulations as also internal policies and procedures. The internal control system is supplemented by extensive internal audits, regular reviews by management and well documented policies and guidelines to ensure reliability of financial and other records to prepare financial statements and other data.

The Company has a well defined manual on delegation of authority and administrative powers, based on which, the authorities exercise their powers. This manual is reviewed periodically to cope with the changes necessitated by the needs of the organization. The said manual, along with the Company’s key functional process manuals, further strengthens the internal control system of the organization. The Company has independent internal audit systems to monitor the entire operations and services spanning over all locations, businesses and functions on a regular basis. The Company has also employed outside consultants in its various areas of functioning in order to reduce/monitor its cost platform.

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CORPORATE GOVERNANCE

1. Company’s Philosophy on Code of Corporate Governance Air India Limited’s corporate philosophy on Corporate Governance has been to ensure fairness to the Stakeholders through transparency, full disclosures, empowerment of employees and collective decision making.

2. Board of Directors As per Articles of Association of the Company, the number of Directors shall not be less than three and not more than fifteen.

BOARD OF DIRECTORS AS ON 31 MARCH 2019 Shri Ashwani Lohani Chairman & Managing Director

Shri Vinod Hejmadi Director (Finance)

Shri Arun Kumar Addl Secretary & Financial Advisor, Ministry of Civil Aviation

Shri Satyendra Kumar Mishra Jt Secretary, Ministry of Civil Aviation

Dr R K Tyagi Independent Director

Dr Syed Zafar Islam Independent Director

Shri Yogesh Chander Deveshwar Independent Director

Shri Kumar Mangalam Birla Independent Director

Smt Daggubati Purandeswari Independent Director

Shri Ashwani Lohani was appointed Chairman & Managing Director effective 14 February 2019 vice Shri Pradeep Singh Kharola.

Further, the Ministry of Civil Aviation, vide Orders No.AV.18013/007/2007-AI, has appointed Shri Y C Deveshwar and Shri Kumar Mangalam Birla effective 8 August 2018 and Smt Daggubati Purandeshwari effective 4 October 2018, as Part Time Non-Official Directors on the Board of the Company.

Further, Shri Pankaj Srivastava ceased to be Director effective 30 April 2018.

The Board places on record its appreciation of the valuable services rendered by Shri Pradeep Singh Kharola, as Chairman & Managing Director and Shri Pankaj Srivastava as Director on the Board of the Company.

Shri Y C Deveshwar ceased to be Director on the Board of the Company effective 11 May 2019 due to his sad demise. Further Shri Arun Kumar also ceased to be on the Board of the 39 AIR INDIA

Company effective 10 July 2019. Shri Praveen Garg was appointed as Director effective 30 August 2019 vice Shri Arun Kumar.

During the year, all meetings of the Board and the Shareholders were chaired by the Chairman & Managing Director.

Details regarding the Board Meetings, Annual General Meeting, Directors’ Attendance thereat, Directorships and Committee positions held by the Directors are as under : Board Meetings: Eight Board Meetings were held during the financial year on the following dates:

Sr. No. Date of Meeting Board Strength No.of Directors Present 1. 21 May 2018 7 7 2 17 August 2018 9 7 3. 16 October 2018 10 9 4. 2 November 2018 10 8 5. 20 November 2018 9 7 6. 26 December 2018 9 7 7. 28 January 2019 9 6 8. 8 March 2019 9 6

CODE OF CONDUCT The Board has adopted a Code of Conduct for the Directors and Senior Management and the same has been posted on the website of the Company. There is a system in the Organisation of affirming compliance with Corporate Governance by the Board Members and Senior Management Personnel of the Company. A declaration of compliance signed by Chairman & Managing Director of the Company is enclosed with this Annual Report.

Particulars of Directors including their attendance at the Board/Shareholders’ Meetings during the financial year 2018-19 Name of the Director Academic Attendance Details of Memberships held Qualifications out of 8 Directorships held in in Committees Board other Companies Meetings held during the year Wholetime Directors 7 Part-time Chairman Shri Pradeep Singh Phd, Masters Air India Express Ltd Air India Ltd Kharola in Development Air India Air Transport Member Chairman & Management Services Ltd Nomination & Managing Director Air India Engineering Remuneration (ceased effective Services Ltd Committee 14.2.2019) Airline Allied Services Ltd

40 AIR INDIA

Hotel Corporation of Hotel Corporation of India Ltd India Ltd Air India Assets Member- Holding Ltd Audit Committee Air India SATS Airport Air India Air Services Pvt Ltd Transport Services Director Limited Air Mauritius Ltd Chairman Air Mauritius Holdings Corporate Social Ltd Responsibilty Committee Member- Audit Committee Part-time Chairman Air India Ltd Shri Ashwani Mechanical Air India Express Ltd Member Lohani, Chairman & Engineer 1 Air India Air Transport Nomination & Managing Director and Fellow Services Ltd Remuneration of Chartered Air India Engineering Committee (appointed effective Institute of Services Ltd 14.2.2019) Logistic and Airline Allied Services Hotel Corporation of Transport Ltd India Ltd Hotel Corporation of Member India Ltd Audit Committee Air India Assets Air India Air Holding Ltd Transport Services Air India SATS Airport Limited Services Pvt Ltd Chairman Corporate Social Director Responsibilty Air Mauritius Ltd Committee Air Mauritius Holdings Member- Ltd Audit Committee Shri Pankaj MBA - Director - Srivastava Airline Allied Services (Ceased effective Ltd 1.5.2018)

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Shri Vinod Hejmadi B.Com., ACA 8 Director Air India Ltd Air India Express Ltd Member Airline Allied Services HR Committee Ltd CSR & Sustainability Hotel Corporation of Development India Ltd Committee Air India Air Transport Share Allotment Services Ltd Committee Air India Engineering Selection Services Ltd Committee Air India SATS Airport Flight Safety Services Pvt Ltd Committee Air India Assets Air India Express Holding Ltd. Ltd Chairman Corporate Social Responsibility Committee Member Audit Committee Air India Engineering Services Limited Member Audit Committee Air India Air Transport Services Limited Member Audit Committee Hotel Corporation of India Limited Member Audit Committee Airline Allied Services Ltd Member Audit Committee Air India SATS Airport Services Pvt. Ltd. Chairman Corporate Social Responsibility Committee

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Capt Arvind BA Economics 4 Kathpalia Hons (ceased effective 13.11.2018) Non Executive Directors (Ex Officio) Ms Gargi Kaul M.Phil 5 Director Air India Ltd. Addl Secretary & Air India Air Transport Member Financial Advisor, Services Ltd Audit Committee Ministry of Civil Air India Engineering Chairperson Aviation Services Ltd Share Allotment (ceased effective Hotel Corporation of Committee 24.1.2019) India Ltd. Air India Air Pawan Hans Ltd. Transport Services Delhi International Limited Airport Ltd. Chairperson Indian Renewable Audit Committee Energy Development Member Agency Ltd. Corporate Social Solar Energy Responsibility Corporation of India Committee Ltd. Air India Engineering Air India Assets Services Limited Holding Ltd. Chairperson Audit Committee Hotel Corporation of India Limited Chairperson Audit Committee Shri Arun Kumar B.A. (Hons) Director Air India Ltd. Addl Secretary & Air India Air Transport Member Financial Advisor, Services Ltd. Audit Committee Ministry of Civil Air India Engineering Chairman Aviation Services Ltd. Share Allotment (appointed effective Air India Assets Committee 24.1.2019) Holding Ltd

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1 Airports Authority of Air India Air India Transport Services Pawan Hans Ltd. Limited Solar Energy Chairman Corporation of India Audit Committee Ltd. Member Indian Renewable Corporate Social Energy Development Responsibility Agency Ltd. Committee Air India Engineering Services Limited Chairman Audit Committee Hotel Corporation of India Limited Chairman Audit Committee Shri Satyendra M.Tech 8 Director Air India Ltd. Kumar Mishra (Applied Air India Air Transport Member Jt Secretary, Geology) Services Ltd HR Committee Ministry of Civil M.A. (Public Air India Engineering Nomination Aviation Policy) Services Ltd &Remuneration Hotel Corporation of Committee India Ltd Flight Safety Air India Assets Committee Holding Ltd Air India Air Transport Services Limited Member Audit Committee Corporate Social Responsibility Committee Air India Engineering Services Limited Member Audit Committee Hotel Corporation of India Limited Member Audit Committee

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Non Executive Directors - Independent Dr R K Tyagi BE (Electronics 7 Director Air India Ltd. & Telecom) Defence Innovators Chairman MBA and Industry HR Committee Ph.D Association Member Audit Committee CSR& Sustainable Development Committee Nomination & Remuneration Committee Flight Safety Committee

Dr Syed Zafar Islam Graduate- 6 Air India Ltd. Aligarh Muslim Chairman University Audit Committee Master of Member Finance & Nomination & Control, Aligarh Remuneration MEP from IIM, Committee Ahmedabad Consumer Satisfaction Committee Shri Yogesh B.Tech, IIT, 4 Chairman & Non Air India Ltd. Chander Deveshwar Delhi Executive Director Chairman (appointed effective AMP, Harward ITC Ltd. Nomination & 8.8.2018 and Business ITC Infotech India Ltd. Remuneration ceased effective School, USA Committee 11.5.2019) Member Consumer Satisfaction Committee

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Shri Kumar C.A., MBA 1 Director Air India Ltd. Managalam Birla (London Grasim Industries Ltd Chairman (appointed effective Business Hindalco Industries CSR & Sustainable 8.8.2018) School) Ltd. Development Ultra Tech Cement Committee Ltd. Member Idea Cellular Ltd. Nomination & Century Textiles and Remuneration Industries Ltd. Committee Aditya Birla Sun Life Insurance Company Ltd. Aditya Birla Sun Life AMC Ltd. Aditya Birla Capital Ltd. Birla Group Holdings Pvt Ltd Aditya Birla Management Corporation Private Ltd. Trapti Trading & Investments Private Ltd. Turquoise Investments and Finance Private Ltd. TGS Investment & Trade Private Ltd. Global Holdings Private Ltd. ABG Realty and Infrastructure Company Pvt Ltd. RKN Retail Pvt Ltd. Svatantra Microfin Private Ltd. Smt Daggubati 5 Air India Ltd. Purandeswari Member (appointed effective CSR & Sustainable 4.10.2018) Development Committee

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3. Board Committees Statutory Committees: i. Audit Committee. ii. Nomination and Remuneration Committee. iii. CSR and Sustainability Committee. iv. Independent Directors Committee. non Statutory Committees: i. Human Resources Committee ii. Share Allotment Committee iii. Safety Committee iv. Consumer Satisfaction Committee The Board Committees shall deliberate and recommend to the Board the proposals falling under their Terms of Reference and the final authority to decide on the matters is with the Board.

Statutory Committees: 3.1 Audit Committee As part of the Corporate Governance and in compliance with the provisions of the Companies Act, 2013 and DPE Guidelines, the Company constituted the Audit Committee of the Board in November 2007.

As on 31 March 2019, the following were the Members of the Audit Committee:

Name of the Director Position held in Category of the Director the Committee Dr Syed Zafar Islam Chairman Part Time Non Official Director Dr R K Tyagi Member Part Time Non Official Director Addl. Secretary & Financial Advisor, Member Non Executive Part-time Director MOCA Chairman & Managing Director Permanent Invitee Chairman & Managing Director Director (Finance) Special Invitee Functional Director ED-Internal Audit Special Invitee Executive Director

The Terms of Reference of the Audit Committee are as under:

To recommend for appointment, remuneration and terms of appointment of auditors of the company;

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To review and monitor the auditor’s independence and performance and effectiveness of audit process; 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 Airlines’ Business; To discuss with the Auditor before the audit commences the nature & scope of the audit and to ensure co-ordination where more than one audit firm is involved; To examine the financial statements and the auditors’ report thereon; 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 ; Approval or any subsequent modification of transactions of the company with related parties; Scrutiny of inter-corporate loans and investments; Valuation of undertakings or assets of the company, wherever it is necessary; Evaluation of internal financial controls and risk management systems; Monitoring the end use of funds raised through public offers and related matters. To consider any other matter as desired by the Board ; The Audit Committee met five 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:

1. 25 April 2018 (29th Meeting) 2. 02 November 2018 (30th Meeting) 3. 20 November 2018 (31st Meeting) 4. 12 December 2018 (32nd Meeting) 5. 23 January 2019 (33rd Meeting) Attendance at the Audit Committee Meetings Name of the Member No. of Meetings Attended Dr Syed Zafar Islam, Chairman 4 Dr R K Tyagi, Member 5 Ms Gargi Kaul, Member 4 Shri Pradeep Singh Kharola 5 Shri Ashwani Lohani 0

Air India Limited presently has five Indian Subsidiary Companies i.e. Air India Express Limited,

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Airline Allied Services Limited, Air India Air Transport Services Limited, Air India Engineering Services Limited and Hotel Corporation of India Limited.

3.2 Corporate Social Responsibility (CSR) & Sustainable Development Committee (SD) To review, monitor and provide strategic directions to the Company's CSR and sustainability practices, guide the Company in integrating its social and environmental objectives with its business strategies. The Committee shall also formulate and monitor the CSR Policy and recommend to the Board the annual CSR Plan of the Company. The Terms of Reference of this Committee are as under:

i. Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified ; ii. Recommend the amount of expenditure to be incurred on the various CSR activities; and iii. Monitor the Corporate Social Responsibility Policy of the company from time to time. The Board constituted a CSR & Sustainable Development Committee (SDC) on 11 December 2012 to approve and review Sustainable Development projects from time to time.

As on 31 March 2019, the following were the Members of the CSR Committee:

Shri K.M. Birla Chairman Dr.R.K. Tyagi Member Smt.D. Purandeswari Member Director (Finance) Member Shri Ashwani Sehgal Nodal Officer GM – Personnel

3.3 Nomination and Remuneration Committee: This Committee shall be headed by an Independent Director. The other members of this Committee will be the CMD, one or more Independent Directors and a Government Nominee Director. The CMD shall be the Convener of this Committee. The Nomination and Remuneration Committee shall recommend nomination to the following key positions:

a. Executive Directors b. CEOs of subsidiaries. In case of hiring of specialized human resources (on contract) the Committee shall decide the remuneration keeping in view the market practices.

The Nomination and Remuneration Committee shall, while formulating the policy ensure that:

i. relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

49 AIR INDIA ii. remuneration to key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

3.4 Independent Directors Committee This Committee shall comprise all the Independent Directors of the Company. One of the Independent Directors shall be nominated as the Chairperson of the Committee. The Company Secretary shall be the convener of the Committee.

The Independent Directors Committee shall hold at least one meeting in a year, without the presence of non-Independent Directors and members of the management and all the Independent Directors shall strive to be present at such meeting.

non Statutory Committees 3.5 Human Resources Committee The function of the HR committee would be to assist the Board by reviewing and finalising Service Regulations, Passage Regulations, Recruitment, Promotion, Medical, Foreign Posting Policies. The HR Committee shall be chaired by an Independent Director. Other members of this Committee shall be Government Director (JS, MOCA), Director (Finance) and Director(Personnel). The Director Personnel shall be the Convener. The Terms of Reference of HR Committee are as under:

To consider amendments to the Service Regulations and other Rules and Standing Orders for the employees of the Company; To suggest rationalization of human resources strength and wage and incentive policy; To review and recommend the organizational structure of the Company; To review the performance appraisal system; Any other matter referred by the Board. As on 31 March 2019, the following were the Members of the HR Committee:

Dr.R.K.Tyagi Chairman Director (Finance) Member Jt.Secretary,MOCA Member

3.6 Share Allotment Committee The Share allotment Committee would be chaired by the Government Nominee Director (AS&FA) and would have Director (Finance) and Director (Operations) as members. Government of India infuses equity into Air India. As per the Companies Act, 2013, this equity needs to be allotted to the Government nominated shareholders. This Committee does the aforesaid allocation in a

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tax efficient way.

As on 31 March 2019, the following were the Members of the Share Allotment Committee:

Jt./Addl. Secretary & Financial Advisor, MOCA Chairman Joint Secretary Member Director (Finance) Member

3.7 Flight Safety Committee The Flight Safety Committee would be chaired by an Independent Director and would have Government Nominee Director (JS), Director (Finance) and Director (Operations) as members. The Terms of Reference of Flight Safety Committee would be to review and monitor all safety related matters and to close the Audit findings in a timely manner. The Committee may carry out inspections for this purpose. Director (Operations) shall be the convener.

As on 31 March 2019, the following were the Members of the Flight Safety Committee:

Dr.R.K.Tyagi Chairman Jt.Secretary,MOCA Member Director (Finance) Member Director (Operations) Member ED-Flight Safety Permanent Invitee

3.8 Consumer Satisfaction Committee The Consumer Satisfaction Committee would have two independent directors as members and would be chaired by an independent Director. Director Commercial shall also be a member of this Committee. ED-Customer Service and ED-Inflight Services shall be invitees to this Committee. The Committee would look into the various areas relating to customer interests/ facilities, such as food on board, marketing schemes, loyalty programme, business deals with corporate houses, schemes like Maharaja Direct etc. Director (Commercial) shall be the convener of this Committee.

Normally, meetings of the Board Committees shall be convened by their respective Chairmen. However, any member of the Committee may, with the consent of the concerned Chairman, convene a meeting of the Committee. Signed minutes of Board Committee meetings shall be tabled for the Board's information as soon as possible. However, issues requiring Board's attention / approval should be tabled in the form of note (s) to the Board from the Committee Chairman.

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As on 31 March 2019, the following were the Members of the Consumer Satisfaction Committee:

Shri Y.C.Deveshwar Chairman Dr.Syed Zafar Islam Member Director (Commercial) Member,Convenor ED - Customer Service Member ED - Inflight Services Member

Shri Y C Deveshwar ceased to be on the Board of the Company with effect from 11 May 2019 due to his sad demise.

The Board in its 96th Meeting held on 12 July 2019 decided to include Shri K M Birla as Chairman of the Consumer Satisfaction Committee vice Shri Y C Deveshwar.

3.9 Selection Committee: The Selection Committee would carry out the selection of EDs and the selected candidates would then be referred to the Nomination and Remuneration Committee for final selection to the post of ED as per terms of reference under the provisions of Companies Act 2013.

As on 31 March 2019, the following were the Members of the Selection Committee:

An Independent Director Director (Finance) Director (Commerical) Director (Personnel) Director (Operations) An outside Member belonging to Reserved Category if required.

3.10 The Executive Management Committee: The Executive Management Committee forms an integral part of the Governance structure. Presided over by the Chairman and Managing Director, all the functional Directors shall be its members. Besides, the heads of concerned department (whose subjects are being discussed) shall be members of the EMC.

The primary role of the Committee is strategic management of the Company's businesses within Board approved direction / framework and realization of Company goals. Also, to enable decision making through multi-functional inputs apart from enhancing participation involvement and commitment of Functional Heads in the Corporate Governance and to ensure ethical and efficient conduct of the affairs of the Company.

In addition to the Functional Directors, the following Executive Directors would also be members of the EMC :

a. Company Secretary. 52 AIR INDIA

b. ED-IT c. ED-Cargo d. ED- Corporate Affairs e. ED-Commercial f. ED-Finance g. ED-Operations h. ED-Inflight Services i. Other EDs if their subject is being discussed. j. GMs can be invited by the CMD to discuss subjects concerning them The objective of the EMC mechanism is to involve all stakeholders in the decision making process. Also it will serve the purpose of taking the full team on board and align them to the vision of the top decision making body. Decision making through EMC will bring in an environment of transparency and ensure that all viewpoints are factored in while taking important decisions. The CMD shall ensure that all subjects coming before the Board are first placed before the EMC and a reasoned decision is arrived at. The deliberations of the EMC, in such cases should be placed before the Board.

Meetings of the Committees shall be convened and chaired by the CMD. The Company Secretary or such other person as may be decided by the Board shall be the Secretary to the Committee. The concerned ED or the Functional Director shall prepare the agenda in advance and forward to the Company Secretary, who shall circulate the agenda to all members.

The following subjects shall be placed before the EMC : a. All subjects to be placed before the Board shall be first placed before the EMC. The EMC should give its clear recommendation on each such subject. b. All plans (financial and operational) shall be placed before the EMC for consideration and approval (recommendation if it has to go to the Board). c. The revival plan shall be reviewed by the EMC at least once a fortnight. d. Opening and closing of routes. e. Organizational restructuring f. Opening and closing of offices. g. Capital acquisitions h. Sale of immoveable assets i. All matters requiring coordination among departments j. The CMD or the functional Directors may place any subject on which they are competent

53 AIR INDIA

to decide, before the EMC which in their view require wider consultation. It shall be the responsibility of the concerned ED/Director to place subjects before the EMC as per the aforesaid guidelines.

4. Remuneration to Directors Air India being a Government Company, the appointment and remuneration payable to its Whole- time Directors is determined by the Government of India. The part-time (Ex Officio) Directors do not receive any remuneration from the Company. The non-official part-time (Independent) Directors are paid Sitting Fees for Board Meetings and Sub Committee Meetings of the Board attended by them. Air India does not have a policy of paying commission on profits to any of the Directors of the Company. The remuneration payable to officers below Board level is also approved by the Government of India.

Details of Remuneration paid to the Whole-time Directors during the Financial Year 2018-19 are as follows:

Names of Directors All elements of remuneration packages of the Total Directors i.e. salary, benefits, bonus, pension, etc. Salary & Contribution Other Performance Allowances to Provident benefits & Related Pay Fund & perquisites other funds Shri Ashwani Lohani 69,750 Nil Nil Nil 69,750 Shri Pradeep Singh 30,84,919 Nil Nil 30,84,919 Kharola Shri V Hejmadi 27,11,738 2,17,656 33,750 Nil 29,63,144 Shri Pankaj Srivastava 24,66,120 35,822 5,400 Nil 25,07,342 Capt Arvind Kathpalia 1,04,80,276 1,31,286 22,500 1,06,34,062

Service Contracts: As per terms & conditions of appointment communicated by the administrative Ministry.

The Company has not introduced any Stock Option Scheme.

During the Financial Year, the Non-Executive (Independent) Directors received sitting fees for attending the meetings of the Board / Committees as under:

Dr R K Tyagi Rs.2,40,000/- Dr Syed Zafar Islam Rs.2,70,000/- Shri Y C Deveshwar Rs.80,000/- Smt Daggubati Purandeswari Rs.1,00,000/-

54 AIR INDIA

5. Annual General Meetings during the last three years The details of these meetings are given below:

Meeting Number Date and time of the Venue Special Meeting Resolution Passed at the Meeting 10th Annual General 21 December 2016 Airlines House, 113 - Meeting 1300 hrs. Gurudwara Rakabganj Road, New Delhi 110 001 11th Annual General 29 December 2017 Airlines House, 113 - Meeting 1430 hrs. Gurudwara Rakabganj Road, New Delhi 110 001 12th Annual General 26 December 2018 Airlines House, 113 - Meeting 1030 hrs. Gurudware Rakabganj Road, New Delhi 110001 M/s Link Intime India Pvt Ltd having its address at C-101, 247 Park, L.B.S. Marg, Vikhroli (West), Mumbai 400 083 are the Registrars and Transfer Agents for the debentures of the Company. All matters connected with debenture transfer, transmission, interest payment is handled by the transfer agents.

6. CODE OF CONDUCT “Code of Conduct for Board Members and Senior Management Personnel of Air India Limited” has been devised and made effective 31 March 2013. The purpose of this Code is to enhance further ethical and transparent process in managing the affairs of the Company. This Code has been made applicable to

a. All Whole-time Directors b. All Non-Whole time Directors including Independent Directors under the provisions of Law and c. Senior Management Personnel All the Board Members and Senior Management Personnel have provided the Annual Compliance Certificate duly signed by them as on 31 March 2019. 7. INTEGRITY PACT The Company has introduced Integrity Pact (IP) to enhance ethics / transparency in the process of awarding contracts with effect from 8 February 2008. The Integrity Pact has now become a part of tender documents to be signed by the Company and by the vendor (s) / bidder (s) with a value of Rs.100 Million and above.

8. COMPLIANCE WITH THE RTI ACT, 2005 Air India Limited, as a PSU Organisation with large public interface, has successfully ensured

55 AIR INDIA

compliance with the provisions of Right to Information Act for providing information to the citizens.

As required by the RTI Act, information has been displayed on the Company’s website for the public at large. Air India has decentralized its structure to deal with the applications / appeals received under RTI Act with effect from 9 January 2015. Presently, Air India has 85 Central Public Information Officers (CPIOs), 75 Central Assistant Public Information Officers (CAPIOs) at outstations and 24 First Appellate Authorities (FAAs) for speedy disposal of applications / appeals.

During 2018-19, 1461 cases of RTI Requests and 234 Appeals were received.

Out of 234 Appeals, 232 were disposed off by the First Appellate Authorities.

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CODE OF CONDUCT

DECLARATION

I hereby declare that all the Board Members & Senior Management Personnel have affirmed compliance with the Code of Conduct as adopted by the Board of Directors for the year ended 31 March 2019.

Sd/- (Ashwani Lohani) Chairman & Managing Director Air India Limited Place: New Delhi Date: 30 December 2019

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ANNUAL STATEMENT SHOWING REPRESENTATION OF THE PERSONS WITH DISABILITIES IN SERVICE AS ON 1 JANUARY 2019 AND DIRECT RECRUITMENT / PROMOTION DURING THE CALENDAR YEAR 2019 NAME: AIR INDIA LIMITED

Representation of Number of Appointments made during the Calendar Year VH/HH/OH as on 2018 1.1.2019

By Direct By Promotion - By Recruitment-2018 2018 Deputation-2018 Group Total VH HH OH Total VH HH OH Total VH HH OH Total VH HH OH “A” 5688 3 1 26 152 - - - 8 ------“B” 2447 3 2 12 - - - - 1 ------“C” 61 - - 1 31 ------“D” 2015 10 9 19 01 ------Total 10211 16 12 58 184 - - - 9 ------

Notes i. VH stands for Visually Handicapped (persons suffering from blindness or low vision) ii. HH stands for Hearing Handicapped (persons suffering from hearing impairment) iii. OH stands for Orthopedically Handicapped (persons suffering from loco motor disability or cerebral palsy)

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SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st March, 2019 [Pursuant to section 204(1) of the Companies Act, 2013 and rule no.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014] To, The Members, Air India Limited,

I have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Air India Limited (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 verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has during the audit period covering the financial year ended on 31st March, 2019 generally complied with the statutory provisions listed hereunder and also that the Company has proper Board process and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: I have examined the books, papers, minute books, forms and returns filed and other records made available to me and maintained by the Air India Limited for the financial year ended on 31st March, 2019 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder subject to the following observations:

(a) Debenture Reserves as required under Section 71(4) of the Companies Act, 2013 is not created in absence of profit. (b) Publishing of book closure/record date declared for payment of interest of debentures under Section 91 of the Companies Act,2013 (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye laws framed thereunder;

(iv) 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 borrowing; As confirmed by the Management, the Company does not have Foreign Direct Investment and Overseas Direct Investment.

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) :- 59 AIR INDIA

a) The Securities and Exchange Board of India (Issue and Listing of Debts Securities) Regulations, 2008; b) Chapter V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has issued three series of Debentures and the same are listed with the BSE Ltd. and the National Stock Exchange of India Ltd. I report that the Company has not substantially complied with regulations under SEBI (LODR) Regulations, 2015 except filing of annual report with the stock exchanges. I report that during the year under review there was no action/event in pursuance of – a) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; b) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; c) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; d) The Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998; e) The Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and/or SEBI (Share Based Employee Benefits) Regulations, 2014; f) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2009; and g) The Securities and Exchange Board of India (Registrar to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with the client. (vi) Following are the Acts / Guidelines specifically applicable to the Company:

Aircraft Act, 1934 Carriage by Air Act,1972 Tokyo Convention Act,1975 Anti-Hijacking Act, 1982 Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982 Civil Aviation Requirements issued by Director General of Civil Aviation (DGCA)

Based on the explanation given and representation made by the management, I report that Director General of Civil Aviation (DGCA) has issued Civil Aviation Requirements under Section 4 of the Aircraft Act, 1934 read with Rule 133A of Aircraft Rules, 1937 and the Company is required to

60 AIR INDIA comply with 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 procedure. As per explanation and representation made by the management, DGCA has issued a circular dated 21.12.2011 in connection with regulatory audit policy and programme, under which regulatory audits are being carried out with an aim to ascertain the internal control of the 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 the audit team of DGCA as per the audit programme and audit procedure as prescribed under regulatory audit policy of DGCA. The Joint Director General of Civil Aviation nominated by the DGCA is responsible for all regulatory audits and inspections and is normally the Convening Authority. Regulatory Audits are conducted for the grant of approvals for Initial Certification, Additional Approval, Routine Conformance and Special Purpose Audit pursuant to the Aircraft Act,1934. The DGCA or any other officer specially empowered in his behalf by the Central Government performs the safety oversight functions in respect of matters specified in this Act or the Rules made thereunder. I further report that based on the information, explanation and representation made by the management, the Company is generally regular in compliance of the aforesaid laws and the compliance by the Company of such aviation laws being the subject of review by DGCA and other designated professionals/authorities, I have not reviewed the same in this audit. I have also examined compliance with the applicable clauses of the following: a) Secretarial Standards with regard to Meeting of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of the Company Secretaries of India; b) Chapter V of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company has issued three series of Debentures and the same are listed with the BSE Ltd. and the National Stock Exchange of India Ltd. I report that the Company has not substantially complied with regulations under SEBI (LODR) Regulations, 2015 except filing of annual report with the stock exchanges. c) Guideline on Corporate Governance for Central Public Sector Enterprises, 2010 as issued by the Ministry of Heavy Industries and Public Enterprises, Government of India.

I report the following observations based on the aforesaid Guidelines on Corporate Governance:

(a) Further, as per Clause 4.4. of the DPE Guidelines, the Audit Committee is required to meet four times in a year and not more than four months should elapse between the two meetings. It is observed that the first meeting of the Audit Committee in the financial year under review was held on 25/04/2018 and subsequent meeting was held on 02/11/2018; thereby leading a gap of six months. I report that during the year under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines and Standards mentioned above subject to the observations made thereunder. 61 AIR INDIA

I further report that –

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the year 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, agenda and detailed proposal on agenda were sent in advance duly complying with the time limits specified and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. As per the minutes of the meeting duly recorded and signed by the Chairman, the decisions of the Board were unanimous. I further report that based on the information provided by the Company, in my opinion adequate systems and processes and control mechanism exists commensurate with the size and operation of the Company to monitor and ensure compliance with applicable general laws, rules, regulations and guidelines. However, compliance management system needs further strengthening by taking the following actions: a) To designate a senior employee as Compliance Officer; b) To establish and maintain effective co-ordination of functional units with compliance officer; c) Present quarterly compliance report to the Board. d) Maintain a compliance check list and establish mechanism to detect the non-compliance. e) Maintain a register of complaints/show cause notices received from various authorities. f) Place before the Board details of legal cases filed by and against the Company and its status. I further report that the compliance by the Company of applicable financial laws like direct and indirect tax laws has not been reviewed in this audit since the same has been subject to review by statutory financial audit and other designated professionals. I further report that during the audit period the Company issued and allotted 397,50,00,000 Equity Shares of Rs.10/- each to Government of India on rights basis. There was no other specific event/ action in pursuance of the above referred laws, rules, regulations, standards, guidelines, etc. referred to above, having major bearing on the Company’s affairs. Sd/- (U.C. SHUKLA) COMPANY SECRETARY FCS: 2727/CP: 1654 Place: Mumbai Date: 30 September 2019 Note: 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 Air India Limited Airlines House, 113, Gurudwara Rakabganj Road New Delhi 110 001 My report of even date is to be read with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the Corporation. My responsibility is to express an opinion on these secretarial records based on my audit.

2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on the test basis to ensure that correct facts are reflected in secretarial records. I believe that the process and practices, I followed, provide reasonable basis for my opinion.

3. I have not verified the correctness and appropriateness of financial records and booksof accounts of the Corporation.

4. Wherever required, I have obtained the management representation about the compliance of the laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws, rules, regulations and standards is the responsibility of the management. My examination was limited to the verification of procedure on test basis.

6. The secretarial audit report is neither an assurance as to future viability of the Corporation nor of the efficacy or effectiveness with which the management has conducted the affairs of the Corporation.

Sd/- (U.C. SHUKLA) COMPANY SECRETARY FCS: 2727/CP: 1654 Place: Mumbai Date: 30 September 2019

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Management's Reply on the observations contained in the Secretarial Audit Report (a) Debenture Reserve Debenture Reserves as required under Section 71(4) of the Companies Act, 2013 is not created in absence of profit.

management's Comments

Debenture Redemption Reserve, as required under Section 71(4) of the Companies Act, 2013, has not been created in view of the absence of any profits earned by the Company.

(b) Publishing of book closure/record date declared for payment of interest of debentures under Section 91 of the Companies Act, 2013.

management's Comments

Noted. The efforts are being made to comply the regulations under SEBI (LODR) Regulations, 2015 in future.

(c) Chapter V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Management's Comments

Noted. The efforts are being made to comply the regulations under SEBI (LODR) Regulations, 2015 in future.

(d) Audit Committee Meetings

Further, as per Clause 4.4. of the DPE Guidelines, the Audit Committee is required to meet four times in a year and not more than four months should elapse between the two meetings. It is observed that the first meeting of the Audit Committee in the financial year under review was held on 25/04/2018 and subsequent meeting was held on 02/11/2018; thereby leading a gap of six months.

management's Comments

This is not a requirement under Companies Act, 2013. However, the DPE guidelines have not been modified as per the new act.The Company will endeavor to hold Audit Meeting as per DPE guidelines till such time they are amended as per Companies Act.

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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 AIR INDIA LIMITED FOR THE YEAR ENDED 31 MARCH 2019

The preparation of financial statements of AIR INDIA LIMITED for the year ended 31 March 2019 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of the India under section 139(5) of the Act are responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in accordance with the 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 22 October 2019. I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements ofAIR INDIA LIMITED for the year ended 31 March 2019 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 auditors and is limited primarily to inquiries of the statutory auditors 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 significant 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 financial statements and the related audit report. A. Comments on Profitability Statement of Profit and Loss A.1. Expenses Finance Cost (Note no. 23) Rs. 47113 Million The above includes and amount of Rs. 1269.6 million towards interest on delayed payment payable to DIAL1 on estimation basis for the period April 2014 to March 2019. However, the actual expenses on the non-aeronautical revenue (which includes interest income) will be trued-up by AERA at the time of Tariff determination in the third control period. 1indicates Delhi International Airport Limited. B.1. Comments on Disclosure Assets held for sale (Note no. 32) The above note is deficient as no proper disclosure is given regarding three properties which were identified to be returned back to the allotting authority against the refund of the amount deposited and as such are not available for sale C.1. General Training cost from the Pilots including Cadet Pilots who had joined on or after April 2008 has not been shown as recoverable in the accounts. As per the practice, the Company incurs expenditure amounting to Rs 2.5 million on the training of a Pilot, which is to be recovered in 84 monthly instalments from date of induction as First Officer. In Northern Region, the Company has started the

65 AIR INDIA recovery on this account from 16 Pilots in the year 2019-20. However, this need to be reviewed for the Company as a whole and accordingly accounted for.

For and on behalf of the Comptroller and Auditor General of India

Sd/- (Prachi Pandey) Principal Director of Commercial Audit & Ex-officio Member, Audit Board-1, New Delhi

Place: New Delhi Dated: 23 December 2019

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management Replies to the comments of the Comptroller and Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the Standalone Financial Statements of Air India Limited for the year ended 31st March 2019 Government Audit Query Management Reply A COMMENTS ON PROFITABILITY A.1. Expenses Finance Cost (Note No 23) Rs 47113 million In this regard the following is stated: The above includes an amount of Rs 1269.6 In the Operations Management and million towards interest on delayed payment Development Agreement (OMDA), the payable to DIAL on estimation basis for the Implementation Overseeing Committee period April 2014 to March 2019. However, (OIOC) Meeting held on 03.04.2013, a the actual expenses on the non-aeronautical decision was taken that Air India should revenue (which includes interest income) pay interest to DIAL to off-set cost of loans will be trued up by AERA at the time of tariff borrowed by it to meet its working capital determination in the third control period. requirements due to non-payment by AIL. Subsequently, MoCA has conveyed in various meetings that the interest on the total outstanding amount would be paid by AI to DIAL, as per the actual interest rate at which DIAL has borrowed from banks on year to year basis. Accordingly, the interest claims submitted by DIAL has been duly verified by the independent Chartered Accountants firm, based on their verification interest has been booked in the books of accounts. Further, reference is also invited to Para No. 17.121 of AERA Order No 40/2015- 16, vide which AERA has mentioned that it has decided to consider the interest on the working capital loan as an operating expense, it has also been stated that based on the documentary evidences submitted by DIAL on account of these categories, the Authority will provide a true up at the time of tariff determination for the third control period. In Para No. 19.36, AERA has also stated that “as the Authority has pointed out the realized no-aeronautical revenue in the past few years does not exhibit a clear trend, a true-up will be provided for the non-

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aeronautical revenues based on the actual realized non-aeronautical revenues, at the time of tariff determination in the third control period. Due disclosure on this issue in respect of Contingent Asset has been disclosed in the Notes to Accounts. B.1 Comments on Disclosure Assets held for Sale (Note No 32) The above note is deficient as no proper All assets whether monetized or to be disclosure is given regarding three properties returned back to the allotting authority are which were indentified to be returned back to removed from the FAR & parked in “Assets the allotting authority against the refund of the held for Sale”. This is only an adjustment amount deposited as such are not available account & credit to the account will be given for sale. at the time of monetization or returning back of the property.

C.1. General Training Cost from the Pilots including Cadet Prior to merger, both the erstwhile airlines Pilots who had joined on or after April 2008 had different policies of recovery of training has not been shown as recoverable in the costs. Whereas erstwhile Air India there accounts. As per practice, the Company incurs was no system of recovery of training costs, expenditure amounting to Rs 2.5 million on the erstwhile Indian Airlines had the policy of training of a Pilot, which is to be recovered in 84 recovery of training costs from pilots. monthly instalments from date of induction as First Officer. In Northern Region, the Company Consequent upon the merger, in order to has started the recovery on this account from have a uniform policy in this regard, Air 16 Pilots in the year 2019-20. However, this India decided to implement the policy in need to be reviewed for the Company as a 2011 for the recovery of training costs from whole and accordingly, accounted for. pilots. Accordingly, the recovery process was initiated. However, in respect of the cases pointed out in the audit observation, the action in respect of all these cases shall be taken in FY 2019-20. In this regard it is submitted that with the initiation of SAP Accounting, the process of recovery of training fees from pilots has improved a lot, but an overall review will be undertaken to further strengthen the internal control on the procedure being followed in this regard.

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INDEPENDENT AUDITOR’S REPORT

To the Members of Air India Limited REPORT ON THE AUDIT OF STANDALONE FINANCIAL STATEMENTS Qualified Opinion We have audited the standalone financial statements of Air India Limited (“the Company”), which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as Standalone Financial Statements) In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid Standalone Financial Statements give the information (other than certain information mentioned in Para (g) of Emphasis of Matter), required by the Companies Act, 2013, 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 31st March, 2019, its loss (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion 1. Adjustments on account of reduction in fair value, if any, in the carrying value of Investments in three Subsidiary Companies classified as Assets held for Sale, namely, Hotel Corpora- tion of India Limited, Airline Allied Services Limited and Air India Engineering Services Lim- ited (Carrying Value of Investments aggregating to Rs. 6,795.2 million), which have incurred losses during the current and previous years and net-worth of which have fully eroded, have not been determined and provided in the accounts as required by Ind AS 105. 2. Non- reconciliation/non-confirmation of certain receivables, payables (including certain staff related accounts and suspense / control accounts), inventory lying with third parties, certain bank accounts/ Loans including direct confirmation for certain cases and statutory dues. Re- fer Note No.36 & 37. The impact of the above qualifications on the Standalone Financial Statements, if any, is not ascertainable. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

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Material Uncertainty in relation to Going Concern The Company has incurred a net loss of Rs. 84,748.0 Million during the year ended March 31, 2019 and, as of that date, the Company’s current liabilities exceeded its current assets by Rs. 6,52,458.7 Million and it has accumulated losses of Rs. 6,26,936.3 Million which has resulted in complete erosion of the net worth of the company. In spite of these events or conditions which may cast a doubt on the ability of the company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the continued support of the Government of India and having regard to the other facts mentioned in Note No.54. Our opinion is not modified in respect of this matter.

Emphasis of Matter We draw attention to; a. Note No. 26 A(a) regarding non provision of interest claims from airport operators amounting to Rs. 988.6 Million and Note No. 26A(b) regarding non-provision of penal charges on delayed payment of Guarantee Fee amounting to Rs. 17,470.4 Million, for reasons stated therein; b. i. Note No. 50 regarding Deferred Tax Asset of Rs. 28,425.2 Million carried in the accounts in view of the reasons stated therein, the realisation of which would depend on generation of sufficient profits in the future as anticipated / projected by the management; ii. Note No.50 (d) regarding the effect of change in tax rate subsequent to the Balance Sheet date, vide amendments in the Income Tax Act, 1961 and the Finance (No.2) Act 2019, through Taxation Law (Amendment) Ordinance 2019, on the carrying value of deferred tax asset (Net) as disclosed therein. c. Note No. 47 regarding the management’s opinion that there is no decline in the carrying value of investment in a Subsidiary – Air India Express Limited (Carrying Value of Investments aggregating to Rs. 7,800.0 million) and advances of Rs 10,586.1 Million to the said subsidiary company and interest accrued thereon amounting to Rs 924.3 Million even though the net-worth is fully eroded, for the reasons stated therein. d. Note No.29(ix) read with Note No.47 regarding realisability of advances to subsidiary companies including interest accrued thereon amounting to Rs 36,915.7 Million classified as ‘Asset Held for Sale’ as the same is being transferred at carrying value. e. Note No. 35 regarding non-application of Appendix B to Ind AS 21- “The effect of changes in Foreign Exchange rates” in respect of advances received or paid in foreign currency. f. Note No.29 regarding; i. classification of loans identified for transfer to Air India Assets Holding Limited(AIAHL) as current liability; ii. accounting for reimbursement of Rs 13,000.0 Million for the period from 1st October 2018 to 31st March 2019 by AIAHL towards interest costs paid by the Company on the identified loans, as a reduction from finance cost ; iii. no effect being given for certain receivables/transactions with AIAHL pending final reconciliation; iv. classification of certain identified properties as Asset held for sale/ Investment property; and v. classification of investment in subsidiaries along with receivables and payables of the

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subsidiaries as Assets held for sale. g. Non-Disclosure of certain information in the standalone financial statements as required by Schedule-III of the Companies Act, 2013, and Indian Accounting Standards (Ind AS): (i) Terms of repayment, nature of Security separately for each case of borrowings and period & amount of continuing default in respect of borrowings and interest thereon in respect of each borrowing - Refer Note No.13.2 & 18 (ii) Foreign Currency Fluctuation under Finance Cost- Refer Note No. 23(a) (iii) Information regarding dues/payments/interest to Micro & Small Enterprises, if any, included in Trade Payable- Refer Note No 52 (iv) Fair Value of Investment Properties as required in Ind AS 40- Investment property - Refer Note no. 30 (d) Our Opinion is not modified in respect of above matters

Key Audit Matters Key audit matters are those matters that in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion and Material Uncertainty in relation to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters Principal audit procedures performed Investment in a subsidiary and advance We have obtained an understanding of recoverable from said subsidiary management’s processes with regard to The company has investment in subsidiary, identifying existence and testing the impairment namely Air India Express Limited amounting to in the value of investment, advance to the Rs 7,800.0 Million and has also made advance subsidiary and guarantee to the subsidiary. of Rs 10,586.1 Million to said subsidiary and We have also obtained and verified the latest interest accrued thereon Rs 924.3 Million. financial statements of the subsidiary regarding Further, the company has also given guarantees the present level of operations and profitability of Rs 8,011.9 Million in respect of loans availed of the subsidiary. by them. There is a risk of impairment in carrying We have also relied on management’s estimate value of unquoted equity instruments in said of future operations, which has been described subsidiary, in recoverability of advance including in Note No. 47. interest to the said subsidiary and guarantee given to subsidiary carrying accumulated losses which may be considered significant having regard to the financial position of the subsidiary. Refer Para (c) in Emphasis of Matter

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Key Audit Matters Principal audit procedures performed Depreciation and impairment of Property, We have reviewed the judgments and Plant & Equipment, Investment Properties methodology applied by management including and Intangible assets the nature of underlying costs capitalized, The management uses estimates to assess determination of realizable value of the assets useful life of various items of Property, Plant & retired from active use, technical assessment Equipment, Investment Properties and Intangible conducted in assessing the useful life of assets, Assets including in the application of component considered the applicable rates prescribed in accounting, recognition of early retirement Schedule II of the Companies Act, 2013, and from use, etc. which have a significant impact evaluated the system followed for periodic on the accounts. The company also assesses review. whether an impairment indication exists and We have broadly reviewed the Company’s performs impairment test in respect of Property, impairment assessment process and workings Plant & Equipment, Investment Properties, and of property, plant & equipment and intangible Intangible Assets wherever such indications assets including technical assessment of the exist, which involve management’s judgment of management, key assumptions and judgement various factors including future growth rate etc. used to determine the impairment and future Refer Note 55 cash flows, discount rates applied etc. Provision for Re-delivery of Aircraft The company has contractually undertaken to We have tested the management’s controls return leased aircrafts taken under operating over estimating and recognising provisions for leases to the lessors in a condition agreed at the re-delivery expenditure of aircraft held under inception of each lease. Management estimates operating leases and conducted procedures the costs required to re-deliver the aircrafts in relating to the provisioning including evaluating prescribed condition based on several factors key assumptions and judgements adopted by including aircraft utilisation, expected cost of management. maintenance, estimated lifespans of parts etc. Refer Note 46 Leases and incentives The determination of the lease classification, In view of the significance of the matter we fair value in case of Sale and Lease Back applied the following audit procedures in transactions and recording of related incentives this area, among others to obtain sufficient is considered as a complex accounting matter appropriate audit evidence: and involves significant management’s judgments. Accordingly, the classification of • reviewed the key terms of leasing and leases, accounting of incentives and determining evaluated management judgement used in fair value is regarded as a key audit matter. determination of classification of leases. The Company operates aircrafts under both • performed test of details to verify classification finance and operating lease arrangements. In of leases and related incentives and traced determining the appropriate lease classification, the same to credit notes and other underlying Ind AS 17 - “Leases” is applied by the Company contracts / documents.

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Key Audit Matters Principal audit procedures performed and the substance of the transaction is considered rather than just the legal form. The Company receives certain Manufacturer’s credit entitlements (cash & non-cash incentives) which are non-refundable incentives and 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. Refer Note 45 Assets held for sale (Other than Investments in subsidiaries held for sale) The company has classified assets earmarked We have verified the procedures in relation to for disposal as assets held for sale, including as management’s classification and valuation of part of the disinvestment process in progress. assets held for sale including assessing the Management has estimated the fair value of methodologies used and the appropriateness such assets having regard to various critical of the key assumptions, checking the accuracy factors including market rates. thereof on a sample basis etc.

Refer Note No. 28 & 32 and Para (d) of Emphasis of Matter Recognition of revenue from transportation services We have identified revenue recognition as a key We have reviewed the internal controls in audit matter because passenger revenue is one the company for capturing and recognition of the key performance indicator, significance of of revenue and the reconciliations of revenue passenger revenue to the financial statements, between the reports generated by the complexity of the underlying IT systems of outsourced service provider and accounting of outsourced service provider and the judgment revenue in ERP system of the company. required by management in determining the We have conducted requisite procedures on revenue from Forward sales and Loyalty revenue on a test check of selected samples Programme. and scrutinised relevant records and journals to assess the timing and values of revenues The company extensively uses the services of recorded. outsourced service provider for measurement and recognition of revenue, which carries an In addition, we have performed cut-off tests in inherent risk around the accuracy of revenue order to verify whether the timing of passenger recorded given the complexity of operations and revenue recognition is in line with company’s underlying IT Systems. policy.

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Key Audit Matters Principal audit procedures performed

The company recognises revenue from We obtained the latest available assurance passenger and cargo sales on flown basis i.e, report on service organisation controls and when the service is provided. The Company bridge letter from outsourced service provider recognises revenue from unexercised rights on effectiveness of controls confirming no i.e. forward sales of customers which are non- significant changes to the control environment refundable in nature, based on past trends in and controls relating to revenue accounting and proportion to the pattern of rights exercised by General IT controls. the customer. With regard to forward sales, we have The company has a Frequent Flyer Programme considered the consistency and continuity of as per which, passengers earn miles which can the methods used to determine the amount of be redeemed as per the policy of the company. revenue to be recognised from Forward Sales. The portion of unearned revenue attributable to miles earned are recognised on the statement We reviewed the assumptions used to of financial position as deferred revenue, after estimate the number of miles as per Frequent taking into account the expected utilisation of Flyer Programme that will expire without use, the miles. including analysing historical expiry pattern. Revenue is subsequently recognised when We also reviewed the assumptions used in eligible passengers fly. determination of fair value of the unredeemed miles. Significant judgement is required in the following Refer to para (i) & (ii) in our report on Internal aspects: Financial Controls (Annexure B) • The number of miles that will expire without use – The Company relies on historical expiry pattern in determining these estimates; and • The determination of the fair value of frequent flyer miles – The Company relies on historical redemption patterns, weighted for the various geographic regions and booking classes in determining the fair value. Refer Note.59 Provisions and Contingent Liabilities and Evaluation of uncertain tax positions There are material claims against the company We have obtained details of key claims against and uncertain tax/duty positions which are under the company, completed tax assessments and various stages of dispute, involving significant demands and tax/duty positions. judgment to determine the possible outcome of these disputes. We reviewed status of disputes and representation taken from the management, Refer Note.26 and para (a) of Emphasis of discussed with appropriate senior management Matter. and evaluated the management’s underlying key assumptions.

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Key Audit Matters Principal audit procedures performed We assessed management’s estimate of the possible outcome of the disputed cases in evaluating management’s position on these uncertain claims and tax positions and assessed the appropriate disclosures in the financials. Deferred Tax Assets The company has carried deferred tax assets Our procedures include obtaining an recognised on depreciation in an earlier year understanding of the process and the controls which is based on the likelihood of future taxable over preparation of profit forecast. We reviewed income available for set off the inputs and assumptions used in the forecast, including Revival Plan for Operational The recognition of deferred tax asset, involves & Financial Efficiency formulated by the Govt of judgement regarding the likelihood of realisation India. We verified the disclosures for deferred of these assets in particular whether there will tax asset balance including those related to be sufficient taxable profits in future periods that significant accounting estimate and judgements. support the recognition of these assets. Given the degree of judgement involved in considering these deferred tax assets as recoverable or otherwise, we consider this to be a key audit matter. Refer para (b) (i) of Emphasis of Matter Refer Note. 50 Inventory The company carries inventory of materials, We have evaluated the systems and processes spare parts etc across various locations centres for recording and valuation of inventory, tested and correct measurement of inventory involves a sample of key controls and comparison of net making a proper assessment of the lower of realizable prices. net realisable value over cost and assessment We have obtained an understanding of the of write down necessary on account of company’s policy on control for identification obsolescence etc and provision of non-moving inventory based Refer Note No.39 on age-wise analysis and tested the same on a sample basis. Refer para (i), (ii) (iii), (v) & (ix) in our report on Internal Financial Controls (Annexure B) Provision for receivables The company is carrying significant balances We have obtained a list of outstanding as trade receivables including amounts receivables, test checked the ageing of trade outstanding from earlier accounting periods. receivables generated from SAP at year end on The management makes an estimate of the a sample basis and reviewed Expected credit recoverability of individual debtor with reference loss model used in determining the provision to the aging profile, historical payment pattern requirement.

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Key Audit Matters Principal audit procedures performed and the past record of the customer and makes We have reviewed the controls, systems and provision against the same with reference to the processes applied by the management to ensure recoverable amount. proper recognition of provision for receivables. Refer para (v) in our report on Internal Financial Controls (Annexure B) Accounting & disclosure for proposed disinvestment Govt. of India has given approval for We have reviewed the relevant minutes of strategic disinvestment of the Air India and its meeting of Board of Air India Limited as well as subsidiaries. Accordingly, Strategic Revival Plan of the committees formed for disinvestment and for Operational & Financial Efficiency in Air India other relevant records made available to us in was formulated as per which certain portion this regard. of debt along with certain assets, including We have verified the transactions which have investments in three subsidiary companies and taken place till 31st March 2019 with the SPV and advances given to them, were decided to be held discussions with the senior management of transferred to an Special Purpose Vehicle (SPV) the Air India in order to obtain an understanding formed for the proposed disinvestment. of the present position of the various decision taken for the same. Necessary adjustments/ disclosures are made We have reviewed the disclosure made in the in the financial Statements of Air India Limited financial statements in this regard. based on the present decisions and further adjustments would be made after finalization of the same. Refer Note No.28, Note No.29 and para(f) of Emphasis of Matter.

Information Other than the Standalone Financial Statements and Auditor’s Report thereon The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Directors’ Report, Management Discussion and Analysis Report and Report on Corporate Governance but does not include the standalone financial statements and our auditor’s report thereon. These reports are expected to be made available to us after the date of this auditor’s report. Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the reports containing the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements 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 standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Com- pany to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable 2. 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 purposes of our audit except as stated in Basis for Qualified Opinion and Para no. (g) of Emphasis of Matters section.

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(b) Except for the possible effects of the matters described in the Basis of Qualified opinion section above, 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us. (c) With respect to those foreign stations not visited by us, we have relied upon the summary reports made available to us for the verification of transactions related to major foreign stations, which have been properly dealt by us in preparing this report. (d) The Balance Sheet, Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account. (e) Except for the effects of the matter described in para No -1 of Basis for Qualified Opinion and para (e) & (g) Emphasis of Matter Section above, in our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder; (f) The matters described under Material Uncertainty in relation to Going Concern and Basis of Qualified Opinion section above, may, in our opinion have an adverse effect on the functioning of the Company; (g) We have been informed that the provisions of Section 164(2) of the Act in respect of disqualification of directors are not applicable to the Company, being a Government Company in terms of notification no. G.S.R.463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs (MCA), Government of India; (h) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section above; (i) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting. (j) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended, we report that, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015 provisions of section 197 of the Act are not applicable to the company. (k) 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 of pending litigations on its financial position in its standalone financial statements - Refer Note No. 26 to the standalone financial statements; ii. The Company has made provisions, as required under the applicable laws or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts that have been entered into by the Company; iii. there were no amounts which were required to be transferred to the Investor Educa- 79 AIR INDIA

tion and Protection Fund by the Company. 3. We are enclosing our report in terms of Section 143 (5) of the Act, on the directions / sub-directions issued by the Comptroller and Auditor General of India, 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 Annexure- C.

For and on Behalf of For and on Behalf of For and on Behalf of Jagdish Chand & Co. Khandelwal Jain & Co Varma & Varma Chartered Accountants Chartered Accountants Chartered Accountants FRN: 000129N FRN: 105049W FRN: 004532S

Sd/- Sd/- Sd/- Praveen Kumar Jain narendra Jain P R Prasanna Varma Partner Partner Partner M No.085629 M No.048725 M No.025854 UDIN 19085629AAAAAV3114 UDIN 19048725AAAABV2389 UDIN 19025854AAAABS9910

Place : New Delhi Place : New Delhi Place : Chennai Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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ANNEXURE ‘A’ to independent auditors’ report on “OTHER LEGAL AND REGULATORY REQUIREMENTS”

(i) a. The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets except in case of certain items which are carried in the fixed asset register on block level as one line item, in respect of which full particulars, including quantitative details and situation of such assets have not been updated. b. The Company has a programme of verification of fixed assets as per which the verification of all major assets is conducted annually, and the verification of other assets are covered over a biennial period which, in our opinion, is reasonable having regard to the size of the Company and the nature of its Assets. Accordingly, as per the information and explanations furnished to us, physical verification of major items of fixed assets has been conducted by the Management during the year and no material discrepancies were noticed on such verification. Fixed assets, which are carried on block level as one line item, physical verification reconciliation has not been done during the year. In respect of other items of fixed assets, physical verification for 2016-18 biennial period has been completed, although pending reconciliation no effect has been given in respect of discrepancies noticed amounting to Rs 154.5 Million(net). Refer Note No.34(a) c. Based on our examination of the books and records of the company, the title/ lease deeds of immovable properties (included under Property, Plant and Equipment and As- sets held for Sale) are held in the name of the Company except to the extent mentioned below:[Refer note nos 30(a) and 32]

Sl No Type Area (Sq Mtrs) Net Block (Rs in Million) 1. Land & Building – Freehold 23,904 387.1 2. Land & Building – Leasehold 2,29,288 56,583.2 2,53,192 56,970.3

In respect of 8 other properties (area/ carrying value - not ascertainable) which have been explained to be mortgaged with banks and financial institutions for securing borrowings and loans, confirmation from the bank/ financial institution in relation to holding of title deed has not been furnished to us. (ii) According to the information and explanation given to us, the inventory has been physically verified by the management in phased manner (biennial) at reasonable intervals. Physical Veri- fication of Inventories for the biennial period 2016-18 has been carried out, except in respect of items lying with third parties amounting to Rs.255.0 Million (refer footnote to Note No. 8) The physical verification for biennial period 2018-20 is under progress. Refer Note No.34(b) (iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, during the year, to any companies, firms, limited liability partner- ships or other parties covered in register maintained under Section 189 of the Companies Act, 2013. In view of above, the clauses 3 (iii)(a), 3 (iii)(b) and 3 (iii)(c) of the Order are not appli- 81 AIR INDIA

cable. (iv) As per information and explanations given to us, Company has not granted any loans or given any guarantee and security covered under section 185 of the Companies Act 2013.Further, the Company is exempted from the provisions of section 186 as it is engaged in the business of providing infrastructure facilities as defined in Schedule-VI of the CompaniesAct’2013 (v) On the basis of the examination of the books of accounts, the Company has not accepted deposits under the provisions of Section 73 to 76 or any other provisions of Companies Act, 2013 and the Rules framed thereunder. (vi) The maintenance of cost records has not been prescribed by the Central Government of India under sub-section (1) of Section 148 of the Companies Act, 2013, in respect of the Company which falls under the category of Service Industry. (vii) a. According to the information and explanations given to us and on the basis of our examinations of the Books of Account, undisputed Statutory dues, including Provident Fund, Employees State Insurance Fund, duty of Custom, duty of Excise, Sales Tax, Value Add- ed Tax, TDS, Goods and Services Tax, Cess and any other material Statutory Dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been delays in a large number of cases. As per the information and explanations, and subject to the facts stated in Note No. 36(d), undisputed statutory liabilities outstanding for more than six months as on March 31, 2019 are as under;

Name of the Statute Nature of dues Rs in Million Period to which the amount relates Goods and Service Tax (GST) GST April 2018 upto Sep 217.1 2018 Goods and Service Tax (GST) Interest on GST FY 2017-18 to upto 324.7 Sep 2018 Finance Act, 1994 Interest on Service Tax FY 2012-13 to FY 633.2 2014-15 Income tax Act, 1961 Interest on TDS FY 2013-14 to upto 426.7 Sep 2018 Provident Fund Act PF Contribution Contract 51.47 October 2014 Labour Goods and Service Tax IGST (demand by Directorate of Revenue 471.4 September 2018 Intelligence) Goods and Service Tax Interest on IGST under July 2017 to custom (demand by September 2018 Directorate of Revenue 74.9 Intelligence)

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b. According to the information and explanations given to us and as per the books of accounts , there are no dues outstanding of Sales tax, Wealth Tax, Custom Duty, Excise Duty, Value Added Tax, Service Tax, Goods and Service tax and Cess which have not been deposited as on 31st March 2019 by the company, on account of any dispute, except for the following:

Sl Name of Statute Nature of dues Amounts Period to which Forum where No. Involved the amount disputed is pending (Rs. in relates (Financial Million) Year) 1 Indian Customs Custom Duty 41.1 2007-2016 Commissioner of Act, 1962 Central Excise & Customs 2 Indian Customs Custom Duty 24.3 1997-2004 Central Board of Act, 1962 Excise &Customs 3 Indian Customs Custom Duty 582.6 2002-2005 Commissioner of Act, 1962 Customs (Appeals) 4 Indian Customs Custom Duty 242.8 2000-2017 CESTAT Act, 1962 5 Indian Customs Custom Duty 3.1 2003-2004 CUSTOMS DEPT. Act, 1962 6 Indian Customs Custom Duty 14.4 2005-06 Supreme Court Act, 1962 7 Finance Act, Service Tax 6671.8 2003-2014 CESTAT 1994 8 Finance Act, Service Tax 7.2 2007-2018 Commissioner of 1994 Appeals 9 Finance Act, Service Tax 1223. 6 2007-08 and Commissioner of 1994 2010-11 Service Tax 10 Finance Act, Service Tax 2.8 2013-2015 Service tax Dept 1994 11 Finance Act, Service Tax 0.4 2017 Commissioner of 1994 Customs 12 Income Tax Act, Income Tax 117. 6 2012-2015 Deputy Commissioner 1961 of Income Tax 13 Income Tax Act, Income Tax 1122.8 2000-07 ITAT 1961 14 Value Added Tax VAT 127.3 2011-2016 Commercial Tax Office, Govt of Telangana 15 Value Added Tax VAT 0.5 2015-2016 Revisional Board, West Bengal

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Sl Name of Statute Nature of dues Amounts Period to which Forum where No. Involved the amount disputed is pending (Rs. in relates (Financial Million) Year) 16 Other Statutes Property Tax, 486.8 2000-2018 Concerned Dept. Octroi & Entry Tax

(viii) According to the information and explanations given to us, the Company has delayed in repayment of dues to Financial Institutions/ Banks/ Government and there is an overdue Interest of Rs 1,981.0 Million outstanding for payment as at the year-end [Refer foot notes to Note No.15]. The period and amount of default including lender wise details for the same has not been provided to us in view of the fact stated in the foot note to Note Nos 18 and Note 13.2 of the Standalone Financial Statements. (ix) The Company has not raised any money by way of initial public offer or further public offer (including debts instruments) and hence the application of such money for the specified purposes is not applicable. The Company has applied the Term Loans for the purpose for which the Loans were obtained. (x) During the course of our examination of the books and records of the company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud by the company or on the company by its officers or employees which has been, noticed or reported during the year, nor have we been informed of any such case by the management. (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 Notification no. G.S.R. 463 (E) dated 5th June 2015. (xii) The Company is not a Nidhi Company. Accordingly, the reporting requirements under clause 3(xii) of the Order are not applicable. (xiii) In our opinion and according to the information and explanations given to us, transactions with related parties are in compliance with sections 177 and 188 of the Companies Act, 2013, where applicable. The details of Related Party Transactions have been disclosed in the Stand- alone Financial Statements, as required by the applicable Ind AS; Refer Note No. 42. (xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review as such the clause is not applicable to the company. (xv) As per the records of the company and information and explanation provided to us, the company has not entered into any non-cash transactions with directors or persons connected with them and hence, the clause is not applicable. (xvi) According to the information and explanations given to us and the records of the Company examined by us, the company is not required to be registered under section 45-IA of the Re-

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serve Bank of India Act, 1934. Accordingly, the reporting requirement under clause 3(xvi) of the Order is not applicable.

Sd/- Sd/- Sd/- Praveen Kumar Jain narendra Jain P R Prasanna Varma Partner Partner Partner M No.085629 M No.048725 M No.025854 UDIN 19085629AAAAAV3114 UDIN 19048725AAAABV2389 UDIN 19025854AAAABS9910

Place : New Delhi Place : New Delhi Place : Chennai Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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ANNEXURE ‘b’ to independent auditors’ report on “OTHER LEGAL AND REGULATORY REQUIREMENTS”

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 financial controls over financial reporting of Air India Limited(“the Company”) as of March 31, 2019 in conjunction with our audit of the standalone financial statements 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 financial controls based on the internal control over financial 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 financial controls that were operating effectively for ensuring the orderly and efficient 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 financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility Our responsibility is to express an opinion on the Company’s internal financial controls over financial 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 financial controls over financial 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 financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Company’s internal financial controls system over financial reporting.

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Meaning of Internal Financial Controls over Financial Reporting A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial 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 financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified for the year ended March 31, 2019:

(i) The company did not have an effective interface between various functional software relating to Sales/Revenue and Inventory Management (for part of a year) with the accounting software resulting in accounting entries being made manually on periodical basis. (ii) The company did not have an appropriate internal control system for reconciliation of Control Accounts in relation to the Sales / Revenue, Inventory and Payroll. (iii) The Company did not have appropriate system to capture incidental cost such as freight, duty etc. in inventory system. (iv) The company did not have an appropriate internal control system for deduction, timely deposit and reconciliation of statutory dues. (v) The company did not have an appropriate internal control system for obtaining confirmation of balances on a periodic basis, ageing and reconciliation of unmatched Receivables, Payables, (including certain staff related accounts and suspense / control accounts), inventory lying with third parties, certain bank accounts and statutory dues. (vi) The company did not have an effective internal audit system commensurate with the size, nature and complexities of the business. (vii) The Company did not have an effective Information Systems Audit to evaluate and test

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the IT general controls, which may affect the completeness, accuracy and reliability of the reports generated from IT System. (viii) The company did not have an effective system for timely accounting of entries including delay in accounting of cash collection/disbursement, reversal of ineligible input tax credit of GST & approval thereof in IT System. (ix) The company did not have effective system for control over sale of scrap of inventory and accounting thereof. (x) The Company did not have an effective system for determining fair value of the Company’s investments in its subsidiaries carried as assets held for sale. A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively during the year ended March 31, 2019, based on the internal control over financial 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 identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company as at and for the year ended 31 March 2019, and these material weaknesses have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements. For and on Behalf of For and on Behalf of For and on Behalf of Jagdish Chand & Co. Khandelwal Jain & Co Varma & Varma Chartered Accountants Chartered Accountants Chartered Accountants FRN: 000129N FRN: 105049W FRN: 004532S

Sd/- Sd/- Sd/- Praveen Kumar Jain narendra Jain P R Prasanna Varma Partner Partner Partner M No.085629 M No.048725 M No.025854 UDIN 19085629AAAAAV3114 UDIN 19048725AAAABV2389 UDIN 19025854AAAABS9910 Place : New Delhi Place : New Delhi Place : Chennai Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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ANNEXURE ‘c’ to independent auditors’ report on “OTHER LEGAL AND REGULATORY REQUIREMENTS”

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Sl Directions under section 143(5) of Response No Companies Act 2013 2. Whether there is any restructuring of an exist- As per the information and explanation fur- ing loan or cases of waiver /write off of debts/ nished to us, there has been no case of re- loans/interest etc. made by a lender to the structuring of existing loan or waiver /write company due to the company’s inability to re- off of debts/loans/interest etc. made by a pay the loan? If yes, the financial impact may lender to the company during the year. be stated. However, as described in detail in Note.28 the company is in the process of implementing financial restructuring plan in line with the disinvestment proposal which is in progress, the effect of which on the loan balance and interest thereon is as stated therein. The financial impact of the same on the standalone financial statements is given in note 29(xiii). 3. Whether funds received/receivables for specif- To the best of our information, checks ap- ic schemes from Central/State agencies were plied by us during the course of our audit, properly accounted for/utilized as per its term we are of the opinion that funds received/ and condition? List the cases of deviation. receivable for specific schemes from Cen- tral/ State agencies were properly accounted for/ utilized as per its terms and conditions.

Sd/- Sd/- Sd/- Praveen Kumar Jain narendra Jain P R Prasanna Varma Partner Partner Partner M No.085629 M No.048725 M No.025854 UDIN 19085629AAAAAV3114 UDIN 19048725AAAABV2389 UDIN 19025854AAAABS9910

Place : New Delhi Place : New Delhi Place : Chennai Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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MANAGEMENT REPLIES TO THE INDEPENDENT AUDITORS’ REPORT ON THE STANDALONE FINANCIAL STATEMENTS OF AIR INDIA Limited FOR THE FINANCIAL YEAR 2018-19

AUDIT OBSERVATIONS MANAGEMENT COMMENTS Qualified Opinion We have audited the standalone financial statements of Air India Limited (“the Company”), which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as Standalone Financial Statements) In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid Standalone Financial Statements give the information (other than certain information mentioned in Para (g) of Emphasis of Matter), required by the Companies Act, 2013, 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 31st March, 2019, its loss (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date. Basis for Qualified Opinion 1. Adjustments on account of reduction in The company has already disclosed in Note fair value, if any, in the carrying value of No 47 that in the opinion of the Management Investments in three Subsidiary Companies there is no diminution in the carrying value of classified as Assets held for Sale, namely, the investments in Subsidiary Cos. Hotel Corporation of India Limited, Airline Allied Services Limited and Air India Engineering Services Limited 91 AIR INDIA

(Carrying Value of Investments aggregating Detailed write up on the current status of to Rs. 6,795.2 million), which have incurred both AASL and AIESL has been given in losses during the current and previous years the subject Note highlighting that these and net-worth of which have fully eroded, companies are steadily improving their have not been determined and provided in Financial and Operational performance over the accounts as required by Ind AS 105. the past few years. It is expected that both these companies will further consolidate their gains in future thus enabling AI to realize it’s investments made in these companies. 2. Non- reconciliation/non-confirmation of In this regard it may be noted that there is certain receivables, payables (including a steady and considerable improvement in certain staff related accounts and suspense this area as compared to previous years as / control accounts), inventory lying with can be seen from the following: third parties, certain bank accounts/ Loans a) All major Borrowings, Bank Balances including direct confirmation for certain cases have been confirmed and reconciled. and statutory dues. Refer Note No.36 & 37. b) In respect of Receivables/Payables, all major parties such as dues of Oil Companies, Airport Operators, Pax/ Cargo Receivables and dues for VVIP Charters are totally reconciled. These parties in fact constitute a major portion of the total Receivables and Payables of the company. c) Further, in respect of certain other Receivables/Payables such as Staff related accounts and unlinked debits/ credits lying in various such accounts, the company has during the year appointed an outside professional firm to carry out the Reconciliation of such accounts and the necessary accounting effect for the same will be given in the current FY 2019-20. The impact of the above qualifications on the Standalone Financial Statements, if any, is not ascertainable. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by 92 AIR INDIA the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Material Uncertainty in relation to Going The management has given detailed Concern disclosures in Note Nos 28, 29 and 54 regarding the position of Disinvestment of The Company has incurred a net loss of Rs. Air India and the Going Concern status of 84,748.0 Million during the year ended March the company. 31, 2019 and, as of that date, the Company’s current liabilities exceeded its current It is evident, from the details given that assets by Rs. 6,52,458.7 Million and it has as a part of the disinvestment process, accumulated losses of Rs. 6,26,936.3 Million the Government has taken a series of which has resulted in complete erosion of the measures to improve Air India’s Operational net worth of the company. In spite of these and Financial Efficiency and the same are events or conditions which may cast a doubt summarized below: on the ability of the company to continue as a going concern, the management is of the a) Transfer of Debt of Air India to AIAHL amounting to Rs 294,640.0 million opinion that going concern basis of accounting st is appropriate in view of the continued support effective 01 October, 2018 of the Government of India and having regard b) Transfer of non-core Assets, paintings to the other facts mentioned in Note No.54. and artefacts’ from AI to AIAHL Our opinion is not modified in respect of this c) Transfer of the investment in four matter. subsidiaries viz. AIATSL, AASL, AIESL, HCI to AIAHL along with any receivables or payables related to these subsidiaries d) Interest on the transferred debt to AIAHL will be borne by AIAHL effective 1st October 2018 and thereafter e) Provision of Rs 13,000.0 million for AIAHL for servicing the Interest for FY 2018- 19 and a further amount of Rs 26000.0 million for servicing the transferred debt of AI for FY 2019-20. f) Ministry of Finance has already issued the GoI approval for the raising of debt by AIAHL to refinance the transferred debt of AI amounting to Rs 294640.0 million.

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It can be seen from the above that in light of the financial support from the Govt of India and various measures taken by the company to improve the operational efficiencies, various revenue enhancing and cost control measures undertaken etc. the company expects substantial improvements in its operational and financial performance. In fact, in the first four months of the current FY 2019- 20 the company has posted an improved all round performance on all major parameters. In view of the above, the Accounts have been prepared on a ‘Going Concern’ basis. Emphasis of Matter a. We draw attention to ; The subject fact relating to the non- Note No. 26 A(a) regarding non provision acceptance of the interest claims received of interest claims from airport operators from GHIAL on account of delayed payments amounting to Rs. 988.6 Million and Note has already been duly disclosed in Note No No. 26A(b) regarding non-provision of penal 26 (A)(a). charges on delayed payment of Guarantee The Management has not accepted this Fee amounting to Rs. 17,470.4 Million, for claim of Rs 988.6 million from GHIAL as reasons stated therein; the same has still to be verified/reconciled. However, a Contingent Liability for the same has been disclosed in the books. It may, however, be stated that during the current year the Management has engaged the services of an outside Professional Firm for verifying these interest claims of GHIAL and necessary action shall be taken in the current year 2019-20 on the same after due verification. b. i. Note No. 50 regarding Deferred Tax The company has given the detailed status Asset of Rs. 28,425.2 Million carried of Deferred Tax in Note No 50. in the accounts in view of the reasons It may be noted that in view of the clarifications stated therein, the realisation of which given in Note No 54 regarding the Going would depend on generation of sufficient Concern status of AI, there is a reasonable profits in the future as anticipated / certainty that the company will be able to projected by the management; realize its DTA from future taxable profits. ii. Note No.50 (d) regarding the effect of change The same is evident from the following: in tax rate subsequent to the Balance Sheet date, vide amendments in the Income a) As per the approved Revival Plan, the Tax Act, 1961 and the Finance (No.2) Act Govt is giving further support to AI to 2019, through Taxation Law (Amendment) sustain/improve its operations. Ordinance 2019, on the carrying value of deferred tax asset (Net) as disclosed therein.

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b) There is a huge amount of unabsorbed depreciation amount available with the company against which the subject DTA has been recognized and these depreciation losses can be carried forward indefinitely in terms of the Income Tax Act provisions. c) As per the re-casted financial projections for the next five years of the company, the company shall be having substantial taxable profits with it to realize the Net Deferred Tax Assets of Rs 28425.2 million being shown in the books of the company. d) Moreover, the adoption of IND-AS from FY 2017-18 by AI, further provides an additional leverage to the company for carrying forward of DTA as from “virtual certainty” of realization of DTA against future taxable profits as per Indian GAAP, IND-AS now talks of only the reasonable probability of realization of DTA against future taxable profits. In view of the above, AI has decided to carry forward the DTA only to the extent of Rs 28,425.2 Million in its books of accounts as on 31st March 2019. c. Note No. 47 regarding the management’s Management is of the firm view that there is no opinion that there is no decline in the decline in the carrying value of investments carrying value of investment in a Subsidiary of Air India in Air India Express Ltd (AIXL). In – Air India Express Limited (Carrying Value fact, AIXL has been profitable over the past of Investments aggregating to Rs. 7,800.0 four years despite adverse market conditions million) and advances of Rs 10,586.1 Million prevalent in the aviation industry. It is the to the said subsidiary company and interest only airline in India to declare a Net Profit accrued thereon amounting to Rs 924.3 in FY 2018-19. It’s Net Worth is improving Million even though the net-worth is fully on a year to year basis and the future plans eroded, for the reasons stated therein. that the company has to further consolidate its performance, there is no reason for Air India to consider any erosion or decline in it’s investment in AIXL. A detailed disclosure regarding the viability of operations of AIXL in Note No 47 (a).

95 AIR INDIA d. Note No.29(ix) read with Note No.47 regarding As detailed in Note Nos 28 & 29, as per realisability of advances to subsidiary the Disinvestment Plan of Air India, at the companies including interest accrued thereon time of issuance of Preliminary Information amounting to Rs 36,915.7 Million classified Memorandum (PIM), all Receivables and as ‘Asset Held for Sale’ as the same is being Payables of these Sub Cos are eventually transferred at carrying value. going to be transferred to the entirely Govt owned SPV-AIAHL, hence affording a sure security for AIL for the realization of Investments/Receivables due from them to Air India Ltd. e. Note No. 35 regarding non-application of This fact has been duly disclosed in Para Appendix B to Ind AS 21- “The effect of changes No 35 (b). However, it may be noted that in Foreign Exchange rates” in respect of the impact on this account is not likely to be advances received or paid in foreign currency material. f. Note No.29 regarding; All details regarding the transactions with the SPV- AIAHL have been disclosed in Note No I classification of loans identified for transfer 28 and 29. to Air India Assets Holding Limited(AIAHL) as current liability;

II. accounting for reimbursement of Rs As stated, Rs 13000.0 million received 13,000.0 Million for the period from 1st from AIAHL is towards the reimbursement October 2018 to 31st March 2019 by of interest costs on the Loans of AI to be AIAHL towards interest costs paid by the transferred to the SPV. Accordingly, the Company on the identified loans, as a same has been reduced from the Finance reduction from finance cost ; Cost as the Rs 13000.0 million was received by AI for this purpose only. Hence, the correct III. no effect being given for certain receivables/ treatment has been given to this amount by transactions with AIAHL pending final AI in its books. reconciliation;

IV. classification of certain identified properties Further, it has also been clarified in the above as Asset held for sale/ Investment stated Notes that accounting effect to all the property; and transactions such as transfer of investment and their related Receivables/Payables etc. V. classification of investment in subsidiaries will be given when all issues regarding this along with receivables and payables of are finalized and approved by the Govt. the subsidiaries as Assets held for sale.

g. Non-Disclosure of certain information in the standalone financial statements as required by Schedule-III of the Companies Act, 2013, and Indian Accounting Standards (Ind AS):

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i) Terms of repayment, nature of Security This is a statement of fact. Due to the separately for each case of borrowings and confidential nature of the agreements period & amount of continuing default in entered into with the consortium of banks respect of borrowings and interest thereon wherein the terms of payments, rates of in respect of each borrowing - Refer Note interest, the nature of security has been No.13.2 & 18 clearly speci fied, it has not been disclosed. However, the same is available with the company, the important extracts of which are already disclosed in the accounts. ii) Foreign Currency Fluctuation under Finance As already stated in Note No 23(a), the Cost- Refer Note No. 23(a) exchange rate differences in the nature of interest cost on foreign currency borrowings has not been classified due to the complexity of transactions. iii) Information regarding dues / payments / A detailed Note has been given regarding interest to Micro & Small Enterprises, if any, MSME dues in Note No 52. It has already included in Trade Payable- Refer Note No 52 been stated that payments to such undertakings covered under the Micro Small and Medium Enterprises Development Act (to the extent identified) have been made within the prescribed time limit/date agreed upon with the supplier and hence, no interest is payable on delayed payments. In other cases, necessary compliance/disclosure will be ensured in due course. iv) Fair Value of Investment Properties as As stated in Note No 30 (d) under required in Ind AS 40- Investment property - disinvestment plan, monetization of the Refer Note no. 30 (d) identified properties is in the process, hence fair value of the investment properties could Our Opinion is not modified in respect of not be disclosed as a confidentiality measure. matters

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Key Audit Matters Principal audit procedures performed Investment in a subsidiary and advance recoverable from said subsidiary The company has investment in subsidiary, We have obtained an understanding of namely Air India Express Limited amounting management’s processes with regard to Rs 7,800.0 Million and has also made to identifying existence and testing the advance of Rs 10,586.1 Million to said impairment in the value of investment, subsidiary and interest accrued thereon Rs advance to the subsidiary and guarantee to 924.3 Million. Further, the company has also the subsidiary. given guarantees of Rs 8,011.9 Million in respect of loans availed by them. There is a risk of impairment in carrying value of unquoted We have also obtained and verified the equity instruments in said subsidiary, in latest financial statements of the subsidiary recoverability of advance including interest regarding the present level of operations and to the said subsidiary and guarantee given to profitability of the subsidiary. subsidiary carrying accumulated losses which may be considered significant having regard to the financial position of the subsidiary. We have also relied on management’s Refer Para (c) in Emphasis of Matter estimate of future operations, which has been described in Note No. 47.

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Depreciation and impairment of Property, Plant & Equipment, Investment Properties and Intangible assets The management uses estimates to assess We have reviewed the judgments and useful life of various items of Property, Plant methodology applied by management & Equipment, Investment Properties and including the nature of underlying costs Intangible Assets including in the application capitalized, determination of realizable value of component accounting, recognition of the assets retired from active use, technical of early retirement from use, etc. which assessment conducted in assessing the useful life of assets, considered the have a significant impact on the accounts. applicable rates prescribed in Schedule II of The company also assesses whether an the Companies Act, 2013, and evaluated the impairment indication exists and performs system followed for periodic review. impairment test in respect of Property, Plant & Equipment, Investment Properties, and We have broadly reviewed the Company’s Intangible Assets wherever such indications impairment assessment process and workings of property, plant & equipment exist, which involve management’s judgment and intangible assets including technical of various factors including future growth rate assessment of the management and etc. evaluated the key assumptions and judgement used to determine the impairment including future cash flows, discount rates applied etc.

Refer Note 55 Refer Note 55 Provision for Re-delivery of Aircraft The company has contractually undertaken to We have tested the management’s controls return leased aircrafts taken under operating over estimating and recognising provisions leases to the lessors in a condition agreed for re-delivery expenditure of aircraft held at the inception of each lease. Management under operating leases and conducted estimates the costs required to re-deliver the procedures relating to the provisioning aircrafts in prescribed condition based on including evaluating key assumptions and several factors including aircraft utilisation, judgements adopted by management. expected cost of maintenance, estimated lifespans of parts etc. Refer Note 46

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Leases and incentives The determination of the lease classification, In view of the significance of the matter we fair value in case of Sale and Lease Back applied the following audit procedures in transactions and recording of related this area, among others to obtain sufficient incentives is considered as a complex appropriate audit evidence: accounting matter and involves significant management’s judgments. Accordingly, • reviewed the key terms of leasing and the classification of leases, accounting of evaluated management judgement incentives and determining fair value is used in determination of classification of regarded as a key audit matter. leases. The Company operates aircrafts under both • performed test of details to verify finance and operating lease arrangements. classification of leases and related In determining the appropriate lease incentives and traced the same to credit classification, Ind AS 17 - “Leases” is applied notes and other underlying contracts / by the Company and the substance of the documents. transaction is considered rather than just the legal form. The Company receives certain Manufacturer’s credit entitlements (cash & non-cash incentives) which are non-refundable incentives and 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. Refer Note 45 Assets held for sale (Other than Investments in subsidiaries held for sale)

The company has classified assets earmarked We have verified the procedures in relation for disposal as assets held for sale, including to management’s classification and as part of the disinvestment process in valuation of assets held for sale including progress. Management has estimated the fair assessing the methodologies used and the value of such assets having regard to various appropriateness of the key assumptions, critical factors including market rates. checking the accuracy thereof on a sample Refer Note No. 28 & 32 and Para (d) of basis etc. Emphasis of Matter

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Recognition of revenue from transportation services

The company extensively uses the services of We have conducted requisite procedures on outsourced service provider for measurement revenue on a test check of selected samples and recognition of revenue, which carries an and scrutinised relevant records and journals inherent risk around the accuracy of revenue to assess the timing and values of revenues recorded given the complexity of operations recorded. and underlying IT Systems.

The company recognises revenue from In addition, we have performed cut-off passenger and cargo sales on flown basis i.e, tests in order to verify whether the timing of when the service is provided. The Company passenger revenue recognition is in line with recognises revenue from unexercised rights company’s policy. i.e. forward sales of customers which are non- refundable in nature, based on past trends in proportion to the pattern of rights exercised by the customer.

The company has a Frequent Flyer Programme We obtained the latest available assurance as per which, passengers earn miles which report on service organisation controls can be redeemed as per the policy of the and bridge letter from outsourced service company. The portion of unearned revenue provider on effectiveness of controls attributable to miles earned are recognised confirming no significant changes to the on the statement of financial position as control environment and controls relating to deferred revenue, after taking into account revenue accounting and General IT controls. the expected utilisation of the miles.

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Revenue is subsequently recognised when With regard to forward sales, we have eligible passengers fly. considered the consistency and continuity of the methods used to determine the amount Significant judgement is required in the of revenue to be recognised from Forward following aspects: Sales. • The number of miles that will expire We reviewed the assumptions used to without use – The Company relies on estimate the number of miles as per Frequent historical expiry pattern in determining Flyer Programme that will expire without use, these estimates; and including analysing historical expiry pattern.

• The determination of the fair value of We also reviewed the assumptions used in frequent flyer miles – The Company relies determination of fair value of the unredeemed on historical redemption patterns, weighted miles. for the various geographic regions and booking classes in determining the fair value. Refer to para (i) & (ii) in our report on Internal Refer Note.59 Financial Controls (Annexure B)

Provisions and Contingent Liabilities and Evaluation of uncertain tax positions There are material claims against the We have obtained details of key claims company and uncertain tax/duty positions against the company, completed tax which are under various stages of dispute, assessments and demands and tax/duty involving significant judgment to determine positions. the possible outcome of these disputes.

Refer Note.26 and para (a) of Emphasis of We reviewed status of disputes Matter. and representation taken from the management, discussed with appropriate senior management and evaluated the management’s underlying key assumptions,

We assessed management’s estimate of the possible outcome of the disputed cases in evaluating management’s position on these uncertain claims and tax positions and assessed the appropriate disclosures in the financials.

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Deferred Tax Assets The company has carried deferred tax assets Our procedures include obtaining an recognised on depreciation in an earlier year understanding of the process and the which is based on the likelihood of future controls over preparation of profit forecast. taxable income available for set off We reviewed the inputs and assumptions The recognition of deferred tax asset, used in the forecast, including Revival involves judgement regarding the likelihood Plan for Operational & Financial Efficiency of realisation of these assets in particular formulated by the Govt of India. We verified whether there will be sufficient taxable profits the disclosures for deferred tax asset in future periods that support the recognition of balance including those related to significant these assets. Given the degree of judgement accounting estimate and judgements. involved in considering these deferred tax assets as recoverable or otherwise, we consider this to be a key audit matter. Refer para (b) (i) of Emphasis of Matter Refer Note. 50 Inventory The company carries inventory of materials, We have evaluated the systems and spare parts etc across various locations processes for recording and valuation of centres and correct measurement of inventory inventory, tested a sample of key controls involves making a proper assessment of the and comparison of net realizable prices. lower of net realisable value over cost and We have obtained an understanding of the assessment of write down necessary on company’s policy on control for identification account of obsolescence etc and provision of non-moving inventory based Refer Note No.39 on age-wise analysis and tested the same on a sample basis. Refer para (i), (ii) (iii), (v) & (ix) in our report on Internal Financial Controls (Annexure B) Provision for receivables The company is carrying significant balances We have obtained a list of outstanding as trade receivables including amounts receivables, test checked the ageing of trade outstanding from earlier accounting periods. receivables generated from SAP at year end The management makes an estimate of on a sample basis and reviewed Expected the recoverability of individual debtor with credit loss model used in determining the reference to the aging profile, historical provision requirement. payment pattern and the past record of the customer and makes provision against the We have reviewed the controls, systems same with reference to the recoverable and processes applied by the management amount. to ensure proper recognition of provision for receivables. Refer para (v) in our report on Internal Financial Controls (Annexure B)

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Accounting & disclosure for proposed disinvestment Govt. of India has given approval for We have reviewed the relevant minutes strategic disinvestment of the Air India of meeting of Board of Air India Limited and its subsidiaries. Accordingly, Strategic as well as of the committees formed for Revival Plan for Operational & Financial disinvestment and other relevant records Efficiency in Air India was formulated as made available to us in this regard. per which certain portion of debt along with certain assets, including investments in three subsidiary companies and advances given to them, were decided to be transferred to an Special Purpose Vehicle (SPV) formed for the proposed disinvestment.

Necessary adjustments/ disclosures are We have verified the transactions which made in the financial Statements of Air India have taken place till 31st March 2019 with Limited based on the present decisions and the SPV and held discussions with the further adjustments would be made after senior management of the Air India in order finalization of the same. to obtain an understanding of the present position of the various decision taken for the same.

Refer Note No.28, 29 and para(f) of Emphasis We have reviewed the disclosure made in of Matter. the financial statements in this regard. Information Other than the Standalone Financial Statements and Auditor’s Report thereon The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Directors’ Report, Management Discussion and Analysis Report and Report

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on Corporate Governance but does not include the standalone financial statements and our auditor’s report thereon. These reports are expected to be made available to us after the date of this auditor’s report. Our opinion on the standalone financial This is a statement of fact. statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the reports containing the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements The Company’s Board of Directors is This is a statement of fact. responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application

105 AIR INDIA of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls. • Evaluate the appropriateness of accounting policies used and the reasonableless of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s

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report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represents the underline transaction and events in a manner that achieves fair presentation. Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements 1 As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable 2 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 purposes of our audit except as stated in Basis for Qualified Opinion and Para no. (g) of Emphasis of Matters section. (b) Except for the possible effects of the matters described in the Basis of Qualified opinion section above, 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us.

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(c) With respect to those foreign stations not visited by us, we have relied upon the summary reports made available to us for the verification of transactions related to major foreign stations, which have been properly dealt by us in preparing this report. (d) The Balance Sheet, Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account. (e) Except for the effects of the matter described in para No -1 of Basis for Qualified Opinion and para (e) & (g) Emphasis of Matter Section above, in our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder; (f) The matters described under Material Uncertainty in relation to Going Concern and Basis of Qualified Opinion section above, may, in our opinion have an adverse effect on the functioning of the Company; (g) We have been informed that the provisions of Section 164(2) of the Act in respect of disqualification of directors are not applicable to the Company, being a Government Company in terms of notification no. G.S.R.463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs (MCA), Government of India; (h) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section above;

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(i) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting. (j) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended, we report that, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015 provisions of section 197 of the Act are not applicable to the company. (k) 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 of pending litigations on its financial position in its standalone financial statements - Refer Note No. 26 to the standalone financial statements; ii. The Company has made provisions, as required under the applicable laws or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts that have been entered into by the Company; iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.. 3 We are enclosing our report in terms of Section 143 (5) of the Act, on the directions / sub-directions issued by the Comptroller and Auditor General of India, 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 Annexure- C.

111 AIR INDIA management replies to ANNEXURE ‘A’ to INDEPENDENT AUDITORS’ REPORT

AUDIT OBSERVATIONS MANAGEMENT COMMENTS (i) The Company is maintaining proper records The Company has a regular procedure a) showing full particulars, including quantitative for the physical verification of all aircraft, details and situation of fixed assets except APUs and other related equipment which in case of certain items which are carried in constitutes nearly 91% of the total value of the fixed asset register on block level as one the assets which are tallied with the Assets line item, in respect of which full particulars, Register maintained. including quantitative details and situation of such assets have not been updated As regards the remaining assets, the Company has already implemented the b) The Company has a programme of verification Fixed Assets module which streamlines of fixed assets as per which the verification the data on Fixed Assets including the of all major assets is conducted annually, details of location and quantitative details and the verification of other assets are on the SAP system. covered over a biennial period which, in our opinion, is reasonable having regard to the As regards to the items entered in SAP at size of the Company and the nature of its block level, these represents those assets Assets. Accordingly, as per the information which were migrated into SAP at block and explanations furnished to us, physical level as individual item-wise details were verification of major items of fixed assets has not available. However, over a period of been conducted by the Management during time, efforts have been made to bifurcate the year and no material discrepancies were these into item-wise details, whereby noticed on such verification. Fixed assets, a considerable number of assets have which are carried on block level as one line already been uploaded item-wise but still item, physical verification reconciliation has not there exists certain block level entries been done during the year. In respect of other which are being looked into but the value items of fixed assets, physical verification for of the same is not very significant. 2016-18 biennial period has been completed, although pending reconciliation no effect has Further, it may be noted that as stated been given in respect of discrepancies noticed in Note No 34, the Physical Verification amounting to Rs 154.5 Million(net). Refer Note for the biennial period 2016-18 has been No.34(a) completed. However, the necessary action on the Physical Verification Report received is under progress and necessary action on the same will be taken on receipt of approval from the Competent Authority.

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c) Based on our examination of the books and re- This matter is being pursued actively with cords of the company, the title/ lease deeds the Ministry of Urban Development through of immovable properties (included under Prop- the Ministry of Civil Aviation and other au- erty, Plant and Equipment and Assets held for thorities and the Company is hopeful of re- Sale) are held in the name of the Company ex- instatement of the title deeds in the future. cept to the extent mentioned below:[Refer note nos 30(a) and 32] Moreover, as a part of the monetization process of AI, the physical possession of S l Type Area Net Block two of the major unregistered properties No (Sq Mtrs) (Rs in Mil- namely Vasant Vihar Housing Colony (Rs lions) 51295.1 million) and Baba Kharag Singh 1. Land & Build- 23,904 387.1 Marg Land (Rs 4770.7 million),have been ing – Freehold handed over to the Ministry of Urban De- velopment (MoUD). 2. Land & Build- 2,29,288 56,583.2 ing– Lease- The MoUD has been entrusted with the hold overall responsibility of development and 2,53,192 56,970.3 sale of these two properties by the Govt. In respect of 8 other properties (area/ car- These properties have been offered as se- rying value - not ascertainable) which curity against working capital loans taken have been explained to be mortgaged with from various banks. Further, these proper- banks and financial institutions for securing ties have been identified to be transferred borrowings and loans, confirmation from to the SPV under the disinvestment plan the bank/ financial institution in relation to of Air India holding of title deed has not been furnished Adequate disclosure for the same has to us. been made vide Note No 30 (b) It has already been disclosed in the Foot Notes to Note No 13 that equitable mort- gages in respect of these properties is still to be created in favour of the lenders. (ii) According to the information and explanation The Physical Verification of aircraft/non- given to us, the inventory has been physically aircraft inventory (except inventory relat- verified by the management in phased man- ing to phased out fleet and lying with third ner (biennial) at reasonable intervals. Physical parties) including non-moving inventory Verification of Inventories for the biennial pe- for the biennial period 2016-18 has been riod 2016-18 has been carried out, except in completed. respect of items lying with third parties amounting to Rs.255.0 Million (refer footnote to Note Pending finalization/approval of the Physi- No. 8) The physical verification for biennial cal Verification Report, by the competent period 2018-20 is under progress. Refer Note authority, the net of the excess/shortages No.34(b) found on reconciliation amounting to Rs 23.6 million (PY: Rs 114.0 million) has been provided for.

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(iii) According to the information and explanations This is a statement of fact. given to us, the Company has not granted any loans, secured or unsecured, during the year, to any companies, firms, limited liability part- nerships or other parties covered in register maintained under Section 189 of the Compa- nies Act, 2013. In view of above, the clauses 3 (iii)(a), 3 (iii)(b) and 3 (iii)(c) of the Order are not applicable. (iv) As per information and explanations given to This is a statement of fact. us, Company has not granted any loans or given any guarantee and security covered under section 185 of the Companies Act 2013.Further, the Company is exempted from the provisions of section 186 as it is engaged in the business of providing infrastructure facilities as defined in Schedule-VI of the Companies Act’2013 (v) On the basis of the examination of the books of This is a statement of fact. accounts, the Company has not accepted deposits under the provisions of Section 73 to 76 or any other provisions of Companies Act, 2013 and the Rules framed thereunder. (vi) The maintenance of cost records has not been This is a statement of fact. prescribed by the Central Government of In- dia under sub-section (1) of Section 148 of the Companies Act, 2013, in respect of the Com- pany which falls under the category of Service Industry. (vii) According to the information and explanations This is a statement of fact. However, in re- given to us and on the basis of our examina- spect of the GST amounting to Rs 217.10 (a) tions of the Books of Account, undisputed Stat- million has been paid subsequently. Fur- utory dues, including Provident Fund, Employ- ther, in respect of PF Contribution and ees State Insurance Fund, duty of Custom, duty Contract Labour amounting to Rs 51.47 of Excise, Sales Tax, Value Added Tax, TDS, million has been deposited in a separate Goods and Services Tax, Cess and any other account pending identification of persons material Statutory Dues, as applicable, have to whom the same is payable. not been regularly deposited with the appropriate authorities and there have been delays in a large number of cases.

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As per the information and explanations, and This is a statement of fact. subject to the facts stated in Note No. 36(d), undisputed statutory liabilities outstanding for more than six months as on March 31, 2019 are as under;

Name of Nature of Rs in Period to which the Stat- dues Million the amount ute relates Goods GST 217.1 Apr 2018 upto and Ser- Sep 2018 vice Tax (GST) Goods Interest on FY 2017-18 to and Ser- GST upto Sep 2018 vice Tax 324.7 (GST) Finance Interest on 633.2 FY 2012-13 to Act, 1994 Service Tax FY 2014-15 Income Interest on FY 2013-14 to tax Act, TDS upto Sep 2018 1961 426.7 Provident PF Con- 51.47 October 2014 Fund Act tribution Contract Labour Goods IGST (de- 471.4 September 2018 and Ser- mand by vice Tax Directorate of Revenue Intelligence) Goods Interest on July 2017 to and Ser- IGST under September 2018 vice Tax custom 74.9 (demand by Directorate of Revenue Intelligence) b) According to the information and explanations given to us and as per the books of accounts , there are no dues outstanding of Sales tax, Wealth Tax, Custom Duty, Excise Duty, Value Added Tax, Service Tax, Goods and Service tax and Cess which have not been deposited as on 31st March 2019 by the company, on account of any dispute, except for the following:

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Sl Name of Statute Nature of Amounts Period to Forum where disputed is No. dues Involved which the pending (Rs. in amount re- Million) lates (Finan- cial Year) 1 Indian Customs Custom 41.1 2007-2016 Commissioner of Central Act, 1962 Duty Excise & Customs 2 Indian Customs Custom 24.3 1997-2004 Central Board of Excise Act, 1962 Duty &Customs 3 Indian Customs Custom 582.6 2002-2005 Commissioner of Customs Act, 1962 Duty (Appeals) 4 Indian Customs Custom 242.8 2000-2017 CESTAT Act, 1962 Duty 5 Indian Customs Custom 3.1 2003-2004 CUSTOMS DEPT. Act, 1962 Duty 6 Indian Customs Custom 14.4 2005-06 Supreme Court Act, 1962 Duty 7 Finance Act, 1994 Service Tax 2003-2014 CESTAT 6671.8 8 Finance Act, 1994 Service Tax 7.2 2007-2018 Commissioner of Appeals 9 Finance Act, 1994 Service Tax 1223.6 2007-08 and Commissioner of Service Tax 2010-11 10 Finance Act, 1994 Service Tax 2.8 2013-2015 Service tax Dept 11 Finance Act, 1994 Service Tax 0.4 2017 Commissioner of Customs 12 Income Tax Act, Income Tax 117.6 2012-2015 Deputy Commissioner of 1961 Income Tax 13 Income Tax Act, Income Tax 1122.8 2000-07 ITAT 1961 14 Value Added Tax VAT 127.3 2011-2016 Commercial Tax Office, Govt of Telangana 15 Value Added Tax VAT 0.5 2015-2016 Revisional Board, West Bengal 16 Other Statutes Property 486.8 2000-2018 Concerned Dept. Tax, Octroi & Entry Tax

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(viii) According to the information and explanations Due to the liquidity position faced by the given to us, the Company has delayed in company, there have been certain delays repayment of dues to Financial Institutions/ in the payment of Interest. However, the Banks/ Government and there is an overdue same have been paid subsequently and Interest of Rs1,981.0 Million outstanding for there has been no further demand on this payment as at the year-end [Refer footnotes to account from the banks. Note No.15]. The period and amount of default including lender wise details for the same has not been provided to us in view of the fact stated in the footnote to Note No 18 and Note 13.2 of the Standalone Financial Statements. (ix) The Company has not raised any money by This is a statement of fact. way of initial public offer or further public offer (including debts instruments) and hence the application of such money for the specified purposes is not applicable. The Company has applied the Term Loans for the purpose for which the Loans were obtained (x) During the course of our examination of the This is a statement of fact. books and records of the company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud by the company or on the company by its officers or employees which has been, noticed or reported during the year, nor have we been informed of any such case by the management. (xi) As informed, the provisions of Section 197 This is a statement of fact. relating to managerial remuneration are not applicable to the Company, being a Government Company, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015 (xii) The Company is not a Nidhi Company. This is a statement of fact. Accordingly, the reporting requirements under clause 3(xii) of the Order are not applicable.

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(xiii) In our opinion and according to the information This is a statement of fact. and explanations given to us, transactions with related parties are in compliance with sections 177 and 188 of the Companies Act, 2013, where applicable. The details of Related Party Transactions have been disclosed in the Standalone Financial Statements, as required by the applicable Ind AS; Refer Note No. 42 (xiv) The company has not made any preferential This is a statement of fact. allotment or private placement of shares or fully or partly convertible debentures during the year under review as such the clause is not applicable to the company. (xv) As per the records of the company and This is a statement of fact. information and explanation provided to us, the company has not entered into any non- cash transactions with directors or persons connected with them and hence, the clause is not applicable (xvi) According to the information and explanations This is a statement of fact. given to us and the records of the Company examined by us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the reporting requirement under clause 3(xvi) of the Order is not applicable

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management replies to ANNEXURE ‘b’ to INDEPENDENT AUDITORS’ REPORT

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 financial controls over financial reporting of Air India Limited(“the Company”) as of March 31, 2019 in conjunction with our audit of the standalone financial statements 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 This is a statement of fact. financial controls based on the internal control over financial 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 financial controls that were operating effectively for ensuring the orderly and efficient 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 financial information, as required under the Companies Act, 2013. Auditors’ Responsibility Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal

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Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 financial controls over financial 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 financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Company’s internal financial controls system over financial reporting. Meaning of Internal Financial Controls over Financial Reporting A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

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purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that This is a statement of fact. (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial 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 financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Qualified Opinion According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified for the year ended March 31, 2019:

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(i) The company did not have an effective The company is having an interface interface between various functional software between various functional software relating to Sales/Revenue and Inventory relating to Sales/Revenue accounting and Management (for part of a year) with the Inventory Management. In fact, the Kale accounting software resulting in accounting and RAMCO software both have interface entries being made manually on periodical with the SAP System whereby data is being basis. directly pushed into SAP and these data (ii) The company did not have an appropriate are being checked and reconciled with the internal control system for reconciliation of Sales entries before incorporating the final Control Accounts in relation to the Sales / accounting entries in SAP System Revenue, Inventory and Payroll. As regards Control Accounts, even in the IFCR Report received for FY 2018-19 there is no comment as such regarding this issue. In fact, it has been stated that this issue basically relates to Revenue booking at stations and liability credited by Kale. It has been stated that this area needs to be strengthened for timely reconciliation of these accounts. Further, periodical rectifications are also carried out subsequent to reconciliations. However, it may also be stated that the value of such transactions are not material. (iii) The Company did not have appropriate system This fact has been duly disclosed in Note to capture incidental cost such as freight, duty No 30 (d). As stated the accounting of FDI etc. in inventory system (Freight, Duty and Incidentals) in Ramco is done on block level instead of at transaction level. At the year end, FDI is expensed out on the basis of ratio of closing inventory to consumption of inventory during the year. The total of FDI expensed out during the period amounts to Rs 1031.0 million. This practice has been followed consistently in view of bulk and consolidated movement of spares, and difficulty in identifying and allocating item wise FDI. (iv) The company did not have an appropriate All statutory dues are properly reconciled. internal control system for deduction, timely However, due to the shortage of funds deposit and reconciliation of statutory dues available there is a delay in the deposit of TDS on certain occasions. However, interest on such delays are provided for in the books of accounts.

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(v) The company did not have an appropriate In this regard it may be noted that there is internal control system for obtaining a steady and considerable improvement in confirmation of balances on a periodic basis, this area as compared to previous years as ageing and reconciliation of unmatched can be seen from the following: Receivables, Payables, (including certain a) All major Borrowings, Bank Balances staff related accounts and suspense / control have been confirmed and reconciled. accounts), inventory lying with third parties, b) In respect of Receivables/Payables, certain bank accounts and statutory dues. all major parties such as dues of Oil Companies, Airport Operators, Pax/ Cargo Receivables and dues for VVIP Charters are totally reconciled. These parties in fact constitute a major portion of the total Receivables and Payables of the company. c) Further, in respect of certain other Receivables/Payables such as Staff related accounts and unlinked debits/ credits lying in various such accounts, the company has during the year appointed an outside professional firm to carry out the Reconciliation of such accounts and the necessary accounting effect for the same will be given in the current FY 2019-20. (vi) The company did not have an effective internal External Internal Auditors were appointed audit system commensurate with the size, during the year 2018-19 to strengthen nature and complexities of the business. and enhance the scope of Internal audit in several areas of the company’s business. With the assistance of these auditors and strengthening of the in house internal audit team the company intends to strengthen the scope and coverage of internal audit commensurate with the size and nature of the company’s business. (vii) The Company did not have an effective The Company has an effective ERP- Information Systems Audit to evaluate and SAP System in place and IBM has been test the IT general controls, which may affect appointed to implement and hand hold AI the completeness, accuracy and reliability of upto FY 2023. Several computers related the reports generated from IT System. applications are checked for accuracy and control by the Service Providers. The reliability of Reports are also checked. (viii) The company did not have an effective system GST on an overall basis has been for timely accounting of entries including delay reconciled for FY 2018-19. However, state in accounting of cash collection/disbursement, wise reconciliation is in process which will reversal of ineligible input tax credit of GST & be completed in the current financial year. approval thereof in IT System.

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(ix) The company did not have effective system Such transactions are not material. However, for control over sale of scrap of inventory and in this regard also instructions have been accounting thereof issued by the Competent Authority whereby Regional Scrap Committees have been formed with representatives of all concerned Departments to further stream line this process. (x) The Company did not have an effective Already replied to in reply to Point No 1 of system for determining fair value of the the main audit qualifications. Company’s investments in its subsidiaries carried as assets held for sale. A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively during the year ended March 31, 2019, based on the internal control over financial 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 identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company as at and for the year ended 31 March 2019, and these material weaknesses have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements. 124 AIR INDIA management replies to ANNEXURE ‘c’ to INDEPENDENT AUDITORS’ REPORT

S l Directions under section 143(5) of Response No Companies Act 2013 1. Whether the company has system in place The company has an ERP system in place to process all the accounting transactions for processing all accounting transactions through IT system? If yes, the implications of through IT systems except for booking processing accounting transactions outside IT of trade and other receivables which is system on the integrity of the accounts along recorded manually. with the financial implications, if any, may be Some of the activities have been outsourced stated by the company to outside vendors viz. a. Transportation revenue b. Cargo Revenue c. Processing of crew allowances Some manual intervention is necessitated for various closing entries; however accounting entries for the same are also processed through ERP. Based on our audit procedures, on test basis, wherever the accounting transactions are based on workings outside IT system, no instances of lack of integrity of accounts and no financial implications has been noted / reported. However, we have noted certain internal control weaknesses in processing of transactions, our comments on which have been given in para (i), (ii) & (iii) of Annexure B of this audit Report. 2. Whether there is any restructuring of an As per the information and explanation existing loan or cases of waiver /write off of furnished to us, there has been no case of debts/loans/interest etc. made by a lender to restructuring of existing loan or waiver /write the company due to the company’s inability off of debts/loans/interest etc. made by a to repay the loan? If yes, the financial impact lender to the company during the year. may be stated. However, as described in detail in Note.28 the company is in the process of implementing financial restructuring plan in line with the disinvestment proposal which is in progress, the effect of which on the loan balance and interest thereon is as stated therein. The financial impact of the same on the standalone financial statements is given in note 29(xiii).

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S l Directions under section 143(5) of Response No Companies Act 2013 3. Whether funds received/receivables for To the best of our information, checks specific schemes from Central/State agencies applied by us during the course of our audit, were properly accounted for/utilized as per its we are of the opinion that funds received/ term and condition? List the cases of deviation. receivable for specific schemes from Central/ State agencies were properly accounted for/ utilized as per its terms and conditions.

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STANDALONE BALANCE SHEET AS AT 31 MARCH 2019 (Rupees in Million) Note Particulars As at March 31, 2019 As at March 31, 2018 No. ASSETS : 1 Non-current Assets (i) Property, Plant & Equipment 1 255,284.6 264,655.9 (ii) Capital Work-in-Progress 1 726.7 813.6 iii) Investment Property 1 4,377.7 9,919.6 (iv) Intangible Assets 1 194.7 401.5 (v) Intangible Assets under development 1 12.5 82.9 260,596.2 275,873.5 (vi) Financial Assets : a) Investments 2 9,330.7 17,461.6 b) Trade Receivables 3 - - c) Loans 4 3,316.4 3,056.0 d) Others 5 11,200.3 39,189.8 23,847.4 59,707.4 (vii) Income Tax Assets (Net) 7 2,264.1 2,780.3 viii) Deferred Tax Assets (net) 50 28,425.2 28,425.2 (ix) Other Non-Current Assets 6 5,877.6 6,045.5 321,010.5 372,831.9 2 Current Assets (i) Inventories 8 8,063.8 9,031.9 (ii) Financial Assets : a) Trade Receivables 3 19,921.0 17,824.5 b) Cash and Cash Equivalents 9 2,452.2 1,886.0 c) Bank Balances other than (b) above 10 5,980.1 5,542.8 d) Loans 4 145.8 121.9 e) Others 5 3,122.5 4,875.8 31,621.6 30,251.0 (iii) Income Tax Assets (Net) 7 1,458.8 468.4 (iv) Other Current Assets 6 12,657.0 19,358.4 53,801.2 59,109.7 3 Assets held for Sale 10.1 148,710.1 87,918.3 Total 523,521.8 519,859.9

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Khandelwal Jain & Co. Varma and Varma Chartered Accountants Chartered Accountants FRN : 105049W FRN : 004532S Sd/- Sd/- Sd/- (Ashwani Lohani) (Narendra Jain) (P.R. Prasanna Varma) Chairman & Managing Director Partner Partner DI No.01023747 M.No. 048725 M.No. 025854

For and on Behalf of Sd/- Sd/- Jagdish Chand & Co. (V.S. Hejmadi) (Kalpana Rao) Chartered Accountants Director-Finance Company Secretary FRN : 000129N DI No.07346490 m.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : New Delhi Date : 22 October 2019 Date : 22 October 2019

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STANDALONE BALANCE SHEET AS AT 31 MARCH 2019 (Rupees in Million) Note Particulars As at March 31, 2019 As at March 31, 2018 No. EQUITY AND LIABILITIES : 1 Equity (i) Equity Share Capital 11 326,652.1 286,902.1 (ii) Other Equity 12 (621,315.7) (535,839.2) (294,663.6) (248,937.1) 2 Liabilities Non-current Liabilities a) Financial Liabilities (i) Borrowings 13 82,999.6 299,622.5 (ii) Trade Payables a) Total outstanding dues of micro en- 14 - - terprises and small enterprises b) Total outstanding dues of creditors other than 14 - - micro enterprises and small enterprises (ii) Other Fiancial Liabilities 15 47.9 111.8 83,047.5 299,734.3 b) Provisions 16 28,271.8 25,484.5

111,319.3 325,218.8 Current Liabilities a) Financial Liabilities (i) Borrowings 18 276,303.4 219,554.9 (ii) Trade Payables a) Total outstanding dues of micro en- 14 163.7 156.6 terprises and small enterprises b) Total outstanding dues of creditors other than 14 81,879.3 80,640.2 micro enterprises and small enterprises (iii) Other Financial Liabilities 15 283,464.4 84,730.4 641,810.8 385,082.1 b) Other Current Liabilities 17 62,331.9 56,383.3 c) Provisions 16 2,117.2 2,112.8 706,259.9 443,578.2 3 Liabilities classified as held for sale 17.1 606.2 - Total 523,521.8 519,859.9 Significant Accounting Policies and A Notes forming part of the Financial Statement 1-61

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date. For and on Behalf of For and on Behalf of For and on behalf of the Board Khandelwal Jain & Co. Varma and Varma Chartered Accountants Chartered Accountants FRN : 105049W FRN : 004532S Sd/- Sd/- Sd/- (Ashwani Lohani) (Narendra Jain) (P.R. Prasanna Varma) Chairman & Managing Director Partner Partner DI No.01023747 M.No. 048725 M.No. 025854

STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2019 (Rupees in Million) Note Particulars 2018-19 2017-18 No. I Revenue 1. Revenue from Operations 19 i) Scheduled Traffic Services 224,005.6 191,359.6 ii) Non-Scheduled Traffic Services 15,343.6 13,085.9 iii) Other Operating Revenue 15,739.1 25,035.8 Revenue from Operations 255,088.3 229,481.3 II 2. Other Income 20 9,217.6 8,968.1 III Total Revenue (I+II) 264,305.9 238,449.4 IV Expenses 1. Aircraft Fuel & Oil 100,344.6 73,626.9 2. Other Operating Expenses 21 131,113.9 110,099.8 3. Employee Benefit Expenses 22 30,052.3 29,463.9 4. Finance Costs 23 47,113.0 44,640.9 5. Depreciation and Amortization 24 15,879.3 16,673.8 6. Other Expenses 25 24,550.8 17,321.5 Total Expenses 349,053.9 291,826.8 V (Loss) before Exceptional Items and Tax (III-IV) (84,748.0) (53,377.4) VI Exceptional Items (Net) - - VII (Loss) before Tax (V+VI) (84,748.0) (53,377.4) VIII Tax Expenses : - - IX (Loss) after Tax for the year (VII-VIII) (84,748.0) (53,377.4) X Other Comprehensive Income Items that will not be reclassified to Profit & Loss and - - its related income tax effect : i) Re-measurements of the Defined Benefit Plans (863.8) (150.9) ii) Fair value changes on Equity Instruments through 48.2 46.6 other comprehensive income Other Comprehensive Income for the year (815.6) (104.3) XI Total Comprehensive Income for the year (IX+X) (85,563.6) (53,481.7) XII Earning per equity share of face value of Rs. 10 each 51 Basic & Diluted (Rs.2.90) (Rs.1.97) Significant Accounting Policies and A Notes forming part of the Financial Statement 1-61

The accompanying notes are an integral part of the Financial Statements. This is the statement of Profit and Loss referred to in our report of even date.

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STANDALONE STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2019 (Figures in Million) A. Equity Share Capital (Refer Note 11) As at 31.03.2019 As at 31.03.2018 No. of Amount No. of Amount in Shares in Rupees Shares Rupees Balance at the beginning of the reporting period 28,690.21 286,902.1 26,753.00 267,530.0 Changes in the Equity Share Capital during the year Add : Equity Shares Allotted during the year 3,975.00 39,750.0 1,937.21 19,372.1 Balance at the end of reporting period 32,665.21 326,652.1 28,690.21 286,902.1

(Rupees in Million) B. Other Equity (Refer Note 12) Share Capital General FCMITDA Retained Equity Total Appli- Re- Reserve Earnings Instru- cation serve ments Money through OCI Balance as at 31.03.2018 - 6,878.7 (1,436.7) (2,137.3) (539,887.8) 743.9 (535,839.2) Changes in accounting policy or prior period ------errors (Loss) for the year - - - - (84,748.0) (84,748.0) Transfer from General Reserve to Retained - - 1,436.7 - (1,436.7) - Earnings Other Comprehensive Income for the year - - - - (863.8) 48.2 (815.6) Additions during the year - 1,163.5 - (1,135.5) - 28.0 Amortization during the year - (454.6) - 513.7 - 59.1 Shares allotted during the year ------Balance as at 31.03.2019 - 7,587.6 - (2,759.1) (626,936.3) 792.1 (621,315.7)

Balance as at 31.03.2017 1,372.1 7,194.8 (1,436.7) (2,349.1) (474,867.1) 697.3 (469,388.7) Changes in accounting policy or prior period - - - - (11,492.4) (11,492.4) errors (Loss) for the year - - - - (53,377.4) (53,377.4) Other comprehensive income for the year - - - - (150.9) 46.6 (104.3) Additions during the year - 147.4 - (126.5) - 20.9 Amortization during the year - (463.5) - 338.3 - (125.2) Shares allotted during the year 1,372.1 - - - 1,372.1 Balance as at 31.03.2018 - 6,878.7 (1,436.7) (2,137.3) (539,887.8) 743.9 (535,839.2) The accompanying notes are an integral part of the Financial Statements. This is the statement of Profit and Loss referred to in our report of even date.

130 AIR INDIA STANDALONE STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2019 (Rupees in Million) Particulars 2018-19 2017-18 A. CASH FLOW FROM OPERATING ACTIVITIES (Loss) before Exceptional and Extraordinary Items and Tax (84,748.0) (52,253.5) Adjustment for : Exceptional & Extraordinary Items (Net) - (1,123.9) Unrealised Foreign Exchange (Gain)/Loss 2,791.4 552.1 Depreciation and amortisation 16,333.9 17,137.3 Provision for Obsolescence / Inventory Reconciliation * (498.2) 1,192.2 Allowance for credit risk, credit impairment & doubtful advances* 1,315.0 (1,514.9) Provision for Employee Benefits * (433.9) 822.4 Provision for Redelivery of Aircrafts * 2,361.9 2,454.0 Provision for Frequent Flyer Programme - 12.8 (Profit)/Loss on sale of fixed assets (1,225.6) (1,761.5) Dividend income (72.7) (69.5) Interest income (on Bank Deposits, advances to subsidiary companies & others) (4,985.6) (3,777.3) Interest and Finance Charges 47,113.0 44,640.9 62,699.2 58,564.6 Operating (Loss) / Profit Before Working Capital Changes (22,048.8) 6,311.1 Adjustments for : (Increase) / Decrease in Inventories 1,466.3 622.3 (Increase) / Decrease in Trade and Other Receivables (1,469.2) (12,499.2) Increase / (Decrease) in Trade and Other Payables 11,666.9 (3,392.6) 11,664.0 (15,269.5) Cash Generated from Operations (10,384.8) (8,958.4) Direct Taxes paid (450.8) (280.4) Net Cash Flow (used in)/ from Operating Activities (10,835.6) (9,238.8) B. CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Property, Plant & Equipment (14,391.7) (35,816.9) Proceeds from sale of Property, Plant & Equipment (Incl Assets Held For Sale) 4,117.1 3,213.8 (Increase) / Decrease in Investments (net) - (46.6) (Increase) / Decrease in Bank Deposits (Maturity of more than 3 months) (392.7) (445.2) Interest received (on Bank Deposits, advances to subsidiary companies & others) 1,062.4 2,840.7 Dividend Received 72.7 69.5 Net Cash Flow used in Investing Activities (9,532.2) (30,184.7) C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Shares / Share application money received 39,750.0 18,000.0 Proceeds from Long Term Borrowings 4,221.3 275.7 Repayment of Long Term Borrowings (30,940.1) (25,619.5) Proceeds from ShortTerm Borrowings 66,028.9 134,214.9 Repayment of Short Term Borrowings (10,330.4) (44,026.2) Increase/(Decrease) in Capital & Other Reserves (Net) 708.9 (316.1) Interest Paid (48,137.2) (43,574.3) Net Cash Flow from/(used in) Financing Activities 21,301.4 38,954.5 Net increase/ (Decrease) in Cash and Cash equivalents 933.6 (469.0) Unrealised Foreign Exchange Gain/(Loss) in Cash & Bank Balances (367.4) 115.2 Cash and Cash equivalents (Opening balance) 1,886.0 2,239.8 Cash and Cash equivalents (Closing balance) 2,452.2 1,886.0

Notes * These figures have been taken from Balance Sheet movements. 1. For details of components of Cash and Cash equivalents, see Note No. 9 2. Reconciliation of Liabilities arising from Financing Activities:- Particulars As at 31.03.2018 Financing Cash Flows Non Cash Flows As at 31.03.2019 Proceeds Repayment -Exchange Loss / (Gain) Long Term Borrowings 331,981.5 4,221.3 (30,940.1) 992.7 306,255.4 Short Term Borrowings 219,554.9 66,028.9 (10,330.4) 1,050.0 276,303.4

For and on Behalf of Sd/- Sd/- Jagdish Chand & Co. (V.S. Hejmadi) (Kalpana Rao) Chartered Accountants Director-Finance Company Secretary FRN : 000129N DI No.07346490 m.No.ACS8194 Sd/- (Praveen Kumar Jain) Place : New Delhi Partner Date : 22 October 2019 M.No. 085629 Place : New Delhi Date : 22 October 2019 131 AIR INDIA

NOTE: A Accounting Policies forming part of the Standalone Financial Statements of Air India Limited for the year ended 31 March 2019 (Rupees in millions except otherwise stated)

1. Company Information / Overview Background Air India Limited, (a Government of India Company) is a company incorporated in India, registered under the Provisions of Companies Act, 1956. The Govt of India holds 100% of Equity Share Capital of the company. Debentures issued by the company are listed on Mumbai Stock Exchange The company provides domestic and international air transport services, which includes mainly passenger and cargo services and other related services. The aircraft fleet of the company consists of a wide range of aircrafts. The registered office of the company is situated at Airlines House, 113, Gurudwara Rakabganj Road, New Delhi -110001.

2. Basis of preparation of Financial Statements (i) Statement of Compliance The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time and other relevant provisions of the Act. The Standalone Financial Statements for the year ended March 31, 2019 have been approved by the Board of directors of the Company in their meeting held on 22nd October 2019.

(ii) Basis of Measurement The Standalone Financial Statements have been prepared under the historical cost convention on accrual basis except for certain financial assets and liabilities which are measured at fair value or amortized cost at the end of each financial year.

(iii) Critical Accounting Estimates /Judgments In preparing these standalone financial 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 and 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. Significant areas of estimation and judgments (as stated in the respective Accounting Policies) that have the most significant effect on the Financial Statements are as follows: a) Impairment of Assets and Investments in subsidiaries and Joint Venture b) Estimate of revenue recognition from “Forward Sales Account”

132 AIR INDIA c) Fair value of liability on account of Frequent Flyer Programme (FFP) d) Measurement of useful life and residual values of property, plant and equipment and components thereof e) Basis of classification of a Property as Investment Property f) Basis of classification of Non-Current Assets held for sale g) Estimation of Costs of Re-delivery h) Recognition of Deferred Tax Assets i) Recognition and measurement of defined benefit obligations j) Judgement required to ascertain lease classification k) Measurement of Fair Values and Expected Credit Loss (ECL) l) Judgment is required to ascertain whether it is probable or not that an outflow of resources embodying economic benefits will be required to settle the taxation disputes and legal claim. (iv) Functional Currency : Currency of the primary economic environment in which the Company operates (“the Functional Currency”) is Indian Rupee (Rs.) in which the Company primarily generates and expends cash. Accordingly, the Management has assessed its functional currency to be Indian Rupee (Rs.) The Stand-alone Financial Statements are presented in Indian Rupees (INR) which is Company’s Presentation and Functional currency and all amounts disclosed in the Financial Statements and Notes have been rounded off to the nearest Million (up to one decimal), unless otherwise stated.

(v) Operating cycle & Classification of Current &Non Current : Presentation of assets and liabilities in the financial statement has been made based on current / non-current classification provided under the Companies Act, 2013. The Company being in service sector, there is no specific 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 financial liabilities and assets.

3. Significant Accounting Policies : I. Property, Plant and Equipment (PPE) a) Items of property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses, if any. b) Property, plant and equipment 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, up to the date of putting the concerned asset to its working condition for its intended use.

133 AIR INDIA c) Significant parts which meet the definition of property, plant and equipment (i.e. Aircraft Rotables, Repairables (with Serialized Control) including the major cost incurred on modernization / modification / conversion of aircraft and engines) have been capitalized as a separate component. d) 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. e) Physical Verification of Assets is done on a rotational basis so that every asset is verified in block of two years and the discrepancies observed in the course of the verification adjusted in the year in which report is finalized.

II. 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) On the basis of technical assessment, the useful life of B-777, B-787 and A-320 family aircraft (procured from 2006-07 onwards) are considered as 25 years (instead of the life of 20 years as prescribed under Schedule II of the Companies Act 2013) keeping a residual value of 5% of the original cost. c) In the case where life of the Property, plant and equipment, has not been prescribed under Schedule II of the Companies Act 2013 the same have been determined by technically qualified persons and approved by the Board of Directors keeping a residual value of 5% of the original cost as under :

1. Rotables: (i) Aircraft Rotables relating to Airbus family are depreciated over the residual average useful life of the aircraft fleet relating to the respective family and of the respective engineering base, from the relevant year of purchase. (ii) Aircraft Rotables relating to Boeing are depreciated over the residual average useful life of the related aircraft fleet from the relevant year of purchase. 2. Aircraft Repairables: Repairables which are serially controlled are treated as Property, Plant & Equipment and accordingly are amortized over a period of 10 years (in case of post migration) and 5 years (in case of pre-migration) from the date of its purchase unless scrapped earlier. d) 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 flying hours. e) Major overhaul costs relating to engine and airframe are identified as separate components for owned aircrafts and aircrafts under finance lease and are depreciated over the expected lives

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between major overhauls. f) Cost incurred on major modifications/refurbishment, modernization/conversion carried to owned and leased assets are depreciated over the useful life/period of lease of the asset. g) Leasehold Property, plant and equipment (including land other than perpetual lease) is amortized over the period of lease. III. Assets Held for Sale Assets included and identified for divestment purposes are classified 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 and are measured at the lower of carrying amount and fair value less costs to sell. No depreciation is provided, once the asset is transferred to Assets Held for Sale.

IV. Investment Properties Investment Properties are properties held to earn rentals and / or for capital appreciation. Investment properties are measured initially at cost including transaction cost, Subsequently, Investment property are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided as per Note No 3 (II). Any gain or loss on disposal is recognized in Statement of Profit & Loss.

V. 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. Intangible assets which have finite useful lives are amortized on straight line method overthe estimated useful life, which is reviewed by the management every year i.e. a) Software of Passenger Services System, over 10 years, and b) Other software/website, over 5 years. VI. Capital work-in-progress Cost of property, plant and equipment including intangible assets not ready for use as at the reporting date are disclosed as capital work-in-progress.

VII. Leases (i) Finance lease a) A lease is classified as finance 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 classified as finance lease. b) Assets held under finance 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. c) Minimum lease payments made under finance lease are apportioned between the finance costs and the reduction of the outstanding liability treated as loan. The finance cost is allocated to 135 AIR INDIA

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.

(ii) Operating Lease a) Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased assets are classified as Operating Lease. b) Lease payments in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with the expected general inflation to compensate the lessors expected inflationary cost increases. Any change in the lease terms are accounted prospectively over the remaining term of lease. c) Contributions made to lessors on account of Maintenance Reserve for which, maintenance is expected to arise during the lease period is treated as Expense. d) The Company has in its fleet, aircrafts 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 Profit & 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.

(iii) Sale and Lease Back (SLB)Transactions Profit or losses arise on sale at fair value and leaseback transactions of asset resulting in an operating lease of such assets, are recognized immediately in the statement of Profit and Loss. Where the sale price is below fair value, any profits/ losses are immediately recognized in the Statement of Profit and Loss except where the loss is compensated by future lease payments at below market price. In such cases loss is deferred and amortized in proportion to the lease payments over the initial period for which the asset is expected to be used. In the case where the sale price is above fair value of the asset, the excess over fair value is amortized over the initial period of the lease period for which the asset is expected to be used. VIII. 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). 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. 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) Expendables/consumables are charged off at the time of initial issue, except those meant

136 AIR INDIA

for repairs of repairable items 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 five years (net of 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 Aircrafts. (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 five years. f) Spares retrieved from the cannibalization of the scrapped aircraft are accounted for at Rupee One.

IX. Investments in Subsidiaries, Associates &Joint Ventures: Investments in Subsidiaries, Associate and Joint Ventures are carried at cost, less impairment losses, if any, in the value of investments. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, associates and joint venture, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.

X. Impairment of Non-Financial Assets : The Company assesses at each Balance Sheet date whether there is any indication that carrying amount of its non- financial asset has been impaired. If any such indication exists, the provision for impairment is made in accordance with IND AS-36. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Units (CGUs).Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. XI. 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 are recognized in profit 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.

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Government Grants that become receivable as compensation for expenses or losses incurred in a previous period are recognized in profit 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 profit or loss on a systematic basis over the expected useful life of the related assets.

XII. Revenue Recognition : Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made and Revenue is recorded when the recovery of consideration is probable and determinable. a) The Company’s revenue primarily derives from transportation services for Passengers, Cargo and Mail Revenue. Revenue is recognized when the transportation service has been provided. Passengers tickets paid for in advance of transportation are recognized, net of discounts, as deferred revenue on ticket sales in current liabilities until the customer has flown. At the end of each financial year, unutilised balance in Forward sales for more than two years isfully recognized as Revenue and for balance amount Revenue is recognized at a certain estimated percentage of the value of tickets/airway bills sold based on available historical statistical data. The Company considers whether it is an agent or a principal in relation to transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. Other operating revenues are recognized as the related performance obligation is satisfied (over the time) using an appropriate methodology which reflects the activity that has been undertaken to satisfy the related obligation. a) Frequent Flyer Programme :

The Company operates Frequent Flyer Programme that provides loyalty points based on accumulated mileage points to those who have joined this facility.

The revenue recognized when the transportation service is provided is reduced by the estimated fair value of the mileage points issued in the year such loyalty points are earned. The fair value attributed to the awarded loyalty points is treated as a deferred liability and recognized as revenue on redemption of the points. The fair value of the loyalty points is computed taking into account the proportion of miles that are expected to lapse i.e. breakage. The fair value is calculated on the basis of past redemption patterns, weighted for the various geographic regions and booking classes. b) Loss or gain on reissue/refund/ involuntary transfer of passengers to other carriers is also deducted or included, as the case may be, in the transport revenue. c) Blocked Space arrangements/Code share revenue/expenditure is recognized on an actual basis, based on uplift data received from the code share partners. Wherever details from code share partners are not available, revenue/expenditure is booked to the extent of documents/ information received, and adjustments, if any, required are carried out at the time of availability of such information.

138 AIR INDIA d) 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. e) Dividend is recognized as, income, if the right to receive is established before the close of the year. f) The claims receivable from Insurance Company are accounted for on the acceptance by the Insurance Company of such claims. g) Warranty claims/credit notes received from vendors are recognized on acceptance of claim/ receipt of credit note. h) Gain or loss arising out of sale/scrap of PPE including aircraft over the net depreciated value is taken to Statement of Profit & Loss as Non-Operating Revenue or Expenses. i) 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/ Claims for amounts payable towards IATA dues are recognized to the extent of claims/ invoices received. XIII. Manufacturer’s Credit (Cash & Non Cash Incentives): Manufacturer’s 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.

XIV. 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. 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.

XV. Foreign Currency Transactions : The management has determined the currency of the primary economic environment in which the company operates i.e. functional currency to be Indian Rupees. The financial 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

139 AIR INDIA

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 realization/settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognized in the Statement of Profit 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 financial 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.

XVI. Employee Benefits : The Retirement Benefits to the employees comprise of Defined Contribution Plans and Defined Benefit 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, and Post Retirement Medical Benefits and other benefits. The liability for these benefits except for (i) below is actuarially determined under the Projected Unit Credit Method at the yearend as per Indian Laws.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit 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 defined benefit obligation resulting from settlement or curtailments are recognized immediately in Statement of Profit and Loss as past service cost.

Liability for Gratuity, Pension and other retirement Benefits for staff directly recruited at foreign stations is provided in compliance with local laws prevailing in the respective countries based

140 AIR INDIA

on available information as at the year end. c) Other Long-Term Employee Benefits in the form of Leave Encashment are accounted as other long-term employee benefits. The Company’s net obligation in respect of Leave Encashment is the amount of benefit to be settled in future, that employees have earned in return for their service in the current and previous years. The benefit 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-measurements are recognized in Statement of Profit and Loss in the period in which they arise. d) Short Term Benefits :

Short Term Employee Benefits are accounted for in the period during which the services have been rendered.

XVII. Taxes on Income : (i) Current Tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.

(ii) Deferred tax Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial 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 deductible temporary differences to the extent that is probable that future taxable profits 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 sufficient taxable profits 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. The measurement of deferred tax reflects 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

141 AIR INDIA intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

XVIII. 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 outflow of resources. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. The expense relating to a provision is presented in the statement of profit 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 confirmed 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 possible assets that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. A contingent asset is disclosed, when an inflow of economic benefits is probable.

XIX. 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 insignificant risk of changes in value.

XX. Earnings 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 profit 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 profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.

XXI. Fair Value Measurement : The Company measures financial instruments and specific 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 financial statements are categorized within the fair value hierarchy, described as below, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3: Valuation techniques for which the lowest level input that is significant to the fair value 142 AIR INDIA 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 significant 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. XXII. Financial Instruments : A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A. Financial Assets (i) Classification The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset. (ii) Initial recognition and measurement All financial assets are recognized initially at fair value plus, in the case of financial assetsnot recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset. (iii) Subsequent measurement For purposes of subsequent measurement financial assets are classified in below categories:

(a) Financial assets carried at amortized cost: A financial asset other than derivatives and specific 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 flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(b) Financial assets at fair value through other comprehensive income: A financial asset comprising specific 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 flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows 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 classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.

143 AIR INDIA

comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.

(iv) De-recognition A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset (v) Investment in subsidiaries, joint ventures and associates The company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.

(vi) 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 financial assets that are trade receivables or contract revenue receivables and all lease receivables etc. (vii) Write-off The gross carrying amount of a financial 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 counterparty does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial 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 financial 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 financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

(ii) Classification The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.

(iii) Subsequent measurement The measurement of financial liabilities depends on their classification, as described below. a) 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

144 AIR INDIA

in Statement of Profit 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 finance costs in the Statement of Profit and Loss. b) Financial liabilities at fair value through Statement of Profit and Loss: Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified 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 Profit and Loss.

(iv) De-recognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

(v) Offsetting of financial instruments Financial assets and financial 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 sell on a net basis, to realize the assets and sell the liabilities simultaneously.

XXIII. Threshold Limits : The Company has adopted following materiality threshold limits in the recognition of expenses/ incomes:

(Rs in Millions)

No Threshold Items Threshold Value i) Fair Valuation of Financial Instruments 50.00 ii) Prior Period Items -Recognition based on individual limits 25.0 -Restatement based on overall limits 1% of Total Revenue of Previous FY

XXIV. Recent Accounting Pronouncements i) Ind AS 116 - Leases On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing Standard Ind AS 17 Leases, and related interpretations. The standard set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e. the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 145 AIR INDIA twelve months, unless the underlying asset is of low value. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The new standard is mandatory for financial years commencing on or after 1 April 2019. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Company is in the process of assessing the detailed impact of Ind AS 116. Presently, the Company is not able to reasonably estimate the impact that application of Ind AS 116 is expected to have on its financial statements. ii) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments : On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, which specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Company does not expect any significant impact of the amendment on its financial statements. iii) Other Amendments : Amendments to Ind AS 12- Income Tax, Ind AS 23- Borrowing costs, Ind AS 28- Long term interest in Associates and Joint ventures, Ind AS 103- Business combinations, Ind AS 111, Joint arrangements, Ind AS 19 – Plan Amendment, Curtailment or Settlement and Ind AS 109 – Prepayment Features with Negative Compensation are either not applicable to the Company or the Company does not expect any material impact on its financial statements.

146 AIR INDIA

NOTE “1” : (Rupees in Million) Sl. Particulars GROSS BLOCK DEPRECIATION NET BLOCK No. As at April Addi- Deduc- As at Upto For the Deduc- Upto As at As at 01, 2018 tions/ tions / March 31, April 01, year tions / March March 31, March 31, Reclas- Reclassi- 2019 2018 Reclas- 31, 2019 2019 2018 sification fication sification PROPERTY, PLANT & EQUIPMENT A. LAND & BUILDINGS 1. Land-Freehold 5,725.4 43.6 2,775.0 2,994.0 - - - - 2,994.0 5,725.4 2. Land-Leasehold 1,838.1 - 1,194.2 643.9 - - - - 643.9 1,838.1 3. Buildings 9,450.8 22.0 750.1 8,722.7 255.8 384.6 94.2 546.2 8,176.5 9,195.0 SUB TOTAL "A" 17,014.3 65.6 4,719.3 12,360.6 255.8 384.6 94.2 546.2 11,814.4 16,758.5 B. AIRCRAFT FLEET, ROTABLES & REPAIRABLES 1. Airframes Owned 171,908.4 2,829.1 723.2 174,014.3 14,938.3 8,225.1 597.5 22,565.9 151,448.4 156,970.1 Leased ------2. Aero Engines & Power Plants (a) Owned-Fixed Cost 69,119.3 6,129.3 2,833.3 72,415.3 5,445.5 3,182.7 - 8,628.2 63,787.1 63,673.8 (b) Owned-Variable Cost (Component) 3,231.5 - - 3,231.5 2,447.8 414.9 - 2,862.7 368.8 783.7 (c) Owned-Repair Cost 5,282.7 2,321.2 - 7,603.9 2,054.9 1,417.8 - 3,472.7 4,131.2 3,227.8 3. Simulators & Link Trainers 2,732.4 - - 2,732.4 114.8 164.9 - 279.7 2,452.7 2,617.6 4. Airframe Rotables 8,407.7 907.1 - 9,314.8 881.8 532.6 - 1,414.4 7,900.4 7,525.9 5. Aero-Engine Rotables 757.0 - - 757.0 121.0 60.5 - 181.5 575.5 636.0 6. Aircraft Repairables 9,498.2 1,085.4 203.7 10,379.9 2,007.5 958.2 136.3 2,829.4 7,550.5 7,490.7 7. Simulator Rotables ------SUB TOTAL "B" 270,937.2 13,272.1 3,760.2 280,449.1 28,011.6 14,956.7 733.8 42,234.5 238,214.6 242,925.6 C. OTHER- FIXED ASSETS 1. Workshop Equipment, Instruments, 4,352.8 947.6 28.2 5,272.2 486.9 450.8 5.1 932.6 4,339.6 3,865.9 Plant & Machinery and Vehicles 2. Ground Support & Ramp Equipment 442.7 3.1 19.3 426.5 273.5 45.1 15.4 303.2 123.3 169.2 3. Furniture & Fixtures 220.5 3.9 1.1 223.3 62.6 22.3 - 84.9 138.4 157.9 4. Office Appliances & Equipment 166.4 3.9 0.4 169.9 47.8 24.9 (2.6) 75.3 94.6 118.6 5. Computer System 328.0 24.1 8.5 343.6 76.4 61.6 - 138.0 205.6 251.6 6. Electrical Fittings & Installations 487.5 1.4 0.1 488.8 78.9 56.6 0.8 134.7 354.1 408.6 7. Object D'art (Net Block Rs.39,969.43) 0.6 - - 0.6 0.6 - - 0.6 - - SUB TOTAL "C" 5,998.5 984.0 57.6 6,924.9 1,026.7 661.3 18.7 1,669.3 5,255.6 4,971.8 TOTAL PROPERTY, PLANT & EQUIPMENT 293,950.0 14,321.7 8,537.1 299,734.6 29,294.1 16,002.6 846.7 44,450.0 255,284.6 264,655.9 INVESTMENT PROPERTY 1. Investment Property Land - Freehold - 191.7 - 191.7 - - - - 191.7 - 2. Investment Property Land - Leasehold 4,213.0 - 108.4 4,104.6 - - - - 4,104.6 4,213.0 3. Investment Property - Buildings 6,569.4 - 6,467.0 102.4 862.8 59.6 901.4 21.0 81.4 5,706.6 TOTAL FOR INVESTMENT PROPERTY 10,782.4 191.7 6,575.4 4,398.7 862.8 59.6 901.4 21.0 4,377.7 9,919.6 INTANGIBLE ASSETS : A. COMPUTER SOFTWARE 885.4 64.9 - 950.3 611.7 143.9 - 755.6 194.7 273.7 B. OTHERS 383.6 - - 383.6 255.8 127.8 - 383.6 - 127.8 TOTAL FOR INTANGIBLE ASSETS 1,269.0 64.9 - 1,333.9 867.5 271.7 - 1,139.2 194.7 401.5 TOTAL ASSETS 306,001.4 14,578.3 15,112.5 305,467.2 31,024.4 16,333.9 1,748.1 45,610.2 259,857.0 274,977.0 Capital Work-in-Progress 813.6 423.3 510.2 726.7 - - - - 726.7 813.6 Intangible Assets under Development 82.9 - 70.4 12.5 - - - - 12.5 82.9 GRAND TOTAL 306,897.9 15,001.6 15,693.1 306,206.4 31,024.4 16,333.9 1,748.1 45,610.2 260,596.2 275,873.5

1 During the year, the Company has capitalized translation difference of Rs.4,047.0 Million (Previous Year : Rs.244.4 Million) arising on settlement and reporting of long term monetary items. Additions to “Aircraft Fleet, Rotables & Repairables” includes Exchange Rate Fluctuations (Net of Debit & Credit) on underlying loans in foreign currency : Rs. 4,047.0 Million (Previous Year: Rs. (244.4 Million). 2 “Aircraft Fleet, Rotables & Repairables” includes 34 Aircraft (One B777-300 ER, Six B787-800, Four B747-400, Ten A-319, Five A320 & Eight A-321), 22 Spare Engines (includes 10 CFM-5B, 2 CFM Leap Engines) & 4 Spare APUs (Previous Year : 39Aircraft (one B777-300 ER, Six B 787-800 , Five B 747-400 , Nine A-319 , Ten A320 & Eight A-321) 20 Spare engines & 4 APUs ) owned by Air India Ltd. 3 “Aircraft Fleet, Rotables & Repairables” includes 36 Aircraft (Three B777-200LR, Twelve B777-300 ER, Nine A-319 & Twelve A-321) (Previous Year : 37 Aircraft - {Three B777-200LR, Twelve B777-300ER, Ten A-319 & Twelve A-321}) & 5 GE Spare Engines (Previous Year 5 GE Spare Engines) and Registration of these 36 Aircraft & 5 Spare Engines continues to be in the name of SPV Company for which beneficial ownership is withAir India Ltd. (Refer Note 45(i)(a)) 4 Borrowing costs capitalized during the year are Rs.21.0 Million (Previous Year : Rs.1,636.8 Million) 5 Depreciation includes debit of Rs.454.6 Million (Previous Year : Debit of Rs.463.5 Million) to Capital Reserve. 6 As per Accounting Policy, the Company has carried out impairment of assets as required under Ind AS 36. 7 Special tools included in Workshop Equipment, Instrument Machinery & Plants and Other Fixed Assets are being Depreciated at year wise total Block Amount. 8 Leasehold land on long term basis with the option to extend the same are identified as perpetual lease and are not amortised during the period of Lease. 9 “Intangible Asset - Others” represents Membership Fees for joining Star Alliance. 10 Object D’art reflected in Property, Plant & Equipment Note as a separate line item are old assets and have been fully depreciated appearing at nil value(Rs 1).

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NOTE “1” (Rupees in Million) Sl. Particulars GROSS BLOCK DEPRECIATION NET BLOCK No. As at Addi- Deduc- As at Upto April For the Deductions Upto As at As at April 01, tions / tions / March 31, 01, 2017 year / Reclassifi- March 31, March 31, March 31, 2017 Reclas- Reclas- 2018 cation 2018 2018 2017 sification sification PROPERTY, PLANT & EQUIPMENT A. LAND & BUILDINGS 1. Land-Freehold 6,986.3 - 1,260.9 5,725.4 - - - - 5,725.4 6,986.3 2. Land-Leasehold 54,522.1 - 52,684.0 1,838.1 75.6 - 75.6 - 1,838.1 54,446.5 3. Buildings 9,903.8 223.0 676.0 9,450.8 253.5 724.0 721.7 255.8 9,195.0 9,650.3 SUB TOTAL "A" 71,412.2 223.0 54,620.9 17,014.3 329.1 724.0 797.3 255.8 16,758.5 71,083.1 B. AIRCRAFT FLEET, ROTABLES & REPAIRABLES 1. Airframes Owned 139,164.0 32,895.4 151.0 171,908.4 6,895.8 8,042.5 - 14,938.3 156,970.1 132,268.2 Leased ------2. Aero Engines & Power Plants (a) Owned-Fixed Cost 54,732.5 14,452.5 65.7 69,119.3 2,511.3 2,934.2 - 5,445.5 63,673.8 52,221.2 (b) Owned-Variable Cost (Component) 3,231.5 - - 3,231.5 1,478.3 969.5 - 2,447.8 783.7 1,753.2 (c) Owned-Repair Cost 3,533.6 1,749.1 - 5,282.7 826.0 1,228.9 - 2,054.9 3,227.8 2,707.6 3. Simulators & Link Trainers 2,251.6 658.9 178.1 2,732.4 132.0 146.4 163.6 114.8 2,617.6 2,119.6 4. Airframe Rotables 7,377.3 1,030.4 - 8,407.7 411.6 472.6 2.4 881.8 7,525.9 6,965.7 5. Aero-Engine Rotables 757.0 - - 757.0 60.5 60.5 - 121.0 636.0 696.5 6. Aircraft Repairables 8,304.4 1,577.9 384.1 9,498.2 1,070.3 1,247.6 310.4 2,007.5 7,490.7 7,234.1 7. Simulator Rotables ------SUB TOTAL "B" 219,351.9 52,364.2 778.9 270,937.2 13,385.8 15,102.2 476.4 28,011.6 242,925.6 205,966.1 C. OTHER- FIXED ASSETS 1. Workshop Equipment, Instruments, 3,648.2 728.9 24.3 4,352.8 238.2 386.6 137.9 486.9 3,865.9 3,410.1 Plant & Machinery and Vehicles - 2. Ground Support & Ramp Equipment 475.4 20.6 53.3 442.7 222.3 99.7 48.5 273.5 169.2 253.1 3. Furniture & Fixtures 205.1 15.9 0.5 220.5 35.7 26.5 (0.4) 62.6 157.9 169.4 4. Office Appliances & Equipment 150.3 20.4 4.3 166.4 21.8 24.8 (1.2) 47.8 118.6 128.5 5. Computer System 249.0 80.5 1.5 328.0 36.6 41.3 1.5 76.4 251.6 212.3 6. Electrical Fittings & Installations 510.1 2.2 24.8 487.5 63.5 65.7 50.3 78.9 408.6 446.6 7. Object D'art (Net Block Rs.39,969.43) 0.6 - - 0.6 0.6 - - 0.6 - - SUB TOTAL "C" 5,238.7 868.5 108.7 5,998.5 618.7 644.6 236.6 1,026.7 4,971.8 4,620.0 TOTAL PROPERTY, PLANT & EQUIPMENT 296,002.8 53,455.7 55,508.5 293,950.0 14,333.6 16,470.8 1,510.3 29,294.1 264,655.9 281,669.2 INVESTMENT PROPERTY 1. Investment Property Land - Freehold 2. Investment Property Land - Leasehold 8,983.7 - 4,770.7 4,213.0 - - - - 4,213.0 8,983.7 3. Investment Property - Buildings 6,568.1 1.3 - 6,569.4 439.4 423.4 - 862.8 5,706.6 6,128.7 TOTAL FOR INVESTMENT PROPERTY 15,551.8 1.3 4,770.7 10,782.4 439.4 423.4 - 862.8 9,919.6 15,112.4 INTANGIBLE ASSETS : A. COMPUTER SOFTWARE 869.2 16.2 - 885.4 496.5 115.2 - 611.7 273.7 372.7 B. OTHERS 383.6 - - 383.6 127.9 127.9 - 255.8 127.8 255.7 TOTAL FOR INTANGIBLE ASSETS 1,252.8 16.2 - 1,269.0 624.4 243.1 - 867.5 401.5 628.4 TOTAL ASSETS 312,807.4 53,473.2 60,279.2 306,001.4 15,397.4 17,137.3 1,510.3 31,024.4 274,977.0 297,410.0 Capital Work-in-Progress 2,320.9 364.0 1,871.3 813.6 - - - - 813.6 2,773.2 Intangible Assets under Development 13.5 69.4 - 82.9 - - - - 82.9 13.5 GRAND TOTAL 315,141.8 53,906.6 62,150.5 306,897.9 15,397.4 17,137.3 1,510.3 31,024.4 275,873.5 300,196.7

1 During the year, the Company has capitalized translation difference of Rs. 244.4 Million (Previous Year : Rs.1620.0 Million) arising on settlement and reporting of long term monetary items. Additions to “Aircraft Fleet, Rotables & Repairables” includes Exchange Rate Fluctuations (Net of Debit & Credit) on underlying loans in foreign currency : Rs. 244.4 Million (Previous Year: Rs. (2124.3 Million). 2 “Aircraft Fleet, Rotables & Repairables” includes 39 Aircraft (One B777-300 ER, Six B787-800, Five B747-400, Nine A-319, Ten A320 & Eight A-321), 22 Spare Engines & 4 Spare APUs owned by Air India Ltd. 3 “Aircraft Fleet, Rotables & Repairables” includes 37 Aircraft (Three B777-200LR, Twelve B777-300 ER, Ten A-319 & Twelve A-321) (Previous Year : 37 Aircraft - {Three B777-200LR, Twelve B777-300ER, Ten A-319 & Twelve A-321}) & 5 GE Spare Engines (Previous Year 5 GE Spare Engines) and Registration of these 37 Aircraft & 5 Spare Engines continues to be in the name of SPV Company for which beneficial ownership is withAir India Ltd. (Refer Note 46(i)) 4 Borrowing costs capitalized during the year are Rs.1636.8 Million (Previous Year : Rs.82.5 Million) 5 Depreciation includes debit of Rs.463.5 Million (Previous Year : Debit of Rs.308.8 Million) to Capital Reserve. 6 “Intangible Asset - Others” represents Membership Fees for joining Star Alliance. 7 Special tools included in Workshop Equipment, Instrument Machinery & Plants and Other Fixed Assets are being Depreciated at year wise total Block Amount. 8 Three Old Classic A320 Aircraft(VT-EPO,Vt-EPL and VT-EPD), two Boeing 737(VT-EGJ and VT-EGI), 18 V2500 Engines, one Boeing JT&D and 10 A320 Classic APU with WDV of Rs. 149.7 Million removed from Surplus assets on sale and a loss of Rs. 4.99 Million booked during the year. 9 As per IND AS, Rs. NIL Million (Previous year 382.4 Million) has been transferred from Engine fixed cost to Engine Variable cost. The Depreciation charged on the Engine Variable Component is Rs. 959.5 Million (previous year - Rs. 1478.3 Million)

148 AIR INDIA

NOTE “2” : NON-CURRENT INVESTMENTS

(Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 1 INVESTMENTS at Cost 1.1 EQUITY INSTRUMENTS - UNQUOTED A IN SUBSIDIARIES i) Equity Shares of Rs. 100 each fully paid up in Hotel - 1,106.0 Corporation of India Limited * (Previous Year : 11,060,000 Equity Shares) ii) 78,000,000 Equity Shares (Previous Year :78,000,000 Equity 7,800.0 7,800.0 Shares) of Rs. 100 each fully paid up in Air India Express Limited. iii) Equity Shares of Rs.10 each fully paid up in Air-India Air - 1,384.2 Transport Services Limited * (Previous Year :138,424,200 Equity Shares) iv) Equity Shares of Rs.10 each fully paid up in Air-India - 1,666.7 Engineering Services Limited * (Previous Year : 166,666,500 Equity Shares) v) Equity Shares of Rs 100/- each fully paid up in Airlines Allied - 4,022.5 Services Ltd * (Previous Year : 40,225,000 Equity Shares) SUB TOTAL 7,800.0 15,979.4 B IN JOINT VENTURE 40,424,975 Equity Shares (Previous Year : 40,424,975 436.2 436.2 Equity Shares) of Rs.10 each fully paid up in Air India SATS Airport Services Private Ltd. (40,419,975 Equity Shares of Rs.10 each issued at a premium of Rs.0.79 per share) SUB TOTAL 436.2 436.2 TOTAL INVESTMENT at Cost (A) 8,236.2 16,415.6

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NOTE “2” : NON-CURRENT INVESTMENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 2. INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI) 2.1 EQUITY INSTRUMENTS (QUOTED) 375,407 Equity Shares (Previous Year : 375,407 Equity Shares) of 422.8 418.2 EUR 0.48 each fully paid up in Orange S.A. (Formerly known as France Telecom ) SUB TOTAL 422.8 418.2 2.2 WITH OTHERS / STRUCTURED ENTITIES TRADE INVESTMENTS i) 2,617,098 Equity Shares (Previous Year : 2,617,098 Equity Shares) of 131.4 105.3 MAR 10 each fully paid up in Air Mauritius Ltd. # ii) 2,301,244 Equity Shares (Previous Year : 2,301,244 Equity Shares) of 45.5 44.8 MAR 10 each fully paid up in Air Mauritius Holding Ltd. # iii) 12,500,000 Equity Shares (Previous Year : 12,500,000 Equity Shares) 451.2 434.3 of Rs. 10 each fully paid up in Cochin International Airport Limited. # (Includes 2,500,000 Equity Shares of Rs.10 issued and subscribed at a premium of Rs.40 per share) iv) 277 Equity Shares (Previous Year : 266 Equity Shares) of EUR 5.00 ^ 0.1 0.1 each fully paid up in SITA (Societe Internationale de Telecommunications Aeronautiques). (11 Shares allotted during the year) v) 890,139 Depository Certificates of SITA Information Network Computing 42.7 42.7 N.V. ^ (Previous Year : 890139) vi) 2348 class B Shares (Previous Year : 1,270 Shares) of BHT 100 ^ each 0.4 0.2 fully paid up in Aeronautical Radio of Thailand Ltd. (1078 Shares allotted during the year) vii) 50 Equity Shares (Previous Year : 50 Equity Shares) of EUR 152.45 each 0.4 0.4 ^ fully paid up in Association Sportive Du Golf Isabella. SUB TOTAL 671.7 627.8 2.3 DEBENTURES 6% Debenture Bonds of Banco De Roma face value EUR 15.49 ^ ** 0.0 ** 0.0 guaranteed by the Government of Italy (Deposited with Civil Aviation Department, Italy) (**Rs.3,057.69) SUB TOTAL - - TOTAL INVESTMENTS AT FAIR VALUE THROUGH OTHER 1,094.5 1,046.0 COMPREHENSIVE INCOME (FVTOCI) (B) TOTAL INVESTMENTS (A + B) 9,330.7 17,461.6

Aggregate amount of unquoted investments 8,907.9 17,043.4 Aggregate provision for diminution in value of investments Aggregate amount of quoted investments (Market value : Rs.422.8 Million 422.8 418.2 (Previous Year : Rs.418.2 Million)) (Equivalent to EUR 5.5 Million (Previous Year : EUR 5.2 Million)) * Subsidiary Investments transferred to Assets Held for Sale (Refer Note 10.1)

# Fair valuation of Investments carried out at book value based on latest available Audited Financial Statements.

^ Investments carried at cost.

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NOTE “3” : TRADE RECEIVABLES (Rupees in Million) Particulars Non-current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Considered Good - Unsecured * - - 19,921.0 17,824.5 Trade Receivables having significant - - 1,389.4 1,161.0 increase in credit risk Trade Receivables - Credit Impaired 9,399.7 9,167.0 9,399.7 9,167.0 21,310.4 18,985.5 Less : Allowance for Significant in- - - 1,389.4 1,161.0 crease in credit risk Less : Allowance for Credit Impaired 9,399.7 9,167.0 - - (A) - - 19,921.0 17,824.5

* Trade Receivables amounting to Rs.447.3 Million (Previous Year Rs. 70.0 Million ) are backed by Bank Guarantees.

NOTE “4” : LOANS (Rupees in Million) Particulars Non-Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Security Deposits Considered Good - Unsecured 3,316.4 3,056.0 145.8 121.9 Credit Impaired 42.4 42.9 - - 3,358.8 3,098.9 145.8 121.9 Less : Allowance for Credit Impaired 42.4 42.9 - - Deposits 3,316.4 3,056.0 145.8 121.9

TOTAL 3,316.4 3,056.0 145.8 121.9

151 AIR INDIA

NOTE “5” : OTHER FINANCIAL ASSETS (Rupees in Million) Particulars Non-Current Current As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018 1 Advances Recoverable from Parties Unsecured Considered Good - - 704.9 1,103.9 Unsecured Considered Doubtful 68.1 201.1 - - 68.1 201.1 704.9 1,103.9 Less : Allowance for Doubtful Advances 68.1 201.1 - - (A) - - 704.9 1,103.9 2 Advances Recoverable from Employ- ees Unsecured Advances Considered Good 117.0 73.3 591.5 482.4 Unsecured Considered Doubtful 10.8 16.0 - - 127.8 89.3 591.5 482.4 Less : Allowance for Doubtful Advances 10.8 16.0 - - (B) 117.0 73.3 591.5 482.4 3 Advance to Subsidiary Companies * / # Unsecured Considered Good 10,586.1 38,936.0 - - Unsecured Considered Doubtful - - - - 10,586.1 38,936.0 - - Less : Allowance for Doubtful Advances - - - - (C) 10,586.1 38,936.0 - -

4 Deposit-Others (having maturity of 434.7 135.6 - - more than 12 months) Less : Allowance for Doubtful Deposits 0.1 0.1 - - (D) 434.6 135.5 - - 5 Interest Accrued on i) Fixed Deposits 61.2 42.4 33.5 22.2 ii) Loan to Employees 1.4 2.6 4.7 5.5 iii) Advances to Subsidiary Companies ** - - 924.3 3,221.7 / # (E) 62.6 45.0 962.5 3,249.4 6 Other Non-Trade Receivables Unsecured Considered Good - - 863.6 40.1 Other Non-trade Receivables - Credit 2,653.6 2,043.1 - - Impaired 2,653.6 2,043.1 863.6 40.1 Less : Allowance for Credit Impaired 2,653.6 2,043.1 - - (F) - - 863.6 40.1 TOTAL (A + B + C + D + E + F) 11,200.3 39,189.8 3,122.5 4,875.8

152 AIR INDIA

* Details of Advances given to Subsidiary Companies/Joint Ventures are as under :

Name of the Subsidiary Company/Joint Ventures As at March As at March 31, 2019 31, 2018 1. Air India Express Limited 10,586.1 9,201.1 2. Air India Engineering Services Limited # - 13,444.9 3. Hotel Corporation of India Limited # - 2,075.4 4. Airline Allied Services Limited # - 14,085.5 5. Air India Air Transport Services Ltd # - 129.1 Total 10,586.1 38,936.0

** Details of Interest Accrued on Advances to Subsidiary Companies/Joint Ventures are as under : Name of the Subsidiary Company/Joint Ventures As at March As at March 31, 2019 31, 2018 1. Air India Express Limited 924.3 752.1 2. Hotel Corporation of India Limited # - 204.6 3. Airline Allied Services Limited # - 1,340.7 4. Air India Engineering Services Limited # - 924.3

Total 924.3 3,221.7

# Advances and Interest Accrued to Subsidiary Companies transferred to Assets Held for Sale (Refer Note 10.1)

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NOTE “6” : OTHER NON-FINANCIAL ASSETS (Rupees in Million) Particulars Non-Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Capital Advances Unsecured Considered Good 100.0 129.4 - - Doubtful 28.7 7.6 - - 128.7 137.0 - - Less : Allowance for Doubtful Advances 28.7 7.6 - - (A) 100.0 129.4 - - Advances other than Capital Advances Unsecured Considered Good 12.6 121.4 5,071.2 5,065.0 Doubtful 583.2 215.3 - - 595.8 336.7 5,071.2 5,065.0 Less : Allowance for Doubtful Advances 583.2 215.3 - - (B) 12.6 121.4 5,071.2 5,065.0 Non-Trade Receivable Unsecured Considered Good - - 1,801.5 9,058.6 Doubtful 149.3 135.1 - - 149.3 135.1 1,801.5 9,058.6 Less : Allowance for Doubtful Non 149.3 135.1 - - Trade Receivable (C) - - 1,801.5 9,058.6 Other Advances Unsecured Considered Good Prepaid Expenses 5,765.0 5,794.7 2,280.3 1,396.5 Balances with Statutory / Government - - 3,504.0 3,838.3 Authorities (D) 5,765.0 5,794.7 5,784.3 5,234.8 TOTAL (A + B + C + D) 5,877.6 6,045.5 12,657.0 19,358.4

NOTE “7” : INCOME TAX ASSETS NET OF PROVISION

Particulars Non-Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Advance Payment of Income Tax and 2,264.1 2,780.3 1,458.8 468.4 TDS (net of provision for taxation) 2,264.1 2,780.3 1,458.8 468.4

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NOTE “8” : INVENTORIES (As taken, valued & certified by the Management) (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 Stores and Spare Parts 16,417.9 17,861.5 Loose Tools 43.0 75.4 16,460.9 17,936.9 Less : Provision for Obsolescence / Inventory Reconciliation 8,466.1 8,964.3 7,994.8 8,972.6 Goods-in-Transit 69.0 59.3 TOTAL 8,063.8 9,031.9 * Stores and Spare Parts includes an amount of Rs.2,371.3 Million (Previous Year : Rs.1,765.9 Million) as Work Order Suspense account which represents inventories lying with a subsidiary company i.e. Air India Engineering Services Ltd. and Rs.255.0 Million (Previous Year : Rs. 308.3 Million) with third party for repair work for Air India Ltd.

NOTE : “9” : CASH AND CASH EQUIVALENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 Cash and Cash Equivalents 1. Balances with Banks : a) In Current Accounts 2,141.8 1,580.8 b) In Deposit Accounts (Maturity less than 3 months) 259.3 241.3 2. Cheques, Drafts on Hand 28.3 31.0 3. Cash on Hand (as certified) 22.8 32.9 TOTAL (A + B) 2,452.2 1,886.0

NOTE : “10” : BANK BALANCES OTHER THAN CASH AND CASH EQUIVALENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 Other Bank Balances 1. Margin money deposits 4,529.4 4,204.0 2. Deposits - Others (More than 3 months but Less than 12 Months) 1,450.7 1,338.8 5,980.1 5,542.8

155 AIR INDIA

NOTE “10.1” : ASSETS HELD FOR SALE (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 1. Properties * 68,066.3 58,223.9 2. Investment in Subsidiary Companies a) 138,424,200 Equity Shares of Rs.10 each fully paid up in 1,384.2 - Air-India Air Transport Services Limited. b) 166,666,500 Equity Shares of Rs.10 each fully paid up in 1,666.7 - Air-India Engineering Services Limited. c) 40,225,000 Equity Shares of Rs 100/- each fully paid up in 4,022.5 - Airlines Allied Services Ltd. d) 11,060,000 Equity Shares of Rs.100 each fully paid up in 1,106.0 - Hotel Corporation of India Limited 8,179.4 - 3. Advance to Subsidiary Companies (net) ** a) Air India Engineering Services Limited 17,181.7 - b) Airlines Allied Services Limited 16,681.9 - c) Hotel Corporation of India Limited 3,052.1 - 36,915.7 - 4. Others (net of provision) *** 35,548.7 29,694.4 TOTAL 148,710.1 87,918.3 *Includes properties transferred from Investment Property during the year amounting to Rs. 6,583.7 Million **Advances to Subsidiary Companies includes Interest Accrued amounting to Rs.2,998.9 Million (PreviousYear Rs.2,469.6 Million) ***Others includes 2 B777-300 SESF aircraft along with one Spare Engine and QEC Kit amounting to Rs.35,223.6 Million (Previous Year : Rs.29,674.0 Million) (Refer Note 32(b))

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NOTE “11” : SHARE CAPITAL (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 A. AUTHORISED 35,000.0 Million Equity Shares of Rs.10 each 350,000.0 300,000.0 (Previous Year : 30,000.0 Million Equity Shares of Rs.10 each) 350,000.0 300,000.0 B. ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARES 32,665.21 Million Equity Shares of Rs. 10 each 326,652.1 286,902.1 (Previous Year : 28,690.21 Million Equity Shares of Rs.10 each) TOTAL 326,652.1 286,902.1

B.i) Reconciliation of number of shares : (Number of Shares in (Share Value Rupees in Millions) Millions) Particulars 2018-19 2017-18 2018-19 2017-18 Equity Shares at the beginning of the year 28,690.21 26,753.00 286,902.1 267,530.0 Add : Equity Shares Allotted during the 3,975.00 1,937.21 39,750.0 19,372.1 year Equity Shares at the end of the year 32,665.21 28,690.21 326,652.1 286,902.1 ii) Terms/rights attached to equity shares :

The Company has single class of shares i.e. Equity Shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

The Company is a Government Company with 100% shares held by the President of India and his nominees, through administrative control of Ministry of Civil Aviation.

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NOTE “12” : OTHER EQUITY (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 1. Share Application Money Pending Allotment * Balance as per Last Balance Sheet - 1,372.1 Add : Additions during the year - - - 1,372.1 Less : Shares allotted during the year - 1,372.1 - - 2. CAPITAL RESERVE Balance as per Last Balance Sheet 6,878.7 7,194.8 Add : Additions during the year ** 1,163.5 147.4 8,042.2 7,342.2 Less : Transfer to the Statement of Profit and Loss to offset 454.6 463.5 Depreciation (Refer Note 24) Closing Balance 7,587.6 6,878.7 3. GENERAL RESERVE *** Balance as per Last Balance Sheet (1,436.7) (1,436.7) Less : Transfer to Retained Earnings 1,436.7 - Closing Balance - (1,436.7) 4. OTHER RESERVES a) Foreign Currency Monetary Item Translation Difference Account (FCMITDA) Balance as per last Balance Sheet (2,137.3) (2,349.1) Add : Exchange gain/(loss) during the year (1,135.5) (126.5) (3,272.8) (2,475.6) Less : Amortization during the year 513.7 338.3 Closing Balance (2,759.1) (2,137.3) 5. Surplus / (Deficit) Balance at the beginning of the reporting period (539,887.8) (474,867.1) Changes in accounting policy or prior period errors - (11,492.4) Restated balance at the beginning of the reporting period (539,887.8) (486,359.5) (Loss) for the year (84,748.0) (53,377.4) Add : Transfer from General Reserve *** (1,436.7) - Re-measurements of the Defined Benefit Plans through (863.8) (150.9) Other Comprehensive Income Net deficit (626,936.3) (539,887.8) 6. Fair value changes on Equity Instruments through Other Comprehensive Income Opening Balance 743.9 697.3 For the year 48.2 46.6 792.1 743.9 TOTAL (1+2+3+4+5+6) (621,315.7) (535,839.2)

* Share Application Money : Share application money amounting to Rs. NIL Million (Previous Year: Rs.NIL Million) represents money paid by the Government of India towards capital infusion during the year, but allotment of shares not yet made.

** Represents MRO Allowance received from GE towards construction of Test Cell Facility at Nagpur.

*** General Reserve of Vayudoot Ltd. transferred to Retained Earnings during the year.

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NOTE “13” : BORROWINGS - NON CURRENT (Rupees in Million) Particulars Non-Current Current * As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 I Debentures 55,000.0 136,000.0 81,000.0 - II Term Loans a) from Banks (Secured) ** - 109,258.3 109,952.5 6,176.0 b) from Banks (Unsecured) ** 7,597.9 14,703.6 8,751.5 7,104.0 c) from Other Parties (Unse- 108.3 209.5 12.7 10.3 cured) III Long Term Maturities of Fi- 20,293.4 39,451.1 23,539.2 19,068.7 nance Lease Obligations ** TOTAL 82,999.6 299,622.5 223,255.9 32,359.0 13.1 Debentures a) 136,000 Redeemable, Unsecured Non-convertible Debentures of face value of Rs.1 Million each (Previous Year : 136,000 Debentures), are guaranteed by Government of India. Maturity Profile and Rate of interest are as set out below :

(Rupees in Million) Month of Redemption Amount to be Redeemed Rate of Interest Dec-2031 4,714.0 9.08% Nov-2031 10,086.0 9.08% Sep-2031 15,000.0 10.05% Dec-2030 4,714.0 9.08% Nov-2030 10,086.0 9.08% Dec-2029 4,714.0 9.08% Nov-2029 10,086.0 9.08% Dec-2028 4,714.0 9.08% Nov-2028 10,086.0 9.08% Dec-2027 4,714.0 9.08% Nov-2027 10,086.0 9.08% Sep-2026 40,000.0 9.84% Mar-2020 7,000.0 9.13% Total 136,000.0 b) Debenture Redemption Reserve as required under Section 71(4) of the Companies Act, 2013 has not been created in the absence of earned profits by the Company. c) Current maturities includes 74,000 Redeemable, Unsecured Non-convertible Debentures of face value of Rs.1 Million each amounting to Rs.74,000.0 Million identified for tranfer to SPV Air 159 AIR INDIA

India Asset Holding Limited by way of Novation Agreement (Refer Note 29(ii) & (v))

13.2(a) Details of Secured Term Loans from following Banks which are identified for transfer to SPV Air India Assets Holding Limited are classified as current maturities (Refer Note 29(ii) & (v)) :

Sr Restructuring Lender As at March 31, 2019 As at March 31, 2018 No. 1 Allahabad Bank 2,524.6 2,645.2 2 Andhra Bank 3,021.7 3,178.9 3 Bank of Baroda 11,346.5 11,903.7 4 Bank of India 15,107.0 15,727.2 5 Canara Bank 7,402.8 7,763.8 6 Central Bank of India 8,022.4 8,463.3 7 Corporation Bank 6,560.9 6,883.9 8 Dena Bank 1,180.6 1,243.6 9 The Federal Bank Limited 1,864.1 1,893.2 10 IDBI Bank Limited 3,763.5 3,967.4 11 Indian Bank 3,757.9 3,962.7 12 Indian Overseas Bank 6,199.8 6,509.3 13 Oriental Bank of Commerce 7,648.9 8,097.9 14 Punjab National Bank 10,561.9 11,136.9 15 Punjab & Sind Bank 2,386.0 2,513.0 16 State Bank of India 5,764.8 6,051.9 17 Syndicate Bank 5,572.3 5,819.6 18 UCO Bank 4,996.6 5,290.6 19 United Bank of India 2,270.2 2,382.2 TOTAL 109,952.5 115,434.3 For all Secured Term Loans from Banks, interest rate is linked to respective Bank’s Prime Lending Rate / Base Rate / Libor plus Margin. These loans are repayable in Quarterly Installments starting from 31st December 2013 and ending in 30th September 2026. Disclosure as regards amount of repayment installment and rate of interest are not made due to complexity of repayment schedules and confidentiality clause with the banks as regards interest rate. All Term Loans from above Banks are secured by Hypothecation of 25 aircraft and 10 immovable properties at market value and all Current Assets (Previous Year 25 aircrafts, 11 immovable properties and all Current Assets). However equitable mortgage for 7 immovable properties with banks are yet to be created.

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13.2(b) Total Unsecured Term Loan from Banks of Rs.16,349.4 Million (Previous Year Rs.21,807.6 Million) has been guaranteed by the Government of India.

(Rupees in Million) Starting Month of Equal Number of Amount of Loan as Rate of Month of Maturity Loan Installments at March 31, 2019 Interest Repayment

Bullet 4,775.6 Libor + 1.45 Sep-2016 Sep-2021 /2.5 10 562.7 Libor + Apr-2015 Apr-2021 2.13455 9 557.3 Libor + 2.15 Mar-2015 Mar-2021 9 662.0 Libor + 1.55 Mar-2016 Mar-2021 9 732.5 Libor + 1.55 Mar-2016 Mar-2021 5 9,059.3 Libor + 1.80 Jun-2016 Mar-2020 TOTAL 16,349.4

13.2(c) Unsecured Term Loan from Others of Rs.121.0 Million (Previous Year Rs.219.8 Million) are guaranteed by the Government of India. (Rupees in Million) Equal Number of Amount of Discounted Rate of Starting Month of Loan Installments Loan as at As per Ind AS Interest Month of Maturity March 31, as at March Repayment 2019 31, 2019 42 153.7 79.8 Interest Free Oct-1990 Oct-2039 39 70.3 41.2 Interest Free Oct-1987 Mar-2037 TOTAL 224.0 121.0

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13.3Long Term Maturities of Finance Lease Obligations of Rs.43,832.6 Million (Previous Year Rs.58,519.8 Million) are guaranteed by the Government of India to the extent of Rs.36,932.9 Million (Previous Year Rs.47,545.7 Million) (Rupees in Million)

Number of Equated Amount of Rate of Interest Starting Month Month of Loan Installments Loan as at of Repayment Maturity March 31, 2019 27 8,730.7 Libor + 0.24 Aug-2011 Jul-2022 31 14,442.0 Libor + 0.93 Mar-2010 Sep-2021 8 10,633.5 Libor + 0.75 Feb-2008 Feb-2021 11 2,180.0 Libor - 0.05+0.55 Jan-2009 May-2020 10 2,294.0 2.46% to 2.89% Oct-2007 Dec-2019 Fixed 3 5,552.4 Libor + 0.75 Mar-2007 Dec-2019 TOTAL 43,832.6 * Current maturities of long term borrowings have been grouped under the head Other Current Financial Liabilities (Refer Note No.15)

NOTE “14” : TRADE PAYABLES (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Total outstanding dues of micro enter- - - 163.7 156.6 prises and small enterprises Total outstanding dues of creditors - - 81,879.3 80,640.2 other than micro enterprises and small enterprises * - - 82,043.0 80,796.8

* Trade Payable includes : Net payable to Joint Venture AI-SATS Rs. 859.1 Million net of TDS (Previous Year : Rs. 969.8 Million). Also Refer Note No.51 - Identification of Micro and Small Enterprises.

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* For details of Current maturities of long term debts / Finance Lease Obligation Refer Note 13.

Current Maturities of long-term debts includes Rs.183,952.5 Million identified for transfer to SPV Air India Assets Holding Limited (Refer Note 13)

** Interest accrued and due includes :

Rs.236.6 Million being interest on Secured Loans repayable on demand from Banks (Previous Year : Rs. 2,078.3 Million), paid subsequently (Refer Note 18).

Rs.1597.6 Million being interest on Unsecured Loans repayable on demand from Banks (Previous Year : Rs. 1,063.5 Million), paid subsequently (Refer Note 18).

Rs.146.8 Million being interest on Future Lease Obligation (Previous Year : Rs. 55.1 Million), paid subsequently (Refer Note 13)

*** Other Liabilities (Net) includes :

Rs.14,970.6 Million towards Guarantee Fee Liability (Previous Year : Rs.8,391.5 Million

Rs.19,332.8 Million towards Provision for Employees including JDC impact (Previous Year : Rs.19,154.4 Million)

Rs.8,583.2 Million towards Delayed Payment Interest to Oil Marketing Companies (Previous Year : Rs.7,590.6 Million)

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NOTE “16” : PROVISIONS (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Provision for Employee Benefits a) Gratuity 6,101.4 6,026.0 1,054.1 1,025.1 b) Leave Encashment 3,039.2 3,288.0 471.0 504.1 c) Post Employment Medical and 11,559.0 10,960.2 592.1 583.6 Other Benefits (A) 20,699.6 20,274.2 2,117.2 2,112.8 Other Provisions a) Re-delivery of Aircrafts 7,572.2 5,210.3 (B) 7,572.2 5,210.3 - - TOTAL (A + B) 28,271.8 25,484.5 2,117.2 2,112.8

NOTE “17” : OTHER NON FINANCIAL LIABILITIES (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 a) Forward Sales (Net) [Passenger / - - 24,477.4 22,445.3 Cargo] b) Advance from customers (Net) * - - 35,807.0 31,016.6 c) Others Liabilities (Net) ** - - 1,218.8 2,284.5 d) Frequent Flyer Programme - - 828.7 636.9 - - 62,331.9 56,383.3

* Advance from customers (Net) includes Rs.34,675.2 Million (Pevious Year : Rs.30,000.0 Million) pertains to 2 B777-300 SESF Aircraft. ** Other Liabilities (Net) includes Govt. Taxes / Statutory Dues amounting to Rs.764.9 Million (Previous Year : Rs.1,839.8 Million) NOTE “17.1” : LIABILITIES CLASSIFIED AS HELD FOR SALE (Rupees in Million) Particulars Non Current As at March 31, 2019 As at March 31, 2018 Liabilities to Subsidiary Companies (net) Air India Air Transport Services Limited 606.2 - 606.2 -

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NOTE “18” : SHORT TERM BORROWING (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 I Loans repayable on demand : a) from Banks (Secured) 1 / 2 / # / * 113,992.6 110,915.7 b) from Banks (Unsecured) # / * 135,950.8 108,639.2 c) from Other Parties (NSSF) (Unsecured) 26,360.0 - TOTAL 276,303.4 219,554.9

1. Secured loans repayable on demand from Banks are to the tune of Rs.66,857.9 Million (Previ- ous Year Rs.66,482.2 Million). Details are as under : (Rupees in Million) Sr. No. Name of the Lender As at March As at March 31, 2019 31, 2018 1 Allahabad Bank 3,344.0 3,350.0 2 Andhra Bank 1,005.2 1,010.0 3 Bank of Baroda 18,343.3 13,985.4 4 Bank of India 5,345.5 4,891.8 5 Canara Bank 4,853.9 4,794.2 6 Central Bank of India 2,688.8 2,716.5 7 Corporation Bank 2,162.0 2,186.6 8 Dena Bank 381.9 407.3 9 HDFC Bank Ltd. 40.5 50.0 10 The Federal Bank Limited 698.3 651.9 11 IDBI Bank Limited 1,247.9 1,273.4 12 Indian Bank 1,280.0 1,280.0 13 Indian Overseas Bank 1,575.0 1,613.9 14 Oriental Bank of Commerce 2,575.1 2,597.7 15 Punjab National Bank 3,854.1 3,761.0 16 Punjab & Sind Bank 2,269.0 786.8 17 Standard Chartered Bank 7,343.3 11,955.3 18 State Bank of India 3,807.2 1,640.9 19 Syndicate Bank 1,845.9 1,867.7 20 UCO Bank 1,694.4 4,447.8 21 United Bank of India 52.6 764.0 22 PNB Discounting 450.0 450.0 TOTAL (1) 66,857.9 66,482.2

The loans to the tune of Rs.66,857.9 Million are secured by Hypothecation of 30 aircraft, 2 engines, 11 immovable properties at market value and all Current Assets (Previous Year : 29 aircraft,

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11 immovable properties and all Current Assets). However equitable mortgage for 7 immovable properties with banks are yet to be created. 2. Secured loan repayable on demand from Bank is to the tune of Rs.47,134.7 Million (Previous Year Rs.44,433.5 Million). Details of Secured Loans from Banks are as under : (Rupees in Million) Sr. No. Name of the Lender As at March 31, 2019 As at March 31, 2018 1 Investec Bank 32,779.5 30,893.0 2 First Gulf Bank 14,522.5 13,686.7 47,302.0 44,579.7 Less : Deferred amount of upfront 167.3 146.2 fees TOTAL (2) 47,134.7 44,433.5 TOTAL (1 + 2) 113,992.6 110,915.7

The loans to the tune of Rs.47,134.7 Million (Previous Year Rs.44,433.5 Million) are secured by Hypothecation of 6 aircraft at market value (Previous Year : 6 aircraft). 3. Unsecured loan repayable on demand from Bank of Rs.135,950.8 Million (Previous Year Rs.108,639.2 Million) has been guaranteed by the Government of India to the extent of Rs.129,791.5 Million (Previous Year Rs.104,522.4 Million). (Rupees in Million) Sr. Name of the Lender As at March As at March No. 31, 2019 31, 2018

1 Bank of Baroda 21,750.0 21,750.0 2 Bank of Baroda 15,000.0 - 3 Bank of Baroda OD NYC 2,955.6 3,224.4 4 Bank of India 15,000.0 15,000.0 5 Indusind Bank 10,000.0 10,000.0 6 Punjab national Bank 22,500.0 22,499.8 7 Punjab National Bank 15,000.0 15,000.0 8 Uco Bank 10,000.0 - 9 Uco Bank 8,250.0 8,249.6 10 SBI Bill Discounting *not guaranteed by GOI 6,159.3 4,116.8 11 SCB/FAB/Meshreq Bridge Loan 9,335.9 8,798.6 TOTAL 135,950.8 108,639.2

# Disclosure as regards Bank wise rate of interest and period of default is not made due to complexity of data & confidentiality clause with the banks. (Also refer Note 13 & 15)

* As indicated in Note 29(ii) & (v), a sum of Rs.294,640.0 Million as on 1st October 2018 is identified for transfer to the SPV / AIAHL. A sum of Rs.74,000.0 Million and Rs. 109,952.5 Million pertaining to Note 13 - Long Term Borrowings is identified for transfer. The balance amount of Rs.110,687.5 is included in Short Term Secured & Unsecured Borrowings from Banks above.

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NOTE “19” : REVENUE FROM OPERATIONS (Rupees in Million) Particulars 2018-19 2017-18 i) Scheduled Traffic Services 1 Passenger 207,741.6 177,440.9 2 Excess Baggage 1,203.8 1,110.1 3 Mail 576.2 713.4 4 Cargo 14,484.0 12,095.2 (A) 224,005.6 191,359.6 ii) Non-Scheduled Traffic Services 1 Charter 14,526.2 12,459.5 2 Block Seat Arrangement 462.4 516.8 3 Subsidy for Operations from Government 355.0 109.6 (B) 15,343.6 13,085.9 iii) Other Operating Revenue 1 Handling and Servicing 1,653.7 1,674.3 2 Manufacturers Credit 356.7 1,363.3 3 Incidental 9,821.9 17,248.2 4 Revenue Share from Air India Express Ltd. 3,500.0 4,000.0 (Wholly Owned Subsidiary Company) 5 Revenue Share from Air India Air Transport Services Ltd. 406.8 750.0 (Wholly Owned Subsidiary Company) (C) 15,739.1 25,035.8 TOTAL (A + B + C) 255,088.3 229,481.3

NOTE “20” : OTHER INCOME (Rupees in Million) Particulars 2018-19 2017-18 1 Interest Income on : a) Bank Deposits 369.0 271.7 b) Others * 693.4 283.9 c) Advances to Subsidiary Companies 3,923.2 3,221.7 2 Dividend from Long Term Investments (Trade) 72.7 69.5 3 Rent from Air India Building 901.1 886.4 4 Profit / (Loss) on Sale of Assets (Net) 1,225.6 1,761.5 5 Provisions No Longer Required written back 2,032.6 2,473.4 TOTAL 9,217.6 8,968.1

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* Interest Income on Others includes interest pertaining to discounting of Security Deposits as per Ind AS amounting to Rs.257.6 Million (Previous Year : Rs.211.8 Million)

NOTE “21” : OTHER OPERATING EXPENSES (Rupees in Million) Particulars 2018-19 2017-18 1 Insurance 941.3 979.1 2 Material Consumed - Aircraft 5,511.2 6,655.2 3 Outside Repairs - Aircraft 29,250.9 20,535.4 4 Navigation, Landing, Housing and Parking 19,188.2 18,113.4 5 Hire of Aircraft 30,926.1 23,550.6 6 Handling Charges 15,878.3 13,894.0 7 Passenger Amenities 10,251.7 8,897.7 8 Booking Agency Commission (Net) 5,634.8 5,249.8 9 Communication Charges i) Reservation System 11,847.1 10,101.5 ii) Others 1,684.3 2,123.1 TOTAL 131,113.9 110,099.8

NOTE “22” : EMPLOYEE BENEFIT EXPENSES (Rupees in Million) Particulars 2018-19 2017-18 1 Salaries, Wages and Bonus 14,284.8 14,184.9 2 Crew Allowances 11,459.2 10,913.8 3 Contribution to Provident and Other Funds 1,043.5 866.4 4 Staff Welfare Expenses 1,291.1 374.9 5 Provision for Gratuity 760.7 1,700.4 6 Provision for Leave Encashment 207.6 540.5 7 Provision for Retirement Benefit 1,005.4 883.0 TOTAL 30,052.3 29,463.9

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NOTE “23” : FINANCE COST (Rupees in Million) Particulars 2018-19 2017-18 1 Interest on : a) Debentures 12,801.8 12,801.8 b) Short Term and Long Term Loans 33,298.8 25,400.9 46,100.6 38,202.7 Less: Interest Cost Reimbursement through SPV AIAHL (Refer 13,000.0 - Note 29(vi)) 33,100.6 38,202.7 2 Other Borrowing Costs * 7,503.9 3,354.1 3 Interest on Delayed Payment other than borrowings 6,508.5 3,084.1 TOTAL 47,113.0 44,640.9

* Includes an amount of Rs.20.5 Million (Previous Year : Rs.46.0 Million) interest charged by Sub- sidiary Company, AIATSL on outstanding balances. a) Exchange rate difference in the nature of interest cost on foreign currency borrowing has not been reclassified due to complexity of transactions.

NOTE “24” : DEPRECIATION AND AMORTIZATION EXPENSE (Rupees in Million) Particulars 2018-19 2017-18 1 Depreciation of Tangible Assets 16,062.2 16,894.2 2 Amortization of Intangible Assets 271.7 243.1 (A) 16,333.9 17,137.3 Less : Recoupment from Capital Reserve (Refer Note 12) 454.6 463.5 (B) 454.6 463.5 TOTAL (A- B) 15,879.3 16,673.8

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NOTE “25” : OTHER EXPENSES (Rupees in Million) Particulars 2018-19 2017-18

1 Travelling Expenses i) Crew 2,734.2 2,309.6 ii) Others 657.2 527.1 2 Rent 614.9 1,050.7 3 Rates and Taxes 77.3 168.7 4 Repairs to : i) Buildings 199.2 403.9 ii) Others 822.6 980.9 5 Hire of Transport 837.3 758.0 6 Electricity & Heating Charges 497.8 628.6 7 Water Charges 7.2 28.4 8 Directors' Sitting Fees 0.7 0.2 9 Publicity and Sales Promotion 840.8 1,185.6 10 Printing and Stationery 118.8 118.8 11 Legal Charges 101.9 126.3 12 Payments to the Auditors' (Refer Note No.53) i) Audit Fees 12.0 10.5 ii) Other Expenses 2.5 1.6 13 Provision for Bad & Doubtful Receivables and Advances 2,109.5 793.5 14 Write-off / Write Back / Provision of Obsolete Inventory 1,907.7 1,612.0 15 Write-off of Duty Credit Entitlement under SFIS 388.5 786.4 16 Expenses on Block Seat Arrangements 151.7 176.1 17 Exchange Variation (Net) * 7,721.7 307.8 18 Bank Charges 2,030.5 1,987.5 19 Professional / Consultation Fees & Expenses 412.8 506.2 20 Miscellaneous Expenses 2,304.0 2,853.1 TOTAL 24,550.8 17,321.5 * Includes exchange variation on bridge loans amounting to Rs.3,272.4 Million (Previous Year : Rs. 362.2 Million)

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Notes forming part of the Standalone Financial Statements of Air India Limited for the year ended 31st March 2019 (Rupees in Million except otherwise stated)

26. Contingent Liabilities & Contingent Assets: A. Contingent Liabilities: Claims against company not acknowledged as debts (excluding interest and penalty, in certain cases) and the required information, in compliance of Ind AS 37, are as under: (Rs in Millions)

No Description Balance as on 31st Balance as on 31st March 2019 March 2018 (i) Pax Claims on account of Misc 417.3 365.5 Commercial Reasons. (ii) Income Tax Demand Notices received by 1,240.4 540.6 the Company which are under Appeal (iii) Customs Duty and Service Tax 9,208.5 7,668.2 demanded by the Tax Authorities (iv) Property Taxes/House Tax demanded by 111.0 107.7 the Municipal Authorities (v) Claims of Airport Operators/Others (*) 1,196.4 6,118.2 (vi) Other Claims on account of Staff/Civil/ 2,136.4 1,848.1 Arbitration/Labour Cases pending in Courts (vii) Government Guarantee Fee (**) a) Difference between Applicable Rate & the - 3,066.1 rate of 0.5% at which Guarantee Fee has been provided b) Additional Guarantee Fee 17,470.4 13,957.4 Total 31,780.4 33,671.8 Explanatory Statement in respect of Other Contingent Liabilities a) Claims of Airport Operators includes (*) - In the case of GHIAL, a claim of Rs 988.6million(PY: Rs. 4806.5 million) for interest on delayed payments has not been accepted and pending determination of actual liability for the same, the amounts demanded by them have been shown as Contingent Liability. In the case of other Airport Operators namely DIAL and MIAL their claims have been duly verified and reconciled during the year except as stated in Note No 40(i) (b) and liability provided for the same during the year. b) Government Guarantee Fee (**): The company has taken up the issue of waiver of guarantee fee and related penal charges with the Ministry of Finance through the Ministry of Civil Aviation. As regards the penal charges on the delayed payments of Guarantee Fee the Company has disclosed a Contingent Liability for the same amounting to Rs.17470.4 million (PY: Rs.13957.4

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million).However, as a matter of prudence, the Company has provided Rs.4080.8 million towards difference between applicable rate and the rate of 0.5% on working capital loans. B. Contingent Assets During the year 2017-18, the Hon’ble Supreme Court of India has vacated the stay granted by the Hon’ble High Court of Delhi in respect of implementation of tariff fixed by AERA applicable with effect from 01/01/2016. In this regard the tariff fixed for the 2nd control period (i.e.from 1.1.2016), was lower than the tariff fixed for the 1st control period (tariff prior to 1.1.2016). In view of this judgment, DGCA issued AIC (Aeronautical Information Circular) for the implementation of 2nd control period tariff with immediate effect, however, the same is still to be implemented. In the intervening period DIAL has collected from Air India, an excess amount to the tune of Rs 2299 million (approx). on account of Landing & Parking Charges. The company has requested AERA that while fixing the tariff, the airlines who have shouldered the burden of excess amount collected may be compensated by way of discount in tariff in proportion to the excess amount collected by DIAL from respective airlines. During the normal course of business, certain unresolved claims are outstanding. The inflow of economic benefits in respect of such claims cannot be measured due to uncertainties that surround the related events/circumstances.

27. Commitments: (i) Capital Commitments Estimated amount of contracts remaining to be executed on Capital Account are given hereunder:

Particulars (Rs in Million) As on 31st March 2019 As on 31st March 2018 Aircraft Related Payments 2195.5 2607.9 Others 912.0 1550.4 Total 3107.5 4158.3

(ii) Other Long-TermCommitments a) Corporate Guarantees, Letters of Comfort given by the Company on behalf of its Subsidiary Companies:

Particulars (Rs in Million) As on 31st March 2019 As on 31st March 2018 Air India Express Ltd 8011.9 7434.0 Airline Allied Services Ltd 4273.0 4074.1 Against the above Guarantees given by company, guarantee fee/commission has been charged by the company at the rate of 0.5%. b) Commitment in respect of non-cancellable Operating Leases in respect of aircraft as at 31st March 2019 is Rs 246,691.9 million (PY: Rs 255,282.6 million)

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28. Disinvestment of Air India Ltd (i) In view of the NITI Aayog recommendations on the disinvestment of AI and followed by the recommendations of the Core Group of Secretaries on disinvestment (CGD), the Cabinet Committee on Economic Affairs (CCEA) had given an ‘In-Principle’ approval for considering the strategic disinvestment of the Air India group in its meeting held on 28th June 2017. CCEA also constituted the Air India Specific Alternative Mechanism (AISAM) to guide the process of strategic disinvestment. The Transaction Advisor, Legal Advisor and Asset Valuer have also been appointed to guide the Govt and to carry forward the process of Disinvestment.

(ii) The AISAM in its meetings held on 21st September, 2017 and 5th October. 2017 decided that :

a) The following Four Subsidiaries of Air India be demerged and parked in the newly created SPV:. i) Air India Air Transport Services Limited (AIATSL) ii) Airline Allied Services Limited, (AASL) iii) Air India Engineering Services Limited( AIESL), iv) Hotel Corporation of India (HCI) b) Accumulated working Capital loan not backed by any assets be parked in the newly created SPV c) A Special Purpose Vehicle (SPV) be created for warehousing accumulated working capital loan not backed by any asset along with four subsidiaries AIATSL, AASL, AIESL, HCI, non-core assets, paintings and artifacts and other non-operational assets. This entity be named “Air India Assets Holding Limited”. (iii) Pursuant to the above decision of the AISAM, the SPV Air India Assets Holding Limited (AIAHL) was formed. (iv) The Ministry of Civil Aviation vide their Letter No. AV.17046/368/2017- AI dated 3rdNovember, 2017 directed Air India to demerge the above mentioned four subsidiaries to park it in the SPV. It further directed to transfer the investment in the shares of the subsidiary companies namely AIATSL, AASL, AIESL and HCI from Air India to the SPV company at book values (at value shown in the Balance Sheet as of 31.03.2017 with any addition to “Equity” thereto during the year) (v) The Board of Air India in its 82nd Board meeting held on 17thNovember, 2017 had given in- principle approval for transferring the interest of Air India in the subsidiary companies viz. AIATSL, AIESL, AASL and HCI to the SPV after following the necessary procedures under the Companies Act, 2013 and other legal formalities as may be recommended by the legal advisor. (vi) Pursuant to the fact that no bids were received on the Expression of Interest for strategic disinvestment of Air India, the AISAM in its meeting held on 18th June 2018 decided that:

a) In view of the volatile crude prices and adverse fluctuation in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in the near future.

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b) To undertake near and medium-term efforts to capture operational efficiencies 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. (vii) Accordingly, in line with the above decisions conveyed by AISAM, and in view of the deteriorating financial health of Air India Ltd, a Strategic Revival Plan was formulated to take AI back on the path of profitability. The main modalities/directions of this Plan were discussed in the meeting taken by the Hon’ble Finance Minister to discuss the “Plan for Operational & Financial Efficiency in Air India” on 7th September 2018. (viii) The objective of the Strategic Revival Plan was to establish a strong competitive and self- sustaining airline which can be strategically divested or listed in the next few years. Focus on increasing the operational efficiencies whereby substantial increase in revenue or cost saving can be achieved.The Revival Plan contained the following major components: Organizational Reforms Financial Package Disinvestment of Subsidiaries Sale of non-core Assets Improving Internal Efficiencies Tapping the human resource potential to the fullest (ix) After deliberations in the meeting held on 7th September, 2018 under the chairmanship of Hon’ble Finance Minister the “Plan for Operational & Financial Efficiency in Air India” was approved. The following decisions were also taken in the same meeting: Debt amounting to Rs 294,640.0 million to be transferred from Air India Ltd to the SPV viz Air India Assets Holding Ltd effective 1st October 2018. A Cash Support of Rs 39,750.0 million to Air India, inclusive of Rs 16,300.0 million already infused in AI in the current financial year. Provide a Govt Guarantee of Rs 76,000.0 million, (inclusive of Rs 30,000.0 million already provided to Air India in FY 2018-19), to raise new debt for payment of stretched liabilities. Rs 13,000.0 million to be provided to the SPV to meet the interest for Q3/Q4 of FY 18-19 on the debt transferred to the SPV The entire interest on the debt of Rs 294,640.0 million transferred to the SPV, would be serviced by the Government from FY 2019-20 Sale/Disinvestment of AIATSL within the Financial year 2018-19 174 AIR INDIA

(x) In line with the above directives issued by the Ministry of Finance, Govt of India dated 7th September 2018, the Board of Directors of the company, in the Board meeting held on 16th October 2018 decided to transfer 100% share holding of its Subsidiary AIATSL to Air India Asset Holding Ltd (AIAHL, the SPV), subject to necessary approvals and authorized the Company to initiate the talks with AIATSL/AIAHL to finalize the detailed terms and conditions of the transfer. The Board approved the above transfer at a minimum price corresponding to the Net worth of AIATSL as on 31st March, 2018. It also decided that in the event AIAHL is subsequently able to sell AIATSL to a third party at a higher price, then such additional amount shall also be payable by AIAHL to AI as part of the consideration for the purchase of AIATSL. The process of legal transfer of shareholding of AIATSL to AIAHL is still under process and likely to be completed shortly.

(xi) Further, in this regard the PIM (Preliminary Information Memorandum) for the invitation of bids for Expression of Interest (EoI) for the disinvestment of AIATSL has already been issued the details of which are given hereunder:

PIM released on 12th Feb, 2019 Deadline for submission of EOI - 16th May, 2019 which has been extended till 16th August 2019. Last date of Intimation to the Qualified Interested Bidders (QIB) has also been extended to 30th August 2019 (xii) From the above, it is evident that as part of the disinvestment process, the Government has taken a series of measures to improve Air India’s Operational and Financial Efficiency and the same are summarized below:

a) Transfer of Debt of Air India to AIAHL amounting to Rs 294,640.0 million effective 01st October, 2018 b) Transfer of non-core Assets, paintings and artifacts’ from AI to AIAHL c) Transfer of the investment in four subsidiaries viz. AIATSL, AASL, AIESL, HCI to AIAHL along with any receivables or payables related to these subsidiaries d) Interest on the transferred debt to AIAHL will be borne by AIAHL effective 1st October 2018 and thereafter e) Provision of Rs 13,000.0 million for AIAHL for servicing the Interest (xiii) The above decision of the Government amounts to vesting of debt to the extent of Rs 294,640.0 million against transfer of subsidiaries, non-core assets, paintings and artifacts. The total book value of the investment in subsidiaries and the assets are less than the loan being taken over. Further, amongst the subsidiaries, only one subsidiary viz. AIATSL is a profit making subsidiary with a positive net worth. The specially formed SPV - AIAHL has therefore accepted liabilities of Air India far in excess of the book value of the Investments/ Assets being transferred. The exact value would be determined only after the actual monetization of properties and sale of subsidiaries is completed.

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29. Transactions with the SPV relating to Disinvestment of Air India Ltd i) In line with the decision of AISAM, a Company by the name of Air India Assets Holding Ltd (AIAHL) has been incorporated with 100% shareholding held by the Government. This entity is an SPV specially formed for the purpose of acquiring from Air India Limited

a) Non Convertible Debentures (NCD) of Rs 74,000.0 million to be novated to AIAHL against GoI guarantee b) Issue of Govt Fully Serviced Bonds for Rs 70,000.0 million against Letter of Authorization c) Issue of Bonds worth Rs 150,640.0 million with full Government Guarantee for the payment of interest and principal thereof, iv) The Ministry of Finance, Department of Economic Affairs vide its Letters dated 18th June 2019 have already conveyed the Govt of India’s approval for raising the above debt by AIAHL to repay AI’s debt proposed to be transferred to the SPV. The process of issuing of the above Bonds has been initiated and likely to be completed soon. v) As such, as on 31st March, 2019 the identified debt of Rs 294,640.0 million continues to be reflected as Long term/Short term borrowings in the books of Air India Limited as Current and the interest serviced on these debts from 1st October 2018 are reflected as Finance Costs. vi) As per the decision of AISAM the interest on the identified debt were to be serviced by AIAHL and a sum of Rs 13,000.0 million was approved and transferred to AIAHL by the Government. 176 AIR INDIA

This amount in turn was transferred to Air India by AIAHL as reimbursement of the interest costs serviced by Air India effective 1st October 2018. Accordingly, this amount of Rs 13,000.0 million has been reduced from the Finance costs of AIL. vii) As seen from Paragraph (i) above along with the debt of Air India, certain assets are also part of the transfer to SPV. Some of these assets which are part of the proposed transfer are earning income in the form of Rentals. There are associated costs also involved in the earning of the income and maintenance of the said assets. These assets are also meant to be monetized and the proceeds are to be credited to the SPV/ AIAHL through an escrow mechanism for ultimately servicing the transferred debts. viii) Accordingly, Air India had initially identified 111 such properties as non-core assets for monetization purposes. However, subsequently based on the operational requirement 108 properties have now been identified for monetization and transfer of proceeds to the SPV, of which 9 properties have already been sold. The remaining 99properties are reflected in ‘Assets held for Sale’ and ‘Investment Properties’ as given hereunder:

Particulars No of Properties Net Block Value (Rs in Million) Assets Held For Sale 97 68,066.3 Investment Properties (*) 2 4,377.8 (*) Being redeveloped under an agreement prior to monetization ix) As per the decisions of AISAM detailed above and as mentioned in the Preliminary Information Memorandum for Inviting Expression of Interest for Strategic Disinvestment of Air India Limited, including AI’s shareholding interest in AIXL and AISATS, which was also duly approved by AISAM, issued on 28th March, 2018, the investments in Subsidiary Cos including investment in Equity Shares and any balance receivable from and payable to the Subsidiaries will be transferred to the AIAHL. Accordingly, the investment in Subsidiary Cos along with receivables/ payables relating to the Subsidiary Companies which are proposed to the transferred to AIAHL, have been presented as “Assets held for Sale”. Accordingly, the following Subsidiary Companies balances will be transferred to the AIAHL: (Rs in Million) No Name of Sub Co Investment to be Receivables/Payable Transferred to be Transferred a) Airline Allied Services Ltd (AASL) 4,022.5 16,681.9 b) Air India Air Transport Service Ltd (AIATSL) 1,384.2 (606.2) c) Air India Engineering Services Ltd (AIESL) 1,666.7 17,181.7 d) Hotel Corporation of India Limited (HCI) 1,106.0 3,052.1 Total 8,179.4 36,309.5 x) Since the properties are still in the name of Air India, the company i.e. Air India will be disposing off these properties and the sale proceeds of the same will be transferred to the AIAHL through the escrow mechanism as and when received. The rental income also is accounted for in the books of Air India as Rental Income as the rental agreements with the lessees are signed by Air India. These also would be reconciled at a subsequent date when all the loans are transferred

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and the net balance receivable or payable, after adjusting for expenses incurred in maintenance of the property, would be transferred/received from AIAHL. Similarly any Revenue sharing arrangements by the subsidiary viz. AIATSL to be transferred to AIAHL, would be accounted for in Air India as the legal transfer of subsidiary AIATSL to AIAHL has yet to take place, but would be part of the cash flow reconciliation. xi) In the meeting held on 30th May, 2019 it was very clearly agreed that the revenue sharing/ dividend of AIATSL, rental income of the assets proposed to be monetized shall be deposited in Escrow Account from 1st August, 2019. A proposal is required to be moved for accounting and transferring the old receipts subsequent to 1st October, 2018, either in lump sum or in installments to AIAHL Escrow account. The Escrow account is in the final stages of being opened. xii) As per the preliminary reconciliation up to 31st March 2019 of the various amounts due against the identified loan and the netting off of the income received from the assets in the form of rentals, revenue sharing arrangements of AIATSL and actual monetization of the identified properties for the period 1st October 2018 to 31st March 2019 is as under:

No Particulars (Rs in Million) a) Interest Due on the identified Loans 13,651.4 b) Principal Amount Repayable 2,553.8 Sub-Total 16,205.2 c) Disbursable Monetization proceeds 608.3 d) Net Amount of Rental Income 381.5 e) Revenue Sharing with AIATSL (Prov) 150.0 1,139.8 Net Amount Due from AIAHL 15,065.4 f) Amount received from the SPV in March 2019 13,000.0 Final Net Amount Due from AIAHL 2,065.4

a) The above amount due from AIAHL will be reconciled after the Loans are transferred in the current year 2019-20 and adjusting for all expenses incurred by Air India, exchange adjustments and any reimbursement received from AIAHL in 2019-20. No effect has been given for the above amount of Rs 2,065.4 million due from AIAHL as on 31st March 2019, as the same are not finalized, except for accounting for the receipt of Rs 13,000.0 million towards reimbursement of interest cost. b) In view of the Loans amounting to Rs 294,640.0 million not yet transferred to AIAHL as on 31.3.2019, no effect has been given to the entire package of transfer of non- core assets/transfer of investment in Subsidiaries along with their receivables and payables. However, these assets/investments are classified as “Assets held for Sale”/ ”Liabilities classified as held for Sale”. xiii) The effect of all the decisions of various AISAM meetings and decisions of the Government stated above are reflected in the Financial Statements as summarized below:

a) The balance of the principal identified debt for transfer to AIAHL amounting to Rs

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294,640.0 million is reflected as Long term/ short term borrowings as current as on 31st March,2019; b) The reimbursement of Rs 13000.0 million from the AIAHL towards interest costs paid by Air India on the identified loan has been netted off against Finance costs; c) The book value of the 99 identified properties, that are transferred from Property Plant and Equipment to Assets held for Sale/Investment Property amounting to Rs 72444.1million d) The aggregate value of investments in 4 subsidiaries amounting to Rs 8179.4 million and advances given to the subsidiaries along with interest accrued thereon amounting to Rs36,309.5 million (Net) are classified as Assets held for Sale. e) The net amount due from AIAHL towards the interest and Principal amounts due on the identified loans from 1st October, 2018 are not accounted as receivable as the same will be finally reconciled at the completion of the entire transaction.

30. Plant, Property and Equipment a) Land and Buildings include certain properties for which title deeds are not available. Details of the same are as under: (Rs in Million)

Particulars 31.03.2019 31.03.2018 Area Gross Net Area Gross Net (SqMtrs) Block Block (SqMts) Block Block Land/Buildings Freehold - - - 23904.26 387.1 387.1 Land/Buildings Leasehold 76874.0 180.0 180.0 93551.52 412.7 412.7 Total 76874.0 180.0 180.0 117455.78 799.8 799.8

b) In terms of decision taken, as per the records of the discussions held in the Ministry of Finance on 1st June 2017 for the development of assets of AI located at Vasant Vihar Housing Colony 121,410 sqmtrs (Rs 51,295.1 million) and Baba Kharag Singh Marg Land 14326.38 sqmtrs (Rs 4,770.7 million), the physical possession of these unregistered properties have been handed over to the Ministry of Urban Development (MoUD).The MoUD has been entrusted with the overall responsibility of development and sale of these two properties by the Govt. The sale proceeds from these two properties shall be utilized in liquidating Air India debts. These properties are under charge against working capital loans taken from various banks.Till the above process is completed, the said properties have been classified as “Assets held for Sale”, c) The company had 508 flats constructed in Nerul on a portion of land admeasuring 28,626 sqmtrs and it has been decided to sell these flats to the employees of the company and organizations under the control of Ministry of Civil Aviation. In terms of the Orders of Hon’ble High Court at Bombay (the Court), the company issued allotment letters to 334 allottees out of 508 flats. However, title to the underlying land can only be conveyed by a tripartite conveyance deed between Societies, Air India and CIDCO which is not yet done. Pending conveyance of title of land in favour of 179 AIR INDIA

the registered societies and completion of all legal formalities necessary adjustments have been made as at the Transition date (01/04/2016). The value of this property is being carried as on 31.03.2019 as given hereunder: i) Net Value of 334 flats (including cost of land) amounting to Rs 1,483.9 million allotted in earlier years were transferred to Assets held for Sale

ii) Carrying Value of the balance 174 flats and the vacant land amounting toRs 4,177.8 million being depreciated cost has been shown under Investment Property. Necessary entries for the sale of the flats will be made on the completion of the legal formalities. d) Under Disinvestment plan, monetization of the identified properties is in the process, hence fair value of the investment properties could not be disclosed as a confidentiality measure.

e) Disclosure under IND-AS 40-Investment Property (Rs in Million) No Particulars 2018-19 2017-18 Properties Properties not Properties Properties not Earning Rent Earning Rent Earning Rent Earning Rent A Rent Earned 893.8 - 923.7 - B Operating Expenses i) Repair & Maintenance 21.9 22.5 59.8 36.4 ii) Electricity 45.7 18.5 58.7 24.5 iii) Property Taxes 22.0 2.4 23.1 2.5 iv) AMC Expenses - 22.5 - 21.3

31. Advance against Land at Nerul

Long Term Loans & Advances include a sum of Rs 24.6 million (PY: Rs 24.6 million) being the advance paid by the company to CIDCO for the purchase of another plot of Leasehold Land at Nerul for the purpose of construction of staff quarters. However, the possession of the plot allotted by CIDCO in this regard has not been handed over to the company and no agreement/lease deed has been executed so far.

32. Assets Held for Sale

Assets held for sale mainly includes a) Immovable Properties in respect of which the Board has accorded its approval for sale/ monetization. Hence, these properties have been transferred to “Assets Held for Sale A/c” at lower of their carrying value and fair value less cost to sell.“Assets held for Sale” include certain properties for which title deeds are not available. Details for the same areas under:

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(Rs in Million) Particulars 31.03.2019 31.03.2018 Area Gross Net Area Gross Net (SqMtrs) Block Block (SqMts) Block Block Land/Buildings Freehold 23904.3 387.1 387.1 - - - Land/Buildings Leasehold 152413.9 56403.2 56403.2 135736.36 56191.0 56191.0 Total 176318.2 56790.3 56790.3 135736.36 56191.0 56191.0 b) Two B-777-300ER aircraft have been procured on behalf of Govt of India has been classified as Assets held for Sale.The entire cost of these aircraft including the cost of modification will be borne by the Govt of India.

33. Vayudoot After carrying out all disbursements as per the directions of the Ministry of Civil Aviation pertaining to the merger of Vayudoot with Air India Ltd, a balance amount of Rs 28.2 million (PY: Rs. 38.5 million) remains which has been reflected in the books of accounts of AI as “Liability” under “Vayudoot Settlement Account” However, necessary decision regarding the adjustment of this outstanding amount can be taken only when certain Contingent Liabilities relating to Vayudoot Ltd which continue to be disclosed in the Accounts of the AI are settled. This is mainly because these may lead to future liabilities for AI as they mainly pertain to legal cases pending against Vayudoot.AIL has already written to the Ministry of Civil Aviation Govt of India with regard to the unspent balance of Rs 28.2 million out of the amounts sanctioned and released towards liquidating the dues of creditors/parties of erstwhile Vayudoot Ltd.

34. Physical Verification & Reconciliation a) Fixed Assets:

i) Physical Verification and Reconciliation of major assets viz. Airframes, Aero-engines, APUs and Simulators has been carried out at the year end and reconciliation of the same has also been completed. Further, in the case of land and building (including Investment Properties) reconciliation of number of properties as per fixed assets register vis-à-vis records of holding departments was done. These assets together constitute around 91% of the Gross Block of Assets as on 31.3.2019. No major discrepancies were found on the same. ii) The physical verification and reconciliation of assets other than above constituting around 9% of the Gross Block as on 31.3.2019, including assets migrated in Fixed Assets Register at block level as one item for which line item identification is under progress. Further, the physical verification of these assets for the biennial period 2016- 18 has been completed.However,the necessary action on the Physical Verification Report received is under progress and necessary action on the same will be taken on receipt of approval from the Competent Authority for shortages identified amounting to Rs 154.5 million (Net). The Physical Verification of Other Assets for the biennial period 2018-20 is under progress.

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b) Inventory: Physical Verification of aircraft/non-aircraft inventory (except inventory relating to phased out fleet and lying with third parties) for the biennial period 2016-18 has been completed. Pending finalization/approval of the Physical Verification Report, by the competent authority, the net ofexcess/shortages found on reconciliation amounting to Rs 23.6 million (PY: Rs 114.0 million) has been provided for. Further during the year the company has charged/written off Rs 89.7 million to P&L Account based on the requisite approval from the competent authority. The Physical Verification of Inventory for the biennial period 2018-20 is under progress. The Final Report received for the regions covered as of date does not have any material differences and verification for the other regions is under progress.

35. Effect of changes in Exchange rates (IndAS-21) a) 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. b) The Company has not adopted Appendix B to Ind AS 21 – Foreign Currency Transactions and Advance Consideration which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income when an entity has received or paid advance consideration in a foreign currency. However, the effect of on account of adoption of this amendment is not likely to be material.

36. Confirmations/Reconciliations a) The reconciliation and matching of certain unmatched receivables and payables including, suspense/ control ledgers and staff related accounts is under process. Impact, if any, of consequential adjustment arising out of reconciliation will be dealt with in the year of completion of Reconciliation. b) The company has sought the confirmation of balances for major receivables, payables and inventory lying with third parties. However, only some of the parties have responded. Wherever the balances confirmed by the parties are not in agreement with the books, reconciliation of difference is under process. c) Company has requested for confirmation/Bank Statements/Direct confirmation to Statutory Auditors, however, in respect of certain bank accounts the same were not received by Company/ Statutory Auditors. d) GST, Tax Deducted at source (TDS), provident fund liability, Refunds in respect of Income Tax, are still pending to be reconciled with the Returns filed/ statutory records maintained.

37. The Company has requested for confirmation/Bank Statements/Direct confirmation as on 31st March 2019 to Statutory Auditors. Company has obtained confirmation/bank statements in respect of bank accounts/fixed deposits/loan accounts except for 2 bank accounts carrying

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aggregate balance of Rs.0.3 million. However, as per the Statutory Auditors they have not received the confirmations directly in respect of 168 bank accounts carrying aggregate balance of Rs 1,589.5 million, 34 Fixed Deposit accounts carrying aggregate balance of Rs 803.9 million and Loans taken from a foreign bank carrying balance amounting to Rs 9,059.3 million as on 31st March 2019

38. 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 offices, user departments and Central Accounts Office. To comply with the same, Independent Chartered Accountants firms have been appointed by the company.System for uniform and timely accounting in SAP as well as other software, including interface with each other, is under process of being strengthened.

39. Inventories a) The Work Order Suspense account includes items other than repairables of Rs. 2,371.3 million (PY: Rs 1,765.9 million) out of which provision has been made for Rs 2,233.9 million (PY: Rs 1,277.6 million) for items upto September 2018 and heavy checks/transit checks/express checks upto Feb 2019. b) Pending reconciliation/rectification, provision of Rs. 246.1 million (PY: Rs 319.7 million) has been made towards the inventory balances lying under various intermediary /suspense heads under RAMCO system for which consumption / issue / scrappage has not been updated until 31.03.2019. Amount lying in such accounts as at 31.03.2019 is Rs 448.9 million (PY: Rs. 645.8 million). c) The accounting of FDI (Freight, Duty and Incidentals) in Ramco is done on block level instead of at transaction level. At the year end, FDI is expensed out on the basis of ratio of closing inventory to consumption of inventory during the year. The total of FDI expensed out during the period amounts to Rs 1,031.0 million (PY: Rs 823.9 million). This practice has been followed consistently in view of bulk and consolidated movement of spares, and difficulty in identifying and allocating item wise FDI.

40. Status of Reconciliation with Airport Operators

(i) The reconciliation with various Airport Operators such as AAI, MIAL, DIAL, CIAL and GHAIL has been carried out during the year and the status of the same as on 31st March 2019 is given hereunder

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(Rupees in Million)

No Name of Airport Operator Balance Payable Balance Receivable as Difference as per Air India per Airport Operators Ltd as on 31.3.19 as on 31.3.19 1 Airport Authority of India (AAI) 14,374.7 20,336.6 (5,961.9) 2 Mumbai International Airport Ltd 1,516.4 1,852.1 (335.7) (MIAL) 3 Delhi International Airport Ltd 2,598.1 2,790.6 (192.5) (DIAL) 4 Cochin International Airport Ltd 173.2 187.8 (14.6) (CIAL) 5 Greater Hyderabad International 226.6 1,251.5 (1,024.9) Airport Ltd (GHIAL)

Note: a) The balances as per M/s GHIAL include demand for interest on delayed payment and pending verification, the same have been disclosed as contingent liabilities by the company amounting to Rs. 988.6 million (PY Rs 951.1 million).

b) The balance of M/s MIAL is inclusive of an interest amount of Rs 237.7 million, which subsequent to balance confirmation as on 31.3.2019 has been waived off by MIAL in in FY 2019-20. Thus the actual difference as on 31st March 2019 is only Rs 98.0 million for Contingent Liability has been disclosed. (ii) In addition to above, other major reasons for the difference are due to payments/credits given by AI up to 31.3.2019 for which accounting effect by the Airport Operators is yet to be given and the difference due to disputes in rates applied for landing & parking charges, ground handling, royalty, space rentals, etc.which are not as per terms & condition of agreements. (iii) The additional compensation receivable from MIAL is to be accounted for on the completion of the entire process i.e. after comprehensive review of total leased areas/premises ultimately held once the expansion work is completed/certified and handing/taking over is completed. (iv) The balances in respect of AAI are in the process of reconciliation and during the year various pending issues have been sorted out as per the ‘Umbrella Agreement’ signed between AI and AAI. Necessary effect for the same will be given in the FY 2019-20 on the completion of the reconciliation of all balances with AAI.

41. Segment Reporting: a) The Company is engaged in airline related business which is the only reportable segment.The details of geographical area wise revenue earned (derived by allocating revenue to the area in which the sales were made) are given hereunder:

Particulars 2018-19 2017-18 a) USA/Canada 31,177.6 24,578.7 b) UK/Europe 23,338.4 18,986.9 c) Asia (Excluding India, Africa and Australia 34,286.6 24,047.1 d) India 166,303.7 161,868.6 Total 255,088.3 229,481.3

184 AIR INDIA b) Major revenue-earning asset of the Company is the aircraft fleet, which is flexibly deployed across its worldwide route network. Other non-current assets (other than financial instruments) located outside India are not material, hence, not disclosed.

42. Related Party Transactions: Disclosure of the names and designations of the Related Parties as required under IND AS-24 are as under: A. Key Management Personnel &Relatives: Transactions with Key Managerial Personnel i) There are no transactions with key managerial personnel other than Remuneration and Perquisites to Chairman & Managing Director and Functional Directors. ii) Key Management Personnel & Relatives: (During FY 2018-19 and upto 1st September, 2019)

Name Designation (A) Whole-Time Directors 1 Shri Pradeep Singh Kharola Chairman & Managing Director (Appointed as CMD effective 12.12. 2017 and ceased to be CMD w.e.f 14.02.2019) 2 Shri Ashwani Lohani Chairman & Managing Director (Appointed as CMD effective 14.02.2019) 3 Shri Pankaj Srivastava Director-Commercial (Upon superannuation, ceased to be on Board w.e.f. 01.05.2018) 4 Shri Vinod Hejmadi Director- Finance 5 Shri Arvind Kathpalia Director Operations (Ceased to be on the Board w.e.f. 13.11.2018) (B) Government Nominee Directors 6 Ms.Gargi Kaul Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Ceased to be on the Board w.e.f. 24.01.2019) 7 Shri Arun Kumar Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 24.01.2019) 8 Shri Praveen Garg Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 31.08.2019) 9 Shri Satyendra Kumar Mishra Joint Secretary, Ministry of Civil Aviation. C) Independent Directors 10 (Dr) Shri Ravinder Kumar Tyagi Appointed on the Board w.e.f 31.05.2017 11 Shri Syed Zafar Islam Appointed on the Board w.e.f 31.05.2017

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Name Designation 12 Shri Y.C. Deveshwar Appointed on the Board w.e.f 08.08.2018) (Ceased to be on the Board w.e.f. 11.05.2019) 13 Shri Kumar Mangalam Birla Appointed on the Board w.e.f 08.08.2018 14 Smt. Purandeswari Daggubati Appointed on the Board w.e.f 04.10.2018 iii) Key Managerial Remuneration (a) Salary and Allowances (Rs in Million) No Particulars 2018-19 2017-18 (a) Chairman & Managing Director Salaries & Allowances 3.1 2.3 (including value of perquisites 2018-19 : Rs Nil million (PY: Rs 0.02 million) (b) Functional Directors i) Salaries & Allowances 15.7 16.2 (including value of perquisites 2018-19 : Rs 0.06 million (PY: Rs 0.08 million) ii) Contribution to Provident Fund 0.6 0.6 (c) Independent Directors Sitting Fees paid to Independent Directors 0.7 0.2 Note:Transactions such as providing airline related services in the normal course of business are not included above. (b) Employee Benefits Payable and Paid (Rs in Million) No Particulars 2018-19 2017-18 i) Gratuity Provision 3.4 5.1 ii) Leave Encashment Provision 4.5 6.0 iv) Salary Outstanding at year end 1.7 1.3

B. Subsidiary Companies In terms of Ind AS 24, following are the disclosure requirements related to the transactions with certain Govt related entities, i.e. significantly controlled and influenced entities by Govt of India (not included in the list above): (Rs in Million) No Transactions 2018-19 2017-18 1 Air India Express Ltd (AIXL) a) Expenditure - - b) Revenue i) Revenue Sharing with Air India Ltd 3,500.0 4,000.0

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No Transactions 2018-19 2017-18 ii) Interest Cost Reimbursement by Subsidiaries 924.3 752.1 iii) Handling & Servicing 135.5 230.6 iv) Others 102.3 - c) Advances 11,510.4 9,953.2

2 Airline Allied Services Ltd (AASL) a) Expenditure i) Staff Cost Pay and Allowances - 50.0 ii) Staff Cost Travelling Expenses - 7.2 b) Revenue i) Interest Cost Reimbursement by Subsidiary 1,382.9 1,340.7 ii) Handling & Servicing 82.8 65.1 iii) Others 60.7 54.3 c) Advances 16,682.0 15,426.2

3 Hotel Corporation of India Ltd (HCI) a) Expenditure i) Pax Amenities 304.2 340.2 ii) Others 143.9 106.3 b) Revenue i) Interest Cost Reimbursement by Subsidiary/Others 257.5 204.6 c) Advances 3,052.1 2,280.0

4 Air India Air Transport Services Ltd (AIATSL) a) Expenditure i) Handling Charges 3,215.9 2,451.5 ii) Interest Paid to Subsidiary 20.5 46.0 iii) Others 82.5 - b) Revenue i) Revenue Sharing with Air India 406.8 750.0 i) Others 82.5 - c) Liability 606.2 129.2

5 Air India Engineering Services Ltd (AIESL) a) Expenditure i) Outside Repairs Aircraft 9,448.5 5,681.9

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No Transactions 2018-19 2017-18 ii) Others - 336.8 b) Revenue i) Interest Cost Reimbursement by Subsidiary 1,358.6 924.3 c) Advances 17,181.7 14,369.2

Also Refer Note No 27 (ii) for Other Commitments.

C. Transactions with Provident Fund Trusts (Rs in Million) Particulars 2018-19 2017-18 PF Contribution Outstanding as on PF Contribution during Outstanding as on during the Year 31.3.19 the Year 31.3.18 PF Trusts Dues 742.9 382..9 666.7 424.8

D. major Transactions with Govt/Govt Related Entities The details of the major transactions of Revenue and Expenditure of the company with Govt Related Entities are given hereunder: (Rs in Million) No Name of Entity 2018-19 2017-18 Balance as on Amount of Transactions Amount of Transactions 31st Mar’2019 during the year during the year A Expenditure i) Airport Authority of India 14,374.7 4,469.5 4,903.9 ii) Govt of India - Guarantee Fee 14,970.6 6,579.1 2,290.0 ii) Oil Companies

Indian Oil Co Ltd 18,369.2 44,214.3 31,599.5 Hindustan Petroleum Co Ltd 6,302.0 11,770.8 10,144.5 Bharat Petroleum Co Ltd 6,244.4 8,990.2 6,481.8

B Revenue i) SESF Flights Revenue 6,467.9 8,824.2 7,554.3 ii) Charter Revenue - Others 1,226.6 2,475.0 1,378.4

C Loans/Reimbursement/Equity Infusion/Advance i) Loan from National Small 26,360.0 26,360.0 - Savings Fund (NSSF) ii) Air India Asset Holding Co Ltd (SPV)

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a) Reimbursement of Interest on AI Loans - 13,000.0 - carved out to the SPV b) Advance for expenditure 0.45 0.45 - iii) Govt of India a) Equity Infusion from Govt - 39,750.0 18,000.0 b) Advance received for 2 SESF Aircraft 34,675.2 4,675.2 30,000.0

Note: The above transactions with the Govt/Govt Related entities cover transactions that are significant individually and collectively. The company also entered into other transactions with various other Govt related entities, however, these transactions are insignificant either individually or collectively and hence not disclosed.

43. Interest in Joint Venture AI-SATS i) Revenue/Expenditure Transactions relating to AI-SATS (Rs in Million) No Transactions 2018-19 2017-18 a) Expenditure i) Handling Charges 2,734.0 2,564.1 b) Revenue i) Loan of Equipment-Lease Charges - 186.1 ii) Dividend 20.2 20.2 iii) Others 729.5 655.1 c) Payables 859.1 1,000.5 The company has entered into Joint Venture (JV) agreement with SATS, Singapore in the equity ratio of 50:50 to provide ground handling services to airlines at certain airports this was in pursuance of GOI notification on the ground handling policy. As per the books of AI, the net balance payable to AI-SATS as on 31st March 2019 is Rs 859.1 million (PY:Rs.1,000.5 Million) and as per the books of AI-SATS the net balance receivable from AI is Rs 892.6 million (PY: Rs 1,000.5 million). The difference of Rs 33.5 million is account of TDS deducted but not remitted by Air India Ltd as on 31.3.2019. ii) Capital Commitments and Contingent Liabilities in respect of Company share in AI- SATS Joint Venture (Rs in million) No Particulars 31st March, 31st March, 2019 2018 1. Estimated amount of contracts remaining to be executed in - 74.6 respect of PPE and Other Intangible Assets 2. Company's exposure in respect of performance bank guarantee 229.0 590.1 issued to various parties

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No Particulars 31st March, 31st March, 2019 2018 3. Claims against the Company not acknowledged as debts. - - 4. Taxation matters: (i) Income Tax Appeals being contested by the Co 161.2 55.6 Less: Payment under protest In respect of these Appeals (65.6) (55.6) (ii) Other Income Tax Matters 109.5 109.5 5. Other than Taxation matters Demand against the ESIC 2.7 2.7 Less: Payment under protest In respect of these Demands (2.7) (2.7)

44. In compliance with Ind AS – 27 ‘Separate Financial Statements’, the required information is as under: No Particulars Country of Percentage (%) of Incorporation Ownership Interest As at 31st As at 31st March 2019 March 2018 (A) Subsidiary Companies i) Air India Express Ltd (AIXL) India 100 % 100 % ii) Air India Air Transport Services Ltd (AIATSL) India 100 % 100 % iii) Air India Engineering Services Ltd (AIESL) India 100 % 100 % iv) Airline Allied Services Limited (AASL) India 100% 100% v) Hotel Corporation of India Ltd (HCI) India 80.38 % 80.38 % (B) Joint Venture (JV) i) AI-SATS Airport Services Pvt Ltd India 50 % 50 %

45. Leases i) Finance Lease a) Aircraft Fleet and Equipment acquired under finance leases are treated as if they had been purchased outright. As required under Ind AS - 17, the cost of these assets taken on lease is Rs 185,438.3 million (PY. Rs 182,888.8 million). The future lease obligation in respect of the aircraft on finance lease is Rs 43,832.5 million as at March 31, 2019 (PY. 61,013.9 million). The Finance leases are guaranteed by the Govt. of India. Liability on account of future minimum lease rentals is as under: (Rs in million)

Particulars As at 31.3.2019 As at 31.3.2018

a) Outstanding balance of Minimum Lease Payments including interest thereon i) Not later than one year and 24,128.9 19,891.4

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Particulars As at 31.3.2019 As at 31.3.2018 ii) Later than one year and not later than five years 21,371.2 41,122.5 iii) Later than five years Total 45,500.1 61,013.9

b) Present Value of (a) above i) Not later than one year 23,037.4 18,569.3 ii) Later than one year and not later than five years 20,795.2 39,950.5 iii) Later than five years Total 43,832.6 58,519.8

c) Finance Charges 1,667.5 2,494.1 ii) Operating Lease: a) The Company has taken 55 Nos. (PY: 45 Nos) of Aircraft namely 34 (PY: 24 Nos) of Airbus Family and 21 Nos. (PY: 21 Nos) of Boeing Family, as at the end of 31st March 2019 on non- cancellable operating lease. Liability on account of future minimum lease rentals in respect of leases acquired is as under: (Rs in million) No Particulars As at 31 March, As at 31 March, 2019 2018 i) Not later than one year 31,224.1 25,521.0 ii) Later than one year and not later than five years 117,781.0 97,346.9 iii) Later than five years 93,368.8 89,179.5 Total 242,373.9 212,047.4 b) In the case of premature termination of the Lease Agreement by company i.e. lessee is required to pay compensation to the Lessors of the. Aircraft as per the terms of the agreement. However, such compensation may differ from Lessor to Lessor. c) The company has taken various residential/commercial premises under cancellable operating lease/rental basis the amount of which is unascertainable. d) The Company has also taken Vehicles and Office Equipment on operating lease with option to purchase/renew but title may or may not eventually be transferred. These assets are scattered at various stations and cumulatively not significant. Complete details of future obligation in this respect could not be compiled; amount thereof is not material.

46. Re-Delivery Charges Provision for re-delivery charges is made to meet the contractual maintenance and return conditions on aircraft held under operating leases. Such provisions are made based on management estimate of number of hours or cycles each engine will have flown at the return date, the cost of performing

191 AIR INDIA the required restoration work at that future date and discount rates commensurate with the expected obligation maturity schedules. Judgment is exercised by management given the long-term nature of assumptions that go into the determination of the provision. The assumptions made in relation to the current year are consistent with those in the previous year. Expected timing of resulting outflow of economic benefit is FY 2020 to 2030. The movement in provision made is as given below: (Rs in Million) Particulars FY 2018-19 FY 2017-18 Opening Balance 5,210.3 2,756.3 Add: Additional Provisions during the year 1982.0 1,996.6 Add: Interest accretion on Provisions 610.7 420.7 Add/(less): Foreign Exchange Impact (230.8) 36.7 Closing balance 7572.2 5,210.3

47. Subsidiary Companies Four Subsidiary Companies of the Air India Ltd (excluding AIATSL) namely AASL, AIXL, AIESL and HCI are having accumulated losses and the net worth of these companies has eroded as on 31st March 2019. The company wise position of these subsidiaries is given hereunder: a) Air India Express Ltd (AIXL) – Primary mandate of Air India Express is to operate low-cost, direct, international services to Middle East / South East Asian destinations to serve expat population / migrant workers at competitive fares. The company has been posting Net Profits in the last few years and the Net Profit for FY 2018-19 is Rs 1,615.9 million and in FY 2017-18 the same was Rs. 2,195.8 million. The company has also surpassed the Operating Revenue by 17.7% compared to the previous year. The company has achieved a Pan India footprint by launching operations on many new routes from Northern parts of India, the results of which are promising. The company plans on inducting 11 more aircraft through dry lease which would be taken up during 2019-20 which would help it to explore new/additional international and domestic networks. Although the Net Worth was eroded because of the past accumulated losses, the company is continuously showing improvement in operational and financial performance and it is expected that due to its improved performance its net worth will become positive in the near future. b) Air India Engineering Services Ltd (AIESL) - AIESL is the largest MRO set up in India that can serve as an one-stop-shop for all aircraft engineering requirements. At present, in India, major checks of every commercial wide body aircraft of Indian Operators is done by AIESL. The company has got hangar facilities available in all major airports in Mumbai, Delhi, Chennai, Hyderabad, Kolkata, Trivandrum and Nagpur. AIESL commenced its operations from January 2015 after receiving its DGCA Licence. MRO business is a highly capital intensive industry and it generally has a gestation period of 4-5 years for consolidation of operations.

However, AIESL has taken various initiatives to improve its overall revenues such as signing of activity based SLA with Air India Ltd, starting MRO facility in Sharjah and plans to expand the same to Dubai, developing dedicated marketing teams to capture MRO business, offering

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training services, handling VVIP flights to generate additional revenue.

Although, AIESL has posted a Net Loss of Rs 2,049.4 million in FY 2018-19, but as compared to the Net Loss of Rs 4,444.4 million in FY 2017-18 there is a substantial reduction in the Net Losses of the company over the previous year. Hence, in the current year it is showing improvement in its performance on a year to year basis. With a steady reduction in losses and the Make in India thrust of the Govt. of India which will ensure that maintenance of aircraft is within the country, the rapid growth of Aviation in the country and large number of aircraft orders by Indian carriers, AIESL is best poised for taking advantage of the growth in maintenance activities and MRO business within India. In view of this AIESL is likely to earn enhanced revenues and be profitable in the near future. c) Airline Allied Services Limited (AASL) - AASL 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 fleet suitable for serving these smaller airports. In FY 2018-19, Alliance Air has inducted 4 new ATR-72-600 aircraft taking the year end fleet to 20 aircraft comprising of 2 ATR-42-300 and 18 ATR-72-600 aircraft. AASL is contemplating a further induction of 15 aircraft.

Alliance Air is presently operating to 551 destinations with 100 to 109 departures per day and 542 to 607 flights per week. AASL carried 1.6 million passengers during 2018-19 as against 1.28 million passengers in FY 2017-18. The aircraft utilization has also increased to 51,758 block hours from 38,252 block hours at a growth of 35% in 2018-19 as compared to 2017-18.

The company has emerged as major player in the Govt of India’s UDAN Scheme. The performance of the airline under UDAN has been excellent wherein the company has been operationally positive. The company was operating 29 UDAN routes as on 31st March 2019, which at present has risen to 39 routes.

The airline is consciously increasing the yield and as at the year end the average yield stood at Rs 4,179 per passenger, which is about 8% higher than the previous year 2017-18. Further, the company has implemented cost saving measures for the reduction of costs.

Alliance Air is on the threshold of turnaround and poised to lead the regional connectivity in India in the next decade and be a leading regional carrier of Asia. Alliance Air plans to reverse the trend of adverse financial parameters in this financial year 2019-20 and thereafter consolidate the gains. d) Hotel Corporation of India Ltd (HCI)–HCI is primarily engaged in the business of owning operating & managing Hotels and Flight Catering services.The company has been facing severe liquidity crunch due to various factors like operational losses and its financial and operating performance has been affected in recent years due to a number of external and internal factors.

However, although HCI has got a negative Net Worth as at 31stMarch 2019, considering the continuous support of the Holding Company and the Government, the Company is and will continue to be able to meet its financial obligations as they fall due. Accordingly the Company has prepared its accounts on a "Going Concern" basis.Various initiatives have also been taken 193 AIR INDIA

by the management for improving the operational performance of the company and increasing the revenues as detailed below: i) Due to the renovation of 80 guest rooms and other allied works at Centaur Delhi in view of the equity infusion of Rs 270.0million by Government of India, the revenues of the Company increased from Rs. 569.7 million in 2017-18 to Rs 672.8 million during the year 2018-19. ii) The Holding Company and Government of India is continuously supporting the Company by way of financial assistance in the form of equity infusion and providing financial assistance as and when required by HCI andare also committed to provide such assistance in future also. iii) The property of Delhi needs to be handed over to AAI by 31.12.2019 for which the Company is in the process of negotiating the terms of handing over wherein the Company may be given alternate land or compensation in lieu thereof. This will assist the Company in meeting its long term goals of increasing its business.

In view of measures taken by HCI to improve the operational/financial performance of HCI, the company is hopeful that HCI will be able to sustain its requirements from its own revenues in the near future. As regards its investment in HCI, Air India is confident that it would retrieve its investment in the property as well as the loans given to HCI in the event of the closure/sale of HCI as HCI will receive compensation for surrender of land/properties and sale of assets. Accordingly, no provision has been considered for the investment made by the company in HCI.

In view of the above, there is no decline in the carrying value of investments in the above four Subsidiaries. e) The reconciliation/confirmation with the Subsidiary Cos and JV as on 31st March 2019 is given hereunder: (Rs in Million) No Name of Subsidiary/JV Balance (Payable)/ Balance (Payable)/ Difference Receivable as per Receivable as per Air India Ltd as on Subsidiary Co. 31.3.2019 31.3.2019 1 Air India Express Ltd (AIXL) 11510.4 (11510.4) 0.0 (Formerly known as Air India Charters Ltd (AICL) 2 Airline Allied Services Ltd (AASL) 16681.9 (16681.9) 0.0 3 Hotel Corporation of India Ltd 3052.1 (3052.1) 0.0 (HCI) 4 Air India Air Transport Services (606.2) 606.2 0.0 Ltd (AIATSL) 5 Air India Engineering Services Ltd 17181.7 (17181.7) 0.0 (AIESL) 6 Air India SATS (AI-SATS) JV (859.1) 892.6 33.5

Note: The difference of Rs 33.5 million between AI and AI-SATS (JV) is on account of TDS of Rs 33.5 million deducted

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by AI but not reflected in the accounts of AI-SATS as on 31st March 2019. f) In view of continuity of the operations of these Subsidiary Companies, the total advances outstanding as stated above are, in the opinion of the management, considered good and realizable in the normal course of business.

48. Payments to and Provisions for Employees: a) Liability for wage arrears includes Rs. 2,076.3 million (Net), (PY Rs. 2,076.3 million Net) arrived on ad-hoc basis towards wage settlement up to period 31st December 2006 pending finalization of actual liability. b) In view of Department of Public Enterprises (DPE) guidelines applicable to PSUs no wage revision can be granted to the employees of loss-making PSUs. The Company has been making losses since 1st January 2007 hence no provision has been made towards wage revision/ settlement. c) Revised Basic Pay on the basis of Justice Dharamadhikari Committee Report

Based on Justice Dharamadhikari Committee (JDC) recommendations, the Revised Basic Pay (RBP) had been implemented for all the categories of the employees from different dates. The totalprovision towards the balances payable to the employees on account of the implementation st of the JDC recommendations as on 31 March 2019 is Rs 13,319.1 million (PY: Rs 13,319.1 million).

49. Employee Benefits (A) General description of Defined Benefit Plan i) Gratuity: Gratuity is payable to all eligible employees of the Company on superannuation, death, or permanent disablement, in terms of the provisions of the Payment of Gratuity Act. ii) Post-Retirement Medical Benefits: The Company has a Post-Retirement Medical Benefit Scheme under which medical benefits are provided to retired employees and their spouse.

(B) Defined Contribution Plan Employees Provident Fund: The Company has Employees Provident Fund Trusts under the Provident Fund Act 1925, which governs the Provident Fund Plans for eligible employees. The Company as well as the employees contributes 10% of the PF Pay to the Fund out of which Provident Fund is paid to the employees.

(C) Other Long Term Employee Benefits i) Privilege Leave Encashment: Privilege Leave Encashment is payable to all eligible employees at the time of retirement upto a maximum of 300 days. ii) Sick Leave Encashment: Sick Leave encashment is payable to all eligible employees at the time of retirement upto a maximum of 120 days subject to the condition that the employee should have at least 60 days of Sick Leave to his credit. However, the company had decided

195 AIR INDIA

to freeze the encashment of sick leave standing to the credit of all existing employees as on 01.07.2012. Accordingly, provision for sick leave has also been computed at these frozen sick leave numbers.

(D) Defined Benefit Plans – Gratuity & Post-Retirement Medical Benefits (Unfunded) Disclosure as per Ind AS-19

(Rs in Million)

Particulars Gratuity Post Retirement Medical Benefits Gratuity Disclosure Statement As As at As at As at As at per IND AS 19 31.03.19 31.03.18 31.03.19 31.03.18 (A) Actuarial Assumptions for the year: Discount Rate 7.64% 7.80% 7.78% 7.76% Salary Escalation Rate 5.50% 5.50% - - Medical Cost Inflation Rate 4.00% 4.00% Attrition Rate/ Rate of Employee 2.00% 2.00% 2.00% 2.00% Turnover (B) Other Details Number of Active Members 9802 10726 9802 10726 Per Month Salary For Active 605.2 605.2 605.2 605.2 Members Weighted Average Duration of the 6 years 6 years 30.00 30.00 Projected Benefit Obligation Average Expected Future Service 8 years 8 years 30.00 30.00 Projected Benefit Obligation (PBO) 7051.1 6972.9 12120.8 11511.9 Prescribed Contribution For Next - 0.02 - - Year (12 Month ) (C) Table for Change in Benefit Obligation: Liability at the beginning of the year 6972.90 6206.4 11511.9 11351.3 Less: Liability transferred to AIESL/ AIATSL Net Liability at the beginning of the 6972.90 6206.4 11511.9 11351.3 year Interest Cost 543.9 423.3 893.3 845.7 Current service cost 216.8 119.2 112.1 110.7 Past Service Cost (Vested Benefit) 1158.0 - - Benefit paid (1182.9) (754.6) (759.9) (1126.10) Actuarial (gain)/loss on obligations 52.6 (343.5) (25.1) (394.30) Actuarial (gain)/loss on obligations 447.8 164.1 388.5 724.6 Liability at the end of the year 7051.1 6972.90 12120.8 11511.9 (D) Amount Recognized in the Balance Sheet: Liability at the end of the year (7051.1) (6,972.9) (12120.8) (11,511.9) 196 AIR INDIA

Particulars Gratuity Post Retirement Medical Benefits Gratuity Disclosure Statement As As at As at As at As at per IND AS 19 31.03.19 31.03.18 31.03.19 31.03.18 Fair value of Plan Assets at the end - - - of the year Funded Status ( Surplus/ (Deficit) (7051.1) (6,972.9) (12120.8) (11,511.9) Amount Recognized in the Balance (7051.1) (6,972.9) (12120.8) (11,511.9) Sheet (E) Net Interest Cost for Current Period Present Value of Benefit Obligation 6972.90 6206.4 11511.9 11,351.3 at the Beginning of the Period (Fair Value of Plan Asset at the - - - Beginning of the Period) Net Liability( Asset) at the beginning 6972.90 6,206.4 11511.9 11,351.3 Interest cost 543.9 423.3 893.3 845.7 (Interest Income ) - - - - Net Interest Cost for current period 543.9 423.3 893.3 845.7 (F) Expense recognized in the P & L Account: Current service cost 216.8 119.2 112.1 110.7 Interest cost 543.9 423.3 893.3 845.7 Expected return on Plan Assets - - - - Net actuarial (gain)/loss to be - - - - recognized Past Service Cost (Vested Benefit) 1158.0 - - Expense recognized in the P & L 760.7 1700.5 1005.4 956.4 Account (G) Expense recognized in the Other Comprehensive Income ( OCI) for Current Period Actuarial (Gains)/Losses on 500.4 (179.4) 363.4 330.3 obligation for the period Return on Plan Assets, Excluding - - - - Interest Income Change in Asset Ceiling - - - - Net (Income)/Expense For the 500.4 (179.4) 363.4 330.3 period recognized in OCI (H) Balance Sheet Reconciliation: Opening Net Liability 6972.90 6206.4 11511.9 11351.3 Expense Recognized in Statement 760.7 1700.5 1005.4 956.4 of Profit or Loss Expense Recognized in OCI 500.4 - 363.4 330.3 NET Liability /(Asset) Transfer In - - - - NET Liability /(Asset) Transfer Out - - - -

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Particulars Gratuity Post Retirement Medical Benefits Gratuity Disclosure Statement As As at As at As at As at per IND AS 19 31.03.19 31.03.18 31.03.19 31.03.18 Benefit Paid (1182.9) (754.6) (759.9) (1126.10) Expense recognized in OCI - (179.4) - Net Liability/(Asset) Recognized in 7051.1 6972.9 12120.8 11511.9 P&L A/c (I) Net Interest Cost For Next Year Present Value of Benefit Obligation 7051.1 6972.9 12120.8 11511.9 at the Beginning of the Period (Fair Value of Plan Asset at the - - - Beginning of the Period) Net Liability (Asset) at the End of 7051.1 6972.9 12120.8 11511.9 the period Interest cost 538.7 543.9 943.00 893.3 (Interest Income) - - - - Net Interest Cost for current period 538.7 543.9 943.00 893.3 (J) Expense recognized in the Statement of P & L A/C for Next Year Current service cost 210.4 216.8 125.2 112.1 Interest cost 538.7 543.9 943.00 893.3 (Expected Contribution by the - - - - Employees) Expenses recognized 749.1 760.7 1068.2 1005.4 (K) Maturity Analysis of the Benefit Payments: From the Employer Projected Benefits Payable in future Year From the Date of Reporting 1st Following Year 1045.6 1014.6 587.5 520.5 2nd Following Year 654.8 584.5 607.9 576.3 3rd Following Year 1029.8 996.5 648.6 640.2 4th Following Year 1005.1 959.6 691.0 709 5th Following Year 950.2 928.5 732.4 782.3 Sum of Years 6 To 10 3261.3 3463.37 4189.8 3894.1

50. DEFERRED TAX ASSETS / (LIABILITY) The Company has recognized Deferred Tax Assets in earlier years amounting to Rs 28,425.2 million. In the subsequent years, the company has continued to carry this balance of Net Deferred Tax Assets and no further amounts have been recognized as a matter of prudence. The details of the same are as given below:

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(a) Deferred Tax Assets/Liabilities (Rs in Million) S.No Particulars As at 31st March As at 31st March 2019 2018 (A) Deferred Tax Liability (i) Related to Fixed Assets 70508.1 68218.9 (ii) Related to Foreign Currency Monetary 860.8 660.4 Items (FCMI) Sub-Total (A) 71368.9 68879.3 (B) Deferred Tax Assets (i) Unabsorbed Depreciation 99794.1 97304.5 Sub-Total (B) 99794.1 97304.5

Net Deferred Tax Asset/(Liability) 28425.2 28425.2

(b) Details of the Total DTA not recognized as on 31st March 2019: The Total DTA available against Depreciation/Business/Other Disallowances Losses as on 31st March 2019 are Rs 242,628.3 million. Out of this available DTA amount, the company has only recognized DTA amounting to Rs 99,794.1 million (Gross) as detailed in Para (a) above against Depreciation Losses only. Accordingly, as at 31st March 2019 the company still has got total unrecognized DTA amount of Rs 142,834.2 million, which as a matter of prudence has not been recognized in the books. The details of the unrecognized DTA balances are given below: (Rs in Million) Particulars As at 31st March, 2019 As at 31st March, 2018 Unabsorbed Depreciation 10,481.7 6,238.5 Brought Forward Business Losses 115,484.8 105,233.8 Other Temporary Differences 16,867.7 15,511.6 TOTAL 142,834.2 126,983.9 The unused tax losses and unabsorbed depreciation considered above are based on the tax records and returns of the company and does not consider the potential effect of matters under dispute/ litigation with the tax authorities which are currently sub-judice at various levels. The Govt of India approved the Revival Plan of the company during the year and a series of measures were approved to improve the operational and financial efficiencies as detailed in Note Nos 28 and 29. The company is therefore hopeful of showing improved performance in the future and accordingly, has reasonable certainty that the deferred tax assets recognized will be realized against future taxable profits. Further, the Deferred Tax Assets have been created against carry forward Depreciationonly which are available to the Company indefinitely as per the provisions of the Income Tax Act.

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(c) Reconciliation of Effective Tax Rate Reconciliation of tax expense and the accounting profit / (loss) multiplied by India's domestic tax rate for the year ended 31st March 2019and 31 March 2018: (Rs in Million)

Particulars For the year ended 31st For the year ended 31st March 2019 March 2018 Rate (%) Amount Rate (%) Amount Profit/(Loss) Before Tax (84748.0) (53377.4) Effective Tax Rate 31.20% 26,441.38 30.90% 16,493.62 Deferred Tax asset not recognized on - (26,441.38) - (16493.62) above Tax expense for the year - Nil - Nil

(d) Deferred Tax Effect of Subsequent change in Corporate Tax rates The Govt has made certain amendments in the Income Tax Act 1961 and the Finance (No.2) Act 2019, through Taxation Laws (Amendment) Ordinance 2019, by means of which Corporate Tax Rates have been reduced to 22% from 30% for domestic companies. i) The impact of the revised corporate income tax rates as stated above on the Recognized Deferred tax Liabilities/Assets as on 31st March, 2019 are given hereunder: (Rs in Million) Particulars As per Income Tax rates As per Revised Income tax as on date of Balance effective rates announced Sheet subsequently Total Deferred Tax Liabilities 71,368.9 52,337.2 Total Deferred Tax Assets 99,794.1 80,762.4 Net Deferred Tax Assets 28,425.2 28,425.2 ii) The impact of the revised corporate income tax rates as stated above on the Unrecognized Deferred tax Assets as on 31st March, 2019 are given hereunder: (Rs in Million) Particulars As per Income Tax As per Revised Income tax rates as on date of effective rates announced Balance Sheet subsequently Unabsorbed Depreciation 10,481.7 106.5 Brought Forward Business Losses 115,484.8 84,688.9 Other Temporary Differences 16,867.7 12,369.9 TOTAL 142,834.2 97,165.3

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51. Earnings Per Share Particulars As at 31.03.2019 As at 31.3.2018 Profit/(Loss) After Tax for the year (Rs Millions) (84,748.0) (53,377.4) Weighted Average No. of Equity Shares 29,238,360,685 27,108,597,452 EPS (Rs. per Share) (2.90) (1.97)

52. The Micro and Small Enterprises Development Act The SAP system has a field, minority indicator in Vendor Master, which is updated to identify the vendor as MSME. The system has been enhanced to capture more details of MSME Vendors, such as certificate number, name of the entrepreneur, type of organization, date of commencement, bank details etc. However, payments to such undertakings covered under the Micro Small and Medium Enterprises Development Act (to the extent identified) have been made within the prescribed time limit/date agreed upon with the supplier and hence, no interest is payable on delayed payments. In other cases, necessary compliance/disclosure will be ensured in due course.

53. Remuneration to Auditors The details of the audit fees and expenses of the Auditors: - (Rupees in Million) Particulars 2018-19 2017-18 Audit Fee for the year 12.0* 10.50 Other Expenses 2.5 1.60 Total 14.5 12.1 * includes arrears of previous year Rs.1.5 million

54. Going Concern The company has received continuous support from the Government of India (GoI) though the implementation of Turnaround Plan/ Financial Restructuring Plan (TAP/FRP) approved in 2012 and then under the Revival Plan in FY 2018-19 which has helped the company to improve its operating and financial parameters. Under the newly approved Revival Plan for Air India Ltd the GoI has during FY 2018-19 infused Equity to the tune of Rs 39,750.0 million.Accordingly, as on 31st March 2019, the total Equity Infusion received by the company from the Govtunder TAP/FRP and the Revival Plan aggregated to Rs 305,202.1million. Further, as part of the disinvestment process the AISAM has approved the transfer of debts of AI amounting to Rs 294,640.0 million to the SPV-AIAHL. The interest on these loans from 1st October 2018 will be met by AIAHLfor which Rs 13000.0 million was provided in the Budget and the same has been reimbursed to AI by the SPV. The various steps taken by the Govt as also AIAHL towards improving the operational and financial efficiencies of Air India have been discussed in detail in Note No 28 and 29 above. In view of the above and the financial support from the Govt of India and various measures taken by the company to improve its operational efficiencies, various revenue enhancing measures, cost control measures undertaken etc.the company expects a substantial improvement in its operational

201 AIR INDIA and financial performance, in the near future and hence, the Accounts have been prepared on the ‘Going Concern’ basis.

55. Impairment of Assets The Company has carried out an assessment of the impairment of it’s non financial assets as on the Balance Sheet date in accordance with Ind AS 36. For the purpose of such impairment testing, all assets of the company have been considered as a single Cash Generating Unit (CGU) and the value in use has been determined based on the future projections/forecast having regard to the Revival Plan for Operational & Financial Efficiency as described in detail in Note No.28 & 29. Based on such assessment, there is no impairment in the carrying value of the assets to be recognized at this stage

56. 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 financial year ended 31 March 2019, no significant changes were made in the objectives, policies or processes relating to the management of the Company’s capital structure.

Debt-Equity Ratio: (Rs in Million) Particulars As at 31stMarch 2019 As at 31st March 2018 Long term Borrowings 82,999.6 299,622.5 Short term borrowings 276,303.4 219,554.9 Current maturity of Long-term Borrowings 199,716.7 13,290.3 Current maturities of Finance Lease Obligations 23,539.2 19,068.7 Total Debt (A) 582,558.9 551,536.4 Equity Share Capital 326,652.1 286,902.1 Other Equity (621,315.7) (535,839.2) Total Equity (B) (294,663.6) (248,937.1) Debt Equity Ratio (A/B) (2.0) (2.3) Note: The company is highly leveraged due to negative Net Worth and the nature of the business due to which the Debt Equity Ratio is negative.

57. Fair Value Measurement and Financial Instruments (a) Financial instruments – by category and fair value hierarchy

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The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including their levels in the fair value hierarchy. i) As on 31 March 2018 (Rs in Million) Particulars Note Carrying Value Fair value measurement Reference using FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost Financial Assets Non-Current a) Investments 17,461.6 17,461.6 418.2 584.5 16,458.9 b) Loans 3,056.0 3,056.0 - - 3,056.0 c) Other Financial 39,189.8 39,189.8 - - - Assets Current - a) Trade Receivables* 17,824.5 17,824.5 - - - b) Cash and Cash 1,886.0 1,886.0 - - - Equivalents* c) Bank Balance other 5,542.8 5,542.8 - - - than (b) d) Loans * 121.9 121.9 - - - e) Others Financial 4,875.8 4,875.8 - - - Assets Total 17,461.6 72,496.8 89,958.4 Financial liabilities Non-Current i) Borrowings# 299,622.5 299,622.5 - - 299,622.5 ii) Others* 111.8 111.8 - - - Current i) Borrowings# 219,554.9 219,554.9 - - 219,554.9 ii) Trade Payables* 80,796.8 80,796.8 - - - iii) Others* 84,730.4 84,730.4 - - - Total 684,816.4 684,816.4

203 AIR INDIA ii) As on 31 March 2019 (Rs in Million) Particulars Note Carrying Value Fair value measurement Reference using FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost Financial Assets Non-Current a) Investments 9,330.7 9,330.7 422.8 628.1 8,279.8 b) Loans 3,316.4 3,316.4 3,316.4 - - c) Other Financial Assets 11,200.3 11,200.3 - - - Current a) Trade Receivables* 19,921.0 19,921.0 - - - b) Cash and Cash 2,452.2 2,452.2 - Equivalents* - - c) Bank Balance other 5,980.1 5,980.1 - than (b) above* - - d) Loans * 145.8 145.8 - - - e) Others Financial 3,495.9 3,495.9 - Assets - - Total 9,330.7 46,511.7 55,842.4 - - - Financial liabilities Non-Current i) Borrowings# 82,999.6 82,999.6 82,999.6 - - ii) Others* 47.9 47.9 - - - Current i) Borrowings# 276,303.4 276,303.4 276,303.4 - - ii) Trade Payables* 82,043.0 82,043.0 - - - iii) Others* 283,837.9 283,837.9 - - - Total 725,231.8 725,231.8 - - - Notes: (#) The companies’ borrowings and loans to subsidiaries have been contracted at market rate of interest, which resets at regular intervals. Accordingly, the carrying value of such borrowings (including interest accrued) approximates fair value.

(*) The carrying amount of trade receivables, trade payables, cash and cash equivalents, bank balance other than cash and cash equivalents and other financial assets and liabilities approximates the fair values, due to their short-term nature. 204 AIR INDIA

- The fair values for loan were calculated based on discounted cash flow using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable.

- There have been no transfers between level 1, level 2 and level 3 for the year ended 31st March 2018 and 31st March 2017.

(b) Valuation Technique used to determine Fair Value: Specific valuation techniques used to value financial instruments include:

The use of NAV for unquoted Equity Shares The Fair Value of remaining financial instruments is determined using Discounted Cash Flow method.

58. Financial Risk Management Objective and Policies The company has exposure to following risks arising from its business and financial instruments: a) Credit Risk b) Liquidity Risk c) Market Risk – (i) Foreign Currency and (ii) Interest Rate The Company operates to 43 international destinations in multi-currency, dynamic and challenging environment The Company’s principal financial liabilities comprise of loan and borrowings, trade and other payables. The Long term borrowing for the aircraft purchase is mainly dollar related. A part of the borrowings for the working capital are dollar denominated. Nearly 70% of the Company’s expenses are related to the dollar. The main purpose of these financial liabilities is to finance aircraft acquisition, receivable, and cash and cash equivalents that derive directly from its operations. The Company is exposed to credit risk, liquidity risk, market risk and Commodity 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 financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objective. All hedging activities for fuel 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: a) Credit Risk Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial 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 financial institutions, foreign exchange transactions and other financial instruments. The maximum exposure to the credit at the reporting date is primarily from trade receivables. Trade

205 AIR INDIA receivables are mostly from travel agents, Government Parties and Credit Card Companies which are typically unsecured as no coverage is held by the Company and are derived from revenue earned from customers. Trade Receivables includes receivables from IATA Agency Dues, General Sales Agents, Credit Card Companies which are realizable within a period of 30 working days. General Sales Agents dues are recovered by Bank Guarantees by Airline and Agency Dues are covered by BG/Insurance cover held by IATA. Similarly, for Cargo Agents, dues are covered by BG/ Advance Payments and GSA Dues are covered by BG. Mail Dues are GoI Dues. 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 agents to which the Company brands credit terms in the normal course of the business. The company sells majority of its passenger/cargo services against credit worthiness and financial guarantees made by agents (customers) to IATA though individual guarantees are also taken in certain cases. The Company also extends credit to the Government on flights operated and which are realized over a period of time depending on budgetary provisions made by the Govt to the respective departments 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 considers 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. The Companies exposure to credit risk for trade receivables is as follows: (Rs in Million) Particulars As at 31/03/2019 As at 31/03/2018 Gross Carrying Loss Allowance Gross Carrying Loss Amount Amount Allowance Debts not due 7,933.5 - 6,803.6 - Debts over due 22,776.6 10,789.0 21,348.9 10,328.0 Movement in the allowance for impairment in respect of Trade Receivables: (Rs in Million) Particulars For the year ended For the year ended 31st 31st March 2019 March 2018 Balance at the beginning of the Year (10,328.0) (10,884.1) Movement during the year 461.0 556.1 Balance at the end of the Year (10,789.0) (10,328.0) b) Liquidity Risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligation associated with its Financial Liabilities that are settled by delivering cash or another Financial Assets.

206 AIR INDIA

The Company’s approach to manage Liquidity is to have sufficient 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 has been experiencing liquidity problems due to delayed equity infusion by the Govt and the high debt burden The Company believes that its liquidity position, including total cash and cash equivalent and bank balances other than cash and cash equivalent of Rs. 8,432.3 million as at 31st March 2019 (PY: Rs. 7,428.8 million) anticipated future internally generated funds from operations, and its fully available, revolving undrawn credit facility will enable it to meet its future known obligation in the ordinary course of business provided there is equity infusion and assistance from the Government. However, if liquidity needs were to arise, the company believes it has access to financing arrangement, value of unencumbered assets, 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. However, the Company relies on Government support to conserve its liquidity position. The Company’s liquidity management process as monitored by management includes the following:- a) Day to day funding, managed by monitoring future cash flows to ensure that requirement can be met. b) Maintaining rolling forecast of the Company’s liquidity position on the basis of expected cash flows. c) Maintaining diversified credit lines.

Exposure to Liquidity Risk The following are the remaining contractual maturities of financial liabilities at the reporting data. The contractual cash flow amount are gross and undiscounted, and includes interest accrued

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As at 31st March 2018 Carrying Contractual Cash Out Flows (Rs in Millions) Amount as per Trial Upto 1 1-2 2-3 3-4 4-5 More than Total year Years Years Years Years 5 years Borrowings a) Non Convertible Debentures 136,000 7,000 129,000 (Note - 13) 136,000 b) Long Term Borrowings (Note - - 13) - From Banks (Secured) 115,434 6,563 11,401 25,651 25,651 15,201 30,967 115,434 - From Banks (Unsecured) 21,808 7,104 7,338 2,607 4,759 21,808 - From Other Parties 220 10 10 10 10 10 168 220 c) Short Term Borrowings (Note - - 18) - From Banks (Secured) 110,916 110,916 - - - - - 110,916 - From Banks (Unsecured) 108,639 108,639 - - - - - 108,639 - From Other Parties (Unsecured) - - - d) Long Term Maturities of Finance 58,520 18,569 20,352 14,355 4,777 466 58,520 Lease Obligation (Note - 13) Trade Payables (Note - 14) - a) Trade Payables 80,541 80,541 - 80,541 Other Financial Liabilities (Note - 15) a) Interest Accrued but not due on 6,366 6,366 - 6,366 borrowings b) Interest Accrued and due on 3,197 3,197 - 3,197 borrowings c) Other Liabilities 42,902 42,791 112 42,902 d) Bank Overdraft 18 18 18 Total 684,561 384,714 46,101 42,623 35,198 15,677 160,247 684,561

208 AIR INDIA

As at 31st March 2019 Carrying Contractual Cash Out Flows (Rs in Millions) Amount as per Trial Upto 1 1-2 2-3 3-4 4-5 More than Total year Years Years Years Years 5 years Borrowings a) Non Convertible Debentures 136,000 81,000 - - - - 55,000 136,000 (Note - 13) b) Long Term Borrowings (Note - 13) - From Banks (Secured) 109,953 109,953 - - - - - 109,953 - From Banks (Unsecured) 16,349 8,752 2,822 4,775 - - - 16,349 - From Other Parties 121 13 10 10 10 10 68 121 c) Short Term Borrowings (Note - 18) - From Banks (Secured) 113,993 113,993 - - - - - 113,993 - From Banks (Unsecured) 135,951 135,951 - - - - - 135,951 - From Other Parties (Unsecured) 26,360 26,360 - - - - - 26,360 d) Long Term Maturities of Finance 43,833 23,037 15,233 5,069 494 - - 43,833 Lease Obligation (Note - 13) Trade Payables (Note - 14) a) Trade Payables 82,043 82,043 - - - - - 82,043 Other Financial Liabilities (Note - 15) a) Interest Accrued but not due on 6,558 6,558 - - - - - 6,558 borrowings b) Interest Accrued and due on 1,981 1,981 - - - - - 1,981 borrowings c) Other Liabilities 51,718 51,670 - - - - 48 51,718 d) Bank Overdraft ------Total 724,860 641,311 18,065 9,854 504 10 55,116 724,860 c) market risk Market risk is that the fair value and future cash flows of financial instrument will fluctuate 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.

(i) Interest Rate Risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate 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 floating interest rates. The Company’s interest rate risk arises majorly from the foreign currency term loan and finance lease carrying floating rate of interest which is linked to LIBOR. These obligations expose the company

209 AIR INDIA to cash flow interest rate risk. 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: (Rs in Million)

Variable-rate instruments As at 31st As at 31 March March 2019 2018 Long Term Borrowings from Bank (Secured & Unsecured, 7,290.10 30,734.3 including current maturities) Short term borrowings 23,769.7 79,127.7 Finance lease obligation(including current maturities) 41,538.7 53,996.8 Total 72,598.5 163,858.8

Increase / (decrease) in the interest on foreign currency term loans-from others and on finance Statement of Profit and losses. lease obligation. Increase by 0.50 % Decrease by 0.50 % - For the year ended 31 March 2019 363.0 (363.0) - For the year ended 31 March 2018 819.3 (819.3)

(ii) Currency Risk Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to multi currencies on its operations and hence is exposed to the effects of fluctuation in the prevailing foreign currency rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuation between the functional currency and other currencies from the company’s operating, investing and financing activities.Nearly 70% of the Company’s expenses are dollar denominated. Exposure to Foreign Currency Risk The summary of quantitative data about the Company’s exposure to currency risk, as expressed in Indian Rupees, as at 31 March 2019, 31 March 2018 are as below:

210 AIR INDIA a) As at 31st March 2018

(Rs in Million) Particulars USD EUR GBP AED OMR SGD THB CHF QAR AUD OTHERS Financial Assets Trade Receivables 6,073.2 1,077.1 1,167.1 618.6 146.1 107.0 59.8 61.6 14.2 88.6 1,689.8 Cash and Cash equivalents 365.8 421.2 5.8 7.8 - 27.9 20.3 7.6 - 137.4 346.9 Bank Balances other than above 732.0 - 523.1 ------52.1 33.1 Loans 5,272.7 59.1 3.5 13.1 - 5.8 1.1 0.1 0.4 0.2 47.4 Other Financial Assets 5,270.9 9.7 15.1 - - - 0.6 - - 6.7 25.3 Total Financial Assets 17,714.6 1,567.1 1,714.6 639.5 146.1 140.7 81.8 69.3 14.6 285.0 3,958.4

Financial Liabilities Borrowings 168,440 - 161.6 ------Other Financial Liabilities 3,342.8 58.6 17.3 22.3 2.2 4.2 0.8 8.0 1.0 9.9 61.3 Trade Payables 6,407.4 765.2 642.1 572.3 75.7 289.5 30.6 - - 190.4 1,062.0 Total Financial Liabilities 178,190.2 823.8 821.0 594.6 77.9 293.7 31.4 8.0 1.0 200.3 1,123.3 b) As at 31st March 2019 (Rs in Million)

Particulars USD EUR GBP AED OMR SGD THB CHF QAR AUD OTHERS Financial Assets Trade Receivables 7049.8 1086.0 1096.0 616.7 259.1 64.9 64.1 29.5 105.6 160.6 2335.6 Cash and Cash equivalents 568.9 563.6 34.1 9.5 0.04 36.2 48.8 1.02 0.00 32.3 538.7 Bank Balances other than 786.1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 51.9 420.6 above Loans 5856.2 58.3 3.4 13.9 0.00 6.5 1.1 0.1 0.4 0.2 45.3 Other Financial Assets 3652.1 20.1 11.2 9.6 0.8 3.2 0.9 1.5 0.0 14.2 34.5 Total Financial Assets 17913.2 1727.9 1144.7 649.7 260.0 110.8 114.9 32.1 106.0 259.2 3374.7 Financial Liabilities Borrowings 147007.2 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other Financial Liabilities 2290.6 45.4 72.8 16.8 3.1 3.3 0.9 0.00 1.03 9.9 13.9 Trade Payables 11010.4 465.3 661.3 573.5 39.8 256.5 124.7 0.00 3.5 264.8 975.7 Total Financial Liabilities 160308.3 510.7 734.1 590.3 42.9 259.8 125.6 0.00 4.5 274.7 989.7

211 AIR INDIA

(Rs in Million) 0.5% Depreciation / Appreciation Statement of Profit and Loss for Statement of Profit and Loss for in Indian Rupees against following the year ended 31 March 2019 the year ended 31 March 2018 foreign currencies: Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Appreciation Depreciation Appreciation Depreciation USD 712.0 (712.0) 802.4 (802.4) EUR (6.1) 6.1 (3.7) 3.7 GBP (20.5) 20.5 (4.5) 4.5 AED (0.3) 0.3 (0.2) 0.2 OMR (1.1) 1.1 (0.3) 0.3 SGD 0.7 (0.7) 0.8 (0.8) THB 0.1 (0.1) (0.3) 0.2 CHF (0.2) 0.2 (0.3) 0.3 QAR (0.5) 0.5 (0.1) 0.1 AUD 0.1 (0.1) (0.4) 0.4 Other (11.9) 11.9 (5.1) 5.1

59. IND AS 115: Remaining Performance Obligations The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of reporting period and an explanation as to when the company expects to recognize these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by the several factors, including terminations of contract, changes in scope of contracts etc. The aggregate value of performance obligations that are completely or partially unsatisfied as at 31st March, 2019, is Rs 25306.1 million and on account of absorption of IND AS 115, forward sale of which performance obligation are completely unsatisfied as at the end of reporting period is Rs 24,477.4 million which has been classified as “Forward Sale under Current Liabilities”, as detailed in table given below: (Rs in Million) Contractual Liabilities Forward Sales Opening Balance 22,445.3 Add: Additions 225,309.7 Less: Revenue Recognized 223,277.6 Closing Balance 24,477.4 There is no significant impact on the financial results on adoption of IndAS 115.

212 AIR INDIA

60. An instance of fraud involving payment to a third party was reported in New York office amounting to USD 300,250 (Rs 19.4million) during previous year. The matter is under investigation company has initiated action for recovery; however as a matter of prudence full provision has been made towards the same.

61. Previous Years figures have been re-casted/regrouped/re-arranged, wherever necessary. Signatures to the Schedules forming part of the Standalone Financial Statements and to the above notes.

For and on Behalf of Sd/- Jagdish Chand & Co. (V.S. Hejmadi) Chartered Accountants Director-Finance FRN : 000129N DI No.07346490

Sd/- Sd/- (Praveen Kumar Jain) (Kalpana Rao) Partner Company Secretary M.No. 085629 M.No.ACS8194

Place : New Delhi Place : New Delhi Date : 22nd October 2019 Date : 22nd October 2019

213 AIR INDIA

AIR INDIA LIMITED AIR INDIA AIR INDIA

content

Page No. 1. Board of Directors 1 2. Management 2 3. Chairman’s Message 3 4. Directors’ Report 9 5. Management Discussion & Analysis Report 22 6. Comments of the Comptroller and Auditor General of India 65 7. Independent Auditors’ Report 69 8. Balance Sheet as at 31 March 2019 128 9. Statement of Profit and Loss for the year ended 31 March 2019 130 10. Statement of change in equity for the year eneded 31 March 2019 131 11. Cash Flow Statement for the year ended 31 March 2019 132 12. Notes forming part of the Finanaical Statements for the year ended 31 March 2019 133 13. Consolidated Financial Statement for the year ended 31 March 2019 of Air India Group 1-203 14. Annual Report of Air India Air Transport Services Limited 1-136 15. Annual Report of Air India Engineering Services Limited 1-99 16. Annual Report of Air India Express Limited 1-121 17. Annual Report of Airline Allied Services Limited 1-142 18. Annual Report of Hotel Corporation of India Limited 1-100 AIR INDIA AIR INDIA

BOARD OF DIRECTORS

Shri Ashwani Lohani

Shri Praveen Garg Shri Satyendra Kumar Mishra Shri Vinod Hejmadi

Dr. Ravindra Kumar Tyagi Dr. Syed Zafar Islam

Shri Kumar Mangalam Birla Smt. Daggubati Purandeswari

CFS

CONSOLIDATED FINANCIAL STATEMENTS OF AIR INDIA GROUP

220 CFS

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) READ WITH SECTION 129(4) OF THE COMPANIES ACT, 2013 ON THE CONSOLIDATED FINANCIAL STATEMENTS OF AIR INDIA LIMITED FOR THE YEAR ENDED 31st MARCH 2019 The preparation of consolidated financial statements of AIR INDIA LIMITED for the year ended 31 March 2019 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under section 139(5) read with section 129(4) of the Act are responsible for expressing opinion on the financial statements under section 143 read with section 129(4) of the Act based on independent audit in accordance with the 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 22 October 2019. I, on behalf of the comptroller and Auditor General of India, have conducted a supplementary audit of the consolidated financial statements of AIR INDIA LIMITED for the year ended 31 March 2019 under section 143(6) (a) read with section 129 (4) of the Act. We conducted a supplementary audit of the financial statements of AIR INDIA LIMITED, Air India Express Limited, Hotel Corporation of India Limited, Air India Engineering Services Limited, Air India Air Transport Services Limited, Airline Allied Services Limited for the year ended on that date. Further, section 139 (5) and 143 (6) (a) of the act are not applicable to Air India SATS Airport Services Private Limited being private entity for appointmet of their Statutory Auditor nor for conduct of supplementary audit. Accordingly, Comptroller and Auditor General of India has neither appointed the Statutory Auditor nor conducted the supplementary audit of this company. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors 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 significant matters under section 143 (6)(b) read with section 129(4) of the Act which have come to my attention and which in my view are necessary for enabling a better understanding of the financial statements and the related audit reports. A. Comments on consolidated Profitability Consolidated Statement of Profit and Loss A.1. Revenue Revenue from operations (Note No.19)- Rs.292433.1 Million A.1.1 The following items have been accounted for in accordance with paragraph 27 and 28 of Ind AS 1 relating to Presentation of Financial Statements and paragraph 88 relating to recognition of all items of income and expense in a period in profit or loss unless as Ind AS requires or permits otherwise. (a) The above does not include Rs.3.84 Million being differential revenue for the period 2018-19 booked by Chefair Flight Catering Mumbai during April and May 2019 (b)The Centaur Hotel Delhi renewed (October 2018) the agreement with Indus Towers Limited for installation of two mobile towers on terrace w.e.f. May 2017. The Company however, accounted the arrears receivable amounting to Rs.3.96 Million for the period May 2017 to March 2019 in the accounts of 2019-20 instead of the current year (2018-19). 221 CFS

The above has resulted in understatement of revenue from operations and overstatement of loss for the year by Rs.7.8 Million. A.2. Expenses: A.2.1 Employee Benefit Expenses (Note No.22) - Rs. 32882.9 Million The above does not include Rs. 82.26 Million being arrears payable to Union Employees based on the wage revision approved (July 2019) by the Ministry of Civil Aviation on the recommendation (November 2018) of the Company and booked as prior period expenses. This is not in line paragraph 5 relating to prior period errors and paragraph 37 relating to Accounting Policies. Changes in Accounting Estimates and Errors of Ind AS 8. As the Company made provision for salary arrears based on the new information or new developments during the year, the same was not a correction of an error or omission. This has resulted in understatement of the employee benefits and the loss for the year by Rs.82.26 Million and overstatement of opening balance of retained earnings (accummulated loss) by a like amount. A.2.2 Finance Cost (Note No.23) - Rs. 48969.8 Million A.2.2.1 The above includes an amount of Rs. 1269.6 Million towards interest on delayed payment payable to DIAL1 on estimation basis for the period April 2014 to March 2019. However, the actual expenses on the non-aeronautical revenue (which includes interest income) will be trued-up by AERA at the time of tariff determination in the 3rd control period. 1 indicates Delhi International Airport Limited A.2.2.2 The above does not include Rs. 55.50 Million being interest on luxury tax paid by the Centaur Hotel, Delhi for the period 2010-11 to 2015-16 and booked as prior period expenses paragraph 27 of Ind AS 1, an entity shall prepar its financial statements, except for the cash flow information, using the accrual basis of accounting. Accounting of unsecured insurance claim of Rs. 226.19 Million in deviation of the accounting policy of the Company is not in compliance with provision of Ind AS 1. This has resulted in overstatement of the insurance claim receivable and understatement of loss for the year by Rs. 226.19 Million. B. COMMENTS ON CONSOLIDATED FINANCIALS POSITION Consolidated Balance Sheet B.1 Assets B.1.1 Assets heldfor sale and Assets included in Disposal Group Held for Sale (Note No. 10.1)- Rs 120546.2 million In 2014-15, the Company has capitalised assets under the head “Other Intangible Assets” for an amount of Rs. 2713.8 million incurred during the period October to December 2014 on payment of payroll expenses, staff expenses, gratuity/leave salary expenses and other general expenses to obtain Civil Aviation Requirements (CAR) 145 (Licence from DGCA for carrying out MRO services.) Capitalization of these expenses under “Other Intangible Assets” was not in accordance with accounting standards, basic accounting assumptions and principles and accordingly qualified by the Statutory Auditors in their Auditor’s Report for the period 2014-15, 2015-16, 2016-17 and commented by the C&AG for the period 2017-18. This is also in contravention to Ind AS 38 and the basic accounting principles. These expenses could not be said to be directly attributable to create the asset as these employees were performing their duties in the normal course of business. This has resulted in overstatement of Intangible Assets

222 CFS under Assets held for sale and understatement of Other Equitty (Debit balance of Statement of Profit and Loss) by Rs 2713.8 million. B.1.2 Current Assets Financial Assets Others (Note no.5)- Rs 3515.2 million The above includes Rs. 226.19 million being insurance claim receivable. Vide Note 62, Comapny disclosed that the company has received Rs 501.52 million upto 31.03.2019, leaving outstanding net balance recoverable of Rs. 226.19 million. Accouting of the same is a deviation from accouting policy 3 XI (k), which satted that the claim receivable from the insurance company is accounted for on the acceptance by the insurance company on such claims. As per paragraph 18 of Ind AS 1, an entity cannot rectify inappropriate accounting policies either by disclosure of the accouting policy used or by noted or emplanatory material. Further as per paragraph 27 of Ind AS 1, an entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting. Accounting of unaccrued insurance claim of Rs. 226.19 million in deviation of the accounting policy of the Company is not in compliance with provision of Ins AS 1. This has resulted in overstatement of the insurance claim receivable and understatement of loss for the year by Rs. 226.19 million. C. COMMENTS ON DISCLOSURE C.1 Note No.32 (Assets held for sale) The above note is deficient as no proper disclosure is given regarding three properties which were identified to be returned back to the allotting authority against the refund of the amount deposited and as such are not available for sale. C.2 The company in respect of AIESL has neither recognised the Deferred Tax Assets and nor made the disclosures for not recognising the same which is in non-compliance to Indian Accounting Standard (Ind AS) 12 relating to Income Taxes. D. GENERAL Training cost from the Pilots including Cadet Pilots who had joined on or after April 2008 has not been shown as recoverable in the accounts. As per the practice, the Company incurs expenditure amounting to Rs. 2.5 Million on the training of a Pilot, which is to be recovered in 84 monthly instalments from the date of induction as First Officer. In Northern region, the Company has started the recovery on this account from 16 Pilots in the year 2019-20. However, this need to be reviewed for the Company as a whole and accoundingly accounted for. For and on behalf of the Comptroller and Auditor General of India

Sd/- Place: New Delhi (Prachi Pandey) Dated: 23 December 2019 Principal Director of Commercial Audit & Ex-officio Member, Audit Board-1, New Delhi

223 CFS

Management Replies to the comments of the Comptroller and Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the Consolidated Financial Statements of Air India Limited for the year ended 31st March 2019 Government Audit Query Management Reply A COMMENTS ON PROFITABILITY Consolidated Statement of Profit & Loss

A.1 Revenue A.1.1 Revenue from Operations (Note No 19) – Rs 292433.1 million)

The following items have not been accounted The actual revenue for the period for in accordance with paragraph 27 and 28 of April 2018 to December 2018 and the Ind AS 1 relating to Presentation of Financial estimated revenue for the period January Statements and paragraph 88 relating to March 2019 was accounted in 2018- to recognition of all items of income and 19. However since there were delays in expense in a period in profit or loss unless communication of rates of menu items, an Ind AS requires or permits otherwise. there was a delay in generating the actual bills for the period January to March (a) The above does not include Rs.3.84 2019. Subsequently when the actual bills million being differential revenue for the were submitted / prepared in 2019-20, period 2018-19 booked by Chefair Flight the differential amount of Rs 3,843,826/- Catering Mumbai during April and May 2019. were accounted in 2019-20. In the normal (b) The Centaur Hotel Delhi renewed course, the income accounted through (October 2018) the agreement with Indus debit note needs to be accounted as Towers Limited for installation of two mobile and when debit note is raised. Since towers on terrace w.e.f May 2017. The the income is accounted as per the best Company however, accounted the arrears estimate available as on date, subsequent receivable amounting to Rs.3.96 million for additional income needs to be accounted the period May 2017 to March 2019 in the as and when the same is due. accounts of 2019-20 instead of the current year (2018-19).

The above has resulted in understatement of The final Agreement signed by the party revenue from operations and overstatement was received by Centaur Delhi only in of loss for the year by Rs.7.8 million June 2019. During Audit Period, there was no written agreement in existence as a result of which the revenue could not be accounted in 2018-19. Rental income is accounted based upon the binding Registered Rental Agreement. Hence the same was accounted and billed in 2019-20.

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A.2 Expenses

A.2.1 Employees Benefit Expenses (Note No 22) – Rs 32882.9 million

The above does not include Rs.82.26 million The matter regarding non provision for being arrears payable to union employees wage revision for unionized category based on the wage revision approved (July had been disclosed by the Company in 2019) by the Ministry of Civil aviation on its earlier accounts for 2017-18 under the recommendation (November 2018) of Notes to Financial Statements and was the Company and booked as prior period also commented upon by the Statutory expenses. Auditors in point no. 7 under “Emphasis This is not in line with paragraph 5 relating of Matters”. This matter of implementation to Prior Period Errors and paragraph 37 of wage revision for union category relating to Accounting Policies, Changes in started in 2014. CGIT submitted its Award Accounting Estimates and Errors of Ind AS dated 29.11.2016 stating that unionized 8. As the Company made provision for salary employees are entitled to wage revision arrears based on the new information or new effective 17.8.2008. After due negotiations developments during the year, the same with the unions, the final approval for its was not a correction of an error or omission. implementation was received from the This has resulted in understatement of the Ministry only in July 2019. In spite of the employee benefits and the loss for the year on-going process, no provision had been by Rs.82.26 million and overstatement made in the books by the Company in of opening balance of retained earnings earlier years. (accumulated loss) by a like amount. Once the approval was received, the amount of Rs.82,259,669, being provision for the period prior to 31.3.2018,was considered as prior period by the Company. This has been disclosed in the Note no. 30 a) and 43 a) of the Accounts for 2018-19. A.2.2 Finance Cost (Note No 23) – Rs 48969.8 million A.2.2.1 The above includes an amount of Rs 1269.6 In this regard the following is stated: million towards interest on delayed payment In the Operations Management and payable to DIAL on estimation basis for the Development Agreement (OMDA), the period April 2014 to March 2019. However, Implementation Overseeing Committee the actual expenses on the non-aeronautical (OIOC) Meeting held on 03.04.2013, a revenue (which includes interest income) decision was taken that Air India should will be trued up by AERA at the time of tariff pay interest to DIAL to off-set cost of loans determination in the third control period borrowed by it to meet its working capital

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requirements due to non-payment by AIL. Subsequently, MoCA has conveyed in various meetings that the interest on the total outstanding amount would be paid by AI to DIAL, as per the actual interest rate at which DIAL has borrowed from banks on year to year basis. Accordingly, the interest claims submitted by DIAL has been duly verified by the independent Chartered Accountants firm, based on their verification interest has been booked in the books of accounts. Further, reference is also invited to Para No. 17.121 of AERA Order No 40/2015- 16, vide which AERA has mentioned that it has decided to consider the interest on the working capital loan as an operating expense, it has also been stated that based on the documentary evidences submitted by DIAL on account of these categories, the Authority will provide a true up at the time of tariff determination for the third control period. In Para No. 19.36, AERA has also stated that “as the Authority has pointed out the realized no- aeronautical revenue in the past few years does not exhibit a clear trend, a true-up will be provided for the non-aeronautical revenues based on the actual realized non-aeronautical revenues, at the time of tariff determination in the third control period. Due disclosure on this issue in respect of Contingent Asset has been disclosed in the Notes to Accounts. A.2.2.2 The above does not include Rs.55.50 During 2018-19 the Company has paid million being interest on luxury tax paid by all overdue outstanding statutory dues the Centaur Hotel Delhi for the period 2010- along with interest thereon as per online 11 to 2015-16 and booked as prior period challans generated at the time of making expenses. the payments. The assessments of the

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The Company had not made any provision earlier years are yet to be completed. On for interest on luxury tax payable based on making the payment of interest, since they previous years’ policy of the Company to pertained to the earlier years i.e. 2012-13 provide interest on service tax and luxury tax onwards, the Company has accounted as and when assessments are completed. them under Prior Period and adjusted As the same was not correction of an error under Retained Earnings. This has been or omission, accounting of interest on disclosed in the Note no. 43 c) of the luxury tax paid as prior period expenses Accounts for 2018-19. is not in compliance with paragraph 5 and paragraph 37 of Ind AS 8. This has resulted in understatement of the finance cost and the loss for the year by Rs.55.50 million B COMMENTS ON CONSOLIDATED FINANCIAL POSITION Consolidated Balance Sheet B.1 Assets

B.1.1 Assets held for Sale and Assets included in Disposal Group Held for Sale (Note No 10.1) – Rs 120546.2 million In 2014-15, the Company has capitalized The expenditure so capitalized were in the assets under the head “Other Intangible nature of pre-operation expenditure. This Assets” for an amount of Rs.2713.8 million is also a fact the expenditure are pertaining incurred during the period October to to the period October ~ December 2014 December 2014 on payment of payroll and the Company could obtain the expenses, staff expenses, gratuity/leave required DGCA License CAR 145 only on salary expenses and other general expenses 1st January 2015, which is a mandatory to obtain Civil Aviation Requirements (CAR) requirement for running a MRO. 145 (Licence from DGCA for carrying out The Company started the process of MRO services). Capitalizaiton of these obtaining the DGCA License CAR-145 expenses under “Other Intangible Assets” in October 2014 and it was mandatory was not in accordance with Accounting requirement to have the working manpower Standards, basic accounting assumptions working under its payroll and have the and principles and accordingly, qualified by hangers in working condition under its the Statutory Auditors in their Auditors Report administrative control. It is pertinent for the period 2014-15, 2015-16, 2016-17 to note that without demonstrating the and commented by the C&AG for the period working condition of Company’s hangers 2017-18. by its own staff, the Company would not have been in a position to obtain the said license.

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This is also in contravention to Ind AS 38 In view of above, the Company is of the and the basic accounting principles. These opinion that the expenditure so incurred expenses could not be said to be directly prior to commencement of its operation, attributable to create the asset as these were directly attributable for creation employees were performing their duties in the of intangible assets and since keeping normal course of business. This has resulted the hanger in working condition was a in overstatement of Intangible Assets under precondition to obtain DGCA Licence, it Assets held for Sale and understatement of can not be said that they were working Other Equity (Debit balance of Statement of in the normal course of business, as the Profit and Loss) by Rs 2713.8 million. Company could commence its normal business only after obtaining necessary DGCA Licence in its name i.e. on 1st Jan 2015, whereas said expenditure is pertaining to the period OCT~DEC 2014. In view of above, the Company is of the opinion that there is no overstatement of Other Intangible Assets and understatement of Other Equity.

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B.1.2 Current Assets Financial Assets Others (Note No 5) Rs 3515.2 million The above includes Rs.226.19 million being The Accounting policies, including that in insurance claim receivable. Vide Note 62, respect of insurance claims, are in line Company disclosed that the company has with that of the Holding Company, Air India received Rs.501.52 million upto 31.03.2019, keeping in view the CFS requirements. leaving outstanding net balance recoverable of Rs.226.19 million. Accounting of the same The Company is following up with the is a deviation from accounting policy 3 XI (k), Insurance authorities for the recoverable which stated that the claim receivable from through mails / discussion and periodical the insurance company is accounted for on review meeting and wherever additional the acceptance by the insurance company information / clarifications on the claims on such claims. are sought by the Insurance authorities the same are provided. In line with the same, As per paragraph 18 of Ind AS 1, an entity at the end of March 2019, the Insurance cannot rectify inappropriate accounting authorities have provided a confirmation policies either by disclosure of the accounting that the claims are under process and policy used or by notes or explanatory would be cleared in due course of time as material. Further as per paragraph 27 of per the procedure. Ind AS 1, an entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

Accounting of unaccrued insurance claim The Company is hopeful of recovering the of Rs.226.19 million in deviation of the amount in full as reflected and fast is also accounting policy of the Company is not in made in the disclosure vide note 62 of the compliance with provision of Ind AS 1. This Consolidated Financial Statement of FY has resulted in overstatement of the insurance 2018-19. claim receivable and understatement of loss for the year by Rs.226.19 million. C COMMENTS ON DISCLOSURE C.1. Note No 32 (Assets held for Sale) The above note is deficient as no proper All assets whether monetized or to be disclosure is given regarding three properties returned back to the allotting authority which were indentified to be returned back to are removed from the FAR & parked in the allotting authority against the refund of “Assets held for Sale”. This is only an the amount deposited and as such are not adjustment account & credit to the account available for sale. will be given at the time of monetization or returning back of the property.

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C.2 The company in respect of AIESL has neither As per Ind AS 12 there needs to be a recognized the Deferred Tax Assets and nor probability that the Company will make made the disclosure for not recognizing the a sufficient taxable income and the tax same which is in non-compliance to Indian losses/credits will be set-off against the Accounting Standard (Ind AS) 12 relating to same to recognize deferred tax assets in Income Taxes. the financial statements. The Company has been incurring cash losses since commencement of operation and thus deferred tax assets are not recognized due to low probability of future profits, offsetting the current tax losses/ credits. The Company has filed income tax returns using provisional financial statements. The amount of tax loss, unabsorbed depreciation and credits allowed to be carried forward under the Income Tax Act and its Rules are yet to be confirmed. Even though the Company had disclosed the reasons for not recognizing the deferred tax assets in the previous years, as per IndAS with the non-availability of information pertaining to quantum of tax losses/credits and its expiry dates, the disclosure would be incomplete, as such disclosure in this regard could not be made. D General Training Cost from the Pilots including Cadet Prior to merger, both the erstwhile Pilots who had joined on or after April 2008 airlines had different policies of recovery has not been shown as recoverable in the of training costs. Whereas erstwhile Air accounts. As per practice, the Company India there was no system of recovery incurs expenditure amounting to Rs 2.5 of training costs, erstwhile Indian Airlines million on the training of a Pilot, which is Ltd. had the policy of recovery of training to be recovered in 84 monthly instalments costs from pilots. from date of induction as First Officer. In Northern Region, the Company has started Consequent upon the merger, in order to the recovery on this account from 16 Pilots in have a uniform policy in this regard, Air the year 2019-20. However, this need to be India decided to implement the policy in reviewed for the Company as a whole and 2011 for the recovery of training costs from accordingly, accounted for. pilots. Accordingly, the recovery process was initiated.

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However, in respect of the cases pointed out in the audit observation, the action in respect of all these cases shall be taken in FY 2019-20. In this regard it is submitted that with the initiation of SAP Accounting, the process of recovery of training fees from pilots has improved a lot, but an overall review will be undertaken to further strengthen the internal control on the procedure being followed in this regard.

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INDEPENDENT AUDITOR’S REPORT

To the Members of Air India Limited REPORT ON THE AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS Qualified Opinion We have audited the accompanying Consolidated Financial Statements of Air India Limited (hereinafter referred to as the ‘Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) which includes Group’s share of profit in its joint venture, which comprise the Consolidated Balance Sheet as at 31st March, 2019, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Consolidated Financial Statements”). In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiaries and joint venture, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid Consolidated Financial Statements give the information (other than certain information mentioned in Para A(5) of Emphasis of Matter section), required by the Companies Act, 2013 (“Act”), in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its joint venture as at 31st March, 2019 and its consolidated loss (including consolidated other comprehensive income), its consolidated cash flows and the consolidated changes in equity for the year ended on that date.

Basis for Qualified Opinion 1. In respect of Consolidated Financial Statements,

Adjustments on account of reduction in estimated fair value, if any, in the carrying value of disposal group held for sale which includes Assets of Rs 11,100.6 million, and liabilities of Rs 17,319.2 million, in respect of three subsidiaries namely Hotel Corporation of India Limited, Airline Allied Services Limited and Air India Engineering Services Limited, has not been determined and provided for in the books of accounts as required by Ind AS 105.

2. We draw your attention to the following qualifications in the audit opinion of the financial statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us, except for the matters eliminated on Consolidation or not considered material at group level, along with our remarks wherever necessary, as under;

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A. In respect of Air India Limited (Holding Company) (vide our Report on Standalone Financial Statements dated October 22, 2019)

Sl. Qualification Remarks No. 1. Non- reconciliation/non-confirmation of certain receivables, payables Refer Note 42 & 43 (including certain staff related accounts and suspense / control accounts), inventory lying with third parties, certain bank accounts/ Loans including direct confirmation for certain cases and statutory dues. Refer Note No.36 & 37.

B. In respect of Air India Air Transport Services Limited (Subsidiary) – (vide their Independent Auditor’s Report dated September 6, 2019)

Sl. Qualification Remarks No. 1. The Company has carried forward following account balances which are pending reconciliation/ adjustments (if any) as at March 31, 2019: a. The Company has accounted for ground handling service - revenue from IATA platform based on service document generated by the manual system. This revenue is subject to rejections/adjustments by the IATA. The reconciliation for such rejections/adjustments with IATA is pending since Financial Year 2014- 2015. Balance outstanding in respect thereof as at March 31, 2019 is Rs.511.02 million against which the Company has made expected credit loss allowance of Rs.156.82 million. We have relied on the management contention for realisation of such balances atleast equivalent to the value reported and hence, no further adjustments are required to be made. b. Recording and accounting of expenses relating to Employee Benefits is not automated. During the course of verification various statutory non-compliances regarding provident fund, ESIC, Professional tax, Tax Deducted at Sources have also been observed. Further, we report that Employee Benefits related accounts have reported adverse balances which are under reconciliation and are reported on net basis. Balances of Goods and Service Tax, Income Tax assets and Tax Deducted at source are under reconciliation with the respective statutory returns. The Company is in the process of reconciling the said balances and assessing the impact on financial statements. We are unable to ascertain impact of such balances on the financial statements. We have relied on the management 233 CFS

contention that reconciliation of such balances will not - result in material impact on the financial statements and hence, no further adjustments are required for the current year. c. Balances of trade payable and trade receivable are - subject to balance confirmation and reconciliation. Pending such reconciliation trade payable has been reported net of debit balance amounting to Rs.58.00 million and trade receivable net of credit balance amounting to Rs.209.57 million. In the absence of adequate reconciliation, we are unable to ascertain impact of such reconciliation on the financial statements. d. The Company has collected airport authority levy in - respect of ground handling services provided to parties other than Air India Limited and its group companies. As at March 31, 2019, cumulative collection towards such levy for the past five years is classified under other financial liability and trade payables. This amount is yet to be paid to the Airport Authority of India. Pending adjustments of such levy, the management does not expect material impact on the financial statements.

C. In respect of Airline Allied Services Limited (Subsidiary) – (vide their Independent Auditor’s Report dated July 24, 2019)

S r . Qualification Remarks No. 1. Reconciliation of account with Airport Authority of India - is pending since previous years, further liability for interest for non/ delayed payment to Airport Authority of India has not been ascertained and provided, therefore impact of the above on the results of the Company is not ascertainable at this stage. 2. Purchases, consumption and closing stock of Aircrafts Refer Note 70(ii) inventory has been accounted for on the basis data/ advices received from AIL, not verified by us. Further as stated in Note No. 36.2, due to implementation of interface with RAMCO during the year, there are some unresolved discrepancies in the inventory and other accounts, impact of such discrepancies are not ascertainable at this stage. Hence we are unable to comment upon the impact of the same on the results of the Company.

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3. Company has accumulated losses of Rs. 24027.71 Refer Note 60(d) 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’s liabilities exceed its assets since previous years. Due to liquidity problem, periodic delay/ non-payment for fuel, lease rental, Statutory dues, other payments etc. have been observed. Those conditions along with other matter set out in notes on accounts indicate the existence of material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. However the Financial statement of the Company have been prepared on going concern basis. As stated in Note No. 46 Air India Limited (Parent Company) had formulated a Turnaround Plan (approved by Government of India) for AIL and its Group Companies to improve its operational and financial performance. Company’s management is of the view that with the support of AIL and with other measures taken and considering the future business plan financial position of the Company would improve in future. We are unable to comment on the success of Turnaround Plan. 4. Other Current Assets includes Indirect Taxes recoverable Refer Note 42(v)(a) amounting to Rs. 323.80 Million on account of GST Input Credit, whereas as per GST portal amount of Input credit available as on 31-03-2019 was Rs. 143.81 Million. As explained, Company is in the process to reconcile the difference and impact of the above on results of the Company is not ascertainable at this stage. The impact of the above qualifications on the Consolidated Financial Statements, if any, isnot ascertainable. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group and its joint venture in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with ethical requirements that are relevant to our audit of the Consolidated Financial Statements under the provisions of the Act and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us in respect of the Holding Company audited by us and the audit evidence obtained by the other auditors of subsidiaries and joint venture in terms of their reports, referred to in section “Other Matters”, is sufficient and appropriate to provide a basis for our qualified opinion on the Consolidated Financial Statements.

Material Uncertainty in relation to Going Concern We draw attention to the following comments in relation to going concern in the audit opinion of the Financial Statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us; 235 CFS

A. In respect of Air India Limited (Holding Company)- vide our report on Standalone Financial Statements dated October 22, 2019

1. The Company has incurred a net loss of Rs. 84,748.0 Million during the year ended March 31, 2019 and, as of that date, the Company’s current liabilities exceeded its Current assets by Rs. 6,52,458.7 Million and it has accumulated losses of Rs. 6,26,936.3 Million which has resulted in complete erosion of the net worth of the company. In spite of these events or conditions which may cast a doubt on the ability of the company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the continued support of the Government of India and having regard to the other facts mentioned in Note 54 of the standalone financial statements and note 60(a) of the consolidated financial statements. Our opinion is not modified in respect of the above matter. B. In respect of Hotel Corporation of India (Subsidiary)- vide their Auditor’s Report dated July 23, 2019

1. We draw attention to Note 51 in the financial statement, in which net worth of the company is eroded. The Company incurred a net loss of Rs.712.0 million during the year ended March 31, 2019 and, as of that date, the Company’s current liabilities excess its total assets by Rs. 3203.0 million. These events or conditions, along with other matters as set forth in Note 51 indicate that a material uncertainty exits that may cast significant doubt on the Company’s ability to continue as going concern. (Refer note 60(c) of consolidated financial statements) Our opinion based on the consideration of Auditors’ report of the said subsidiary is not modified in respect of the above matter. Emphasis of Matter We draw your attention to the following matter of emphasis on the Financial statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us except for the matters eliminated on Consolidation or considered not material at group level, as under;

A. In respect of Air India Limited (Holding Company)-, Vide our Report on Standalone Financial Statements dated October 22, 2019

Sr. Emphasis of Matter Remarks No. 1. Note No. 26A(a) regarding non provision of interest claims Refer Note 26(A)(a) and 26(A) from airport operators amounting to Rs. 988.6 Million (c) and Note No. 26(A)(b) regarding non-provision of penal charges on delayed payment of Guarantee Fee amounting to Rs. 17,470.4 Million, for reasons stated therein;

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2. i) Note No. 50 regarding Deferred Tax Asset of Rs. 28,425.2 Refer Note 57 Million carried in the accounts in view of the reasons stated therein, the realisation of which would depend on generation of sufficient profits in the future as anticipated / projected by the management; ii) Note No. 50(d) regarding the effect of change in tax rate subsequent to the balance sheet date vide amendments Refer Note 57(c) in the Income Tax Act, 1961 and the Finance (No.2) Act 2019, through Taxation Laws (Amendment) Ordinance 2019 on the carrying value of deferred tax assets (Net) as disclosed therein. 3. Note No. 35 regarding non-application of Appendix B to Refer Note 41 Ind AS 21- “The effect of changes in Foreign Exchange rates” in respect of advances received or paid in foreign currency. 4. Note No. 29 regarding; Refer Note 29

a. classification of loans identified for transfer to AIAHL as current liability;

b. accounting for reimbursement of Rs 13000.0 Million for the period from 1st October 2018 to 31st March 2019 by Air India Assets Holding Limited (AIAHL) towards interest costs paid by the Company on the identified loans, as a reduction from finance cost;

c. no effect being given for certain receivables/ transactions with AIAHL pending final reconciliation ;

d. classification of certain identified properties as Asset held for sale/ Investment property; and

e. Classification of assets and liabilities of four subsidiaries as assets/liabilities included in Disposal group held for sale.

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5. Non-Disclosure of certain information in the consolidated Refer Note 13.2, 18, 23(a) and financial statements as required by Schedule-III of the 30(iv) Companies Act, 2013 and Indian Accounting Standards (Ind AS):

a. Terms of repayment, nature of Security separately for each case of borrowings and period & amount of continuing default in respect of borrowings and interest thereon in respect of each borrowing - Refer Note No.13.2 & 18

b. Foreign Currency Fluctuation under Finance Cost- Refer Note No. 23(a)

c. Fair Value of Investment Properties as required in Ind AS 40- Investment property - Refer Note no. 30(d) Our Opinion is not modified in respect of above matters.

B. In respect of Air India Transport Services Limited (Subsidiary)- vide their Auditor’s Report dated September 6, 2019

Sr. Emphasis of Matter Remarks No. 1. As stated in Note 24 to the financial statements, the Company has restated its Financial Statements [except for items as mentioned in para (1) (a) and (b) below] for the year ended March 31, 2018 in accordance with Ind AS – 8, “Accounting Policies, Changes in Accounting Estimates and Errors”. a. We draw attention to Note 34(b) of the financial Refer Note 57 statements. The Company has recomputed deferred tax on taxable temporary differences using balance sheet approach as against income statement approach in accordance with the requirements of Ind AS – 12 “Income Taxes”. The Company has computed opening cumulative effect (i.e. April 01, 2018) of an error amounting to Rs. 939.37 million which pertains to one or more prior periods. As per the management, it is impracticable to determine the period-specific effects of this error on comparative financial information for reported prior period and hence, the company has given cumulative effect of the error prospectively by restating the opening balances of assets and other equity as at April 01, 2018.

238 CFS b. We draw attention to Note 42(i) of the financial Refer Note 66(a) statements, hitherto the Company has not provided for impairments of financial assets (Trade and Other Contractual Receivables) using provision matrix in accordance with the requirements of Ind AS – 109 “Financial Instruments”. During the year, the Company has computed cumulative effect of Expected Credit Loss as on March 31, 2019 applying simplified approach for trade and other contractual receivables from the parties other than the group companies amounting to Rs.436.26 million. The Company has considered Rs.Nil towards expected credit loss in respect of receivable from the group companies. As per the management, it is impracticable to determine the period-specific effects of this omission on comparative financial information and hence, the company has given cumulative effect prospectively from the financial year ended on March 31, 2019. c. Other Prior Period adjustments consists of errors/ Refer Note 69(e) omissions on account of recording of revenue, accounting of net foreign exchange gain/(loss) on realisation, effect of receivable/payable reconciliations and others. Accordingly, net effect amounting to Rs.172.0 million has been considered in the Statement of Profit and Loss of the previous year with corresponding effect in related assets/liabilities. This has resulted into decrease in profit before tax and other comprehensive income by Rs.172.0 million and Rs.5.0 million respectively with corresponding reduction of other equity by Rs.177.0 million for the previous year. We have verified whether the effects of above misstatements for the previous year dealt with by the management are in accordance with generally accepted accounting principles in India. Our audit procedures for previous year never intended to cover the verification of complete set of financial statements for previous year nor have we conducted such verification. We therefore restricted our verification to the effects of misstatements for the previous year noticed during the course of audit for the current year.

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Accordingly, the Comparative Financial Statements including related notes to accounts and other disclosures, to the extent made, are as per the published numbers as reported by the predecessor Statutory Auditor of the Company and as adopted by the shareholders after giving effects of (c) above. Possible effects of items reported in para (a) and (b) above on the previous year financial statements cannot be ascertained and hence, reported financial information of the previous year is strictly not comparable.

C. In respect of Air India Express Limited (Subsidiary) - vide their Auditor’s Report dated July 30, 2019

Sr. Emphasis of Matter Remarks No. 1. Note no. 42 regarding accounting of "Insurance Claim Refer Note 62 Receivable" pending confirmation for acceptance by insurance company which is in deviation from the Accounting Policy of the company. 2. Note no. 43 regarding penal interest amounting Rs. 832.47 Refer Note 70 (i)(c) Million for delayed payment of Guarantee Commission to Government of India.

D. In respect of Air India Engineering Services Limited (Subsidiary) - vide their Auditor’s Report dated August 5, 2019

Sr. Emphasis of Matter Remarks No. 1. As per para 9 of Ind-AS 2 on Inventories, Inventories shall Refer Note 69(b) be measured at the cost and net realizable value. The Company has valued the inventories during the year at weighted average cost. Valuation of inventories was not done as per Ind-AS 2 at year end. Hence we are unable to comment on the impact of the same.

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E. In respect of The Hotel Corporation of India Limited (Subsidiary) - vide their Auditor’s Report dated July 23, 2019

Sr. Emphasis of Matter Remarks No. 1. During the year, the company has made provision / payment - / settlement of old liabilities such as wage revision, interest on statutory dues payment etc. all these items are classified prior period and retained earnings on 31.03.2017 is restated. In the accounting policies and notes to financial statement it is disclosed that these item will be recognised as and when they are paid / settled. So the accounting treatment given is not as per accounting policy disclosed as above. 2. The Company has reconciled the balances from Trade Refer Note 42(i) & 55(d) Receivables and Payables from the Holding Company and is in the process of obtaining confirmation of balances from other Trade Receivables, Trade Payables, Loan and Advances, Deposits and Other liabilities. Loans and Advances and Other advances receivable are considered good for recovery though the same are in the process of being reconciled, referred to in Note Nos. 29 and 33 (ii). 3. The Company has not provided Interest and penalty on - unpaid/delay payment of Goods and Service Tax.

Our opinion based on the consideration of reports of other auditors is not modified in respect of the above matters reported in para B, C, D and E.

Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section and Material Uncertainty in relation to Going Concern section above, we have determined the matters described below to be the key audit matters to be communicated in this report based on key audit matters reported in audit report issued by us of Holding Company and reported in audit reports issued/communicated to us by respective auditors of the subsidiaries, reproduced by us, except for the matters eliminated on Consolidation or not considered material at group level.

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Key Audit Matters Principal audit procedures performed by the respective auditors Depreciation and impairment of Property, Plant & Equipment, Investment Properties and Intangible assets In respect of Holding Company, In respect of Holding Company, The management uses estimates to assess We have reviewed the judgments and methodology useful life of various items of Property, Plant applied by management including the nature & Equipment, Investment Properties and of underlying costs capitalized, determination Intangible Assets including in the application of realizable value of the assets retired from of component accounting, recognition of active use, technical assessment conducted in early retirement from use, etc. which have assessing the useful life of assets, considered the a significant impact on the accounts. The applicable rates prescribed in Schedule II of the company also assesses whether an impairment Companies Act, 2013, and evaluated the system indication exists and performs impairment test followed for periodic review. in respect of Property, Plant & Equipment, Investment Properties, and Intangible Assets wherever such indications exist, which involve We have broadly reviewed the Company’s management's judgment of various factors impairment assessment process and workings including future growth rate etc. of property, plant & equipment and intangible assets including technical assessment of the management, key assumptions and judgement Refer Note 55 of standalone financial used to determine the impairment and future cash statements flows, discount rates applied etc. Refer Note 61 of consolidated financial statements In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation Corporation of India Limited of India Limited Measurement of useful life & residual value Verification of lease terms and management of Property, plant and equipment & the report on physical verification of fixed assets to assessment as to which components of cost ensure appropriate disclosure of these items. may be capitalized. Provision for Re-delivery of Aircraft In respect of Holding Company, In respect of Holding Company, The company has contractually undertaken to We have tested the management’s controls return leased aircrafts taken under operating over estimating and recognising provisions for leases to the lessors in a condition agreed re-delivery expenditure of aircraft held under at the inception of each lease. Management operating leases and conducted procedures estimates the costs required to re-deliver the relating to the provisioning including evaluating aircrafts in prescribed condition based on key assumptions and judgements adopted by several factors including aircraft utilisation, management.

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expected cost of maintenance, estimated lifespans of parts etc. Refer Note 54 of consolidated financial statements Refer Note 46 of standalone financial statements In respect of subsidiary, Air India Express In respect of subsidiary, Air India Express Limited Limited Company operated 8 aircraft under operating Company has calculated the said provision of lease arrangements at 31st March 2019. redeliver expenses based on the information available from vendor for new aircraft taken on lease by discounting the present value thereof for Under the terms of the operating lease future liability. arrangements with the lessors, Company is contractually committed to either return the aircraft and/or engines in a certain condition or We have verified the documents provided to us for to compensate the lessor based on the actual cost of contractual commitment and working for condition of the aircraft and/or engines at the calculating the present value of the said liability. date(s) of return. Accordingly, provision of Rs.56.56 Million for the costs associated with redelivery of the said aircraft has been made during the lease term and is included under Provisions. Leases and incentives In respect of Holding Company, In respect of Holding Company, The determination of the lease classification, In view of the significance of the matter we applied fair value in case of Sale and Lease Back the following audit procedures in this area, among transactions and recording of related incentives others to obtain sufficient appropriate audit is considered as a complex accounting matter evidence: and involves significant management’s judgments. Accordingly, the classification reviewed the key terms of leasing and of leases, accounting of incentives and evaluated management judgement determining fair value is regarded as a key used in determination of classification of audit matter. The Company operates aircrafts leases. under both finance and operating lease performed test of details to verify arrangements. In determining the appropriate classification of leases and related lease classification, Ind AS 17 - “Leases” is incentives and traced the same to credit applied by the Company and the substance of notes and other underlying contracts / the transaction is considered rather than just documents. the legal form.

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The Company receives certain Manufacturer’s credit entitlements (cash & non-cash incentives) which are non-refundable incentives and are Refer Note 53 of consolidated financial statements 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. Refer Note 45 of standalone financial statements Assets held for sale (Other than Investments in subsidiaries held for sale) In respect of Holding Company, In respect of Holding Company, The company has classified assets earmarked We have verified the procedures in relation to for disposal as assets held for sale, including as management’s classification and valuation of part of the disinvestment process in progress. assets held for sale including assessing the Management has estimated the fair value of methodologies used and the appropriateness such assets having regard to various critical of the key assumptions, checking the accuracy factors including market rates. thereof on a sample basis etc Refer Note No. 28 & 32 Refer Note No. 28 & 32 Recognition of revenue from transportation services In respect of Holding Company, In respect of Holding Company, We have identified revenue recognition We have reviewed the internal controls in the as a key audit matter because passenger company for capturing and recognition of revenue revenue is one of the key performance and the reconciliations of revenue between the indicator, significance of passenger revenue reports generated by the outsourced service to the financial statements, complexity of the provider and accounting of revenue in ERP underlying IT systems of outsourced service system of the company. provider and the judgment required by management in determining the revenue from We have conducted requisite procedures on Forward sales and Loyalty Programme. revenue on a test check of selected samples and scrutinised relevant records and journals The company extensively uses the services of to assess the timing and values of revenues outsourced service provider for measurement recorded. and recognition of revenue, which carries an inherent risk around the accuracy of revenue In addition, we have performed cut-off tests in recorded given the complexity of operations order to verify whether the timing of passenger and underlying IT Systems. revenue recognition is in line with company’s policy.

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The company recognises revenue from We obtained the latest available assurance report passenger and cargo sales on flown basis i.e, on service organisation controls and bridge letter when the service is provided. The Company from outsourced service provider on effectiveness recognises revenue from unexercised rights of controls confirming no significant changes to i.e. forward sales of customers which are non- the control environment and controls relating to refundable in nature, based on past trends in revenue accounting and General IT controls. proportion to the pattern of rights exercised by the customer. With regard to forward sales, we have considered the consistency and continuity of the methods The company has a Frequent Flyer Programme used to determine the amount of revenue to be as per which, passengers earn miles which recognised from Forward Sales. can be redeemed as per the policy of the company. The portion of unearned revenue We reviewed the assumptions used to estimate attributable to miles earned are recognised on the number of miles as per Frequent Flyer the statement of financial position as deferred Programme that will expire without use, including revenue, after taking into account the expected analysing historical expiry pattern. utilisation of the miles. We also reviewed the assumptions used in Revenue is subsequently recognised when determination of fair value of the unredeemed eligible passengers fly. miles. Significant judgement is required in the Refer Note 67 of consolidated financial statements following aspects:

The number of miles that will expire Refer to para 2(A)(1) & 2(A)(2) in our report on without use – The Company relies on Internal Financial Controls (Annexure ‘A’) historical expiry pattern in determining these estimates; and The determination of the fair value of frequent flyer miles – The Company relies on historical redemption patterns, weighted for the various geographic regions and booking classes in determining the fair value. Refer Note 59 of standalone financial statements

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In respect of subsidiary, Air India Express In respect of subsidiary, Air India Express Limited Limited Passenger revenue is not recorded immediately Company has appointed outsourced agency on sale of flight tickets but is deferred to be for reconciliation and accounting the passenger recorded at a later time as Revenue in the revenue transactions ascertain as to whether the statement of profit and loss when passengers policy of recognition the revenue is consistently are flown. Such deferred revenue is presented followed. We have verified the data received from in the Financial Statement as Forward Sales the said agency on test check basis and relied under Other Liabilities. also upon the report received from an external chartered accountant opining that the design As a result of the complexity in determining the and effectiveness of controls in respect revenue revenue to be recognized on flight dates, this reconciliation process provide reasonable is a key focus area in our audit. assurance about their effectiveness. Provisions and Contingent Liabilities and Evaluation of uncertain tax positions In respect of Holding Company In respect of Holding Company There are material claims against the company We have obtained details of key claims against and uncertain tax/duty positions which are the company, completed tax assessments and under various stages of dispute, involving demands and tax/duty positions. significant judgment to determine the possible outcome of these disputes. We reviewed status of disputes and representation taken from the management, discussed with appropriate senior management and evaluated the management’s underlying key assumptions, Refer Note 26 of standalone financial statements and Para (a) of Emphasis of Matter We assessed management’s estimate of the possible outcome of the disputed cases in evaluating management’s position on these uncertain claims and tax positions and assessed the appropriate disclosures in the financials. Refer Note 26 of consolidated financial statements and Para A(1) of Emphasis of Matter In respect of Subsidiary, Air India Express In respect of Subsidiary, Air India Express Limited Limited The Company has material Indirect Tax We have obtained the relevant information and litigated demands. reviewed pending litigations regarding indirect tax in terms of legal stand/positions taken by the Company and regulation related the same. We have reviewed the disclosures made in the financial statements in this regard.

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In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation Corporation of India Limited of India Limited Judgment is required to ascertain whether it Verification of analysis of legal disputes and is probable or not that an outflow of resources other related documents to ensure appropriate embodying economic benefits will be required disclosure of these items. to settle the taxation disputes and legal claim. Deferred Tax Assets In respect of Holding Company In respect of Holding Company The company has carried deferred tax assets Ourprocedures include obtaining an recognised on depreciation in an earlier year understanding of the process and the controls which is based on the likelihood of future over preparation of profit forecast. We reviewed taxable income available for set off the inputs and assumptions used in the forecast The recognition of deferred tax asset, including Revival Plan for Operational & Financial involves judgement regarding the likelihood Efficiency formulated by the Govt of India. We of realisation of these assets in particular verified the disclosures for deferred tax asset whether there will be sufficient taxable profits balance including those related to significant in future periods that support the recognition of accounting estimate and judgements. these assets. Given the degree of judgement involved in considering these deferred tax assets as recoverable or otherwise, we Refer Para A(2) of Emphasis of Matter consider this to be a key audit matter. Refer Note. 57 of consolidated financial Refer Para (b)(i) of Emphasis of Matter statements Refer Note. 50 of standalone financial statements In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation Corporation of India Limited of India Limited Recognition of Deferred Tax Assets Verification of conservative view on recognition of deferred tax to ensure appropriate disclosure of these items. Inventory In respect of Holding Company, In respect of Holding Company, The company carries inventory of materials, We have evaluated the systems and processes spare parts etc across various locations for recording and valuation of inventory, tested centres and correct measurement of inventory a sample of key controls and comparison of net involves making a proper assessment of the realizable prices. lower of net realisable value over cost and assessment of write down necessary on We have obtained an understanding of the account of obsolescence etc company’s policy on control for identification and provision of non-moving inventory based on age- Refer Note 39 of standalone financial wise analysis and tested the same on a sample statements basis. Refer Note 45 of consolidated financial statements

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Refer para 2(A)(1), 2(A)(2), 2(A)(3), 2(A)(5) & A(9) in our report on Internal Financial Controls (Annexure ‘A’) Provision for receivables In respect of Holding Company, In respect of Holding Company, The company is carrying significant balances We have obtained a list of outstanding receivables, as trade receivables including amounts test checked the ageing of trade receivables outstanding from earlier accounting periods. generated from SAP at year end on a sample The management makes an estimate of the basis and reviewed Expected credit loss model recoverability of individual debtor with reference used in determining the provision requirement. to the aging profile, historical payment pattern and the past record of the customer and makes We have reviewed the controls, systems and provision against the same with reference to processes applied by the management to ensure the recoverable amount. proper recognition of provision for receivables. Refer para 2(A)(5) in our report on Internal Financial Controls (Annexure ‘A’) Accounting & disclosure for proposed disinvestment In respect of Holding Company, In respect of Holding Company, Govt. of India has given approval for We have reviewed the relevant minutes of strategic disinvestment of the Air India and its meeting of Board of Air India Limited as well as subsidiaries. Accordingly, Strategic Revival of the committees formed for disinvestment and Plan for Operational & Financial Efficiency in other relevant records made available to us in this Air India was formulated as per which certain regard. portion of debt along with certain assets, We have verified the transactions which have including investments in three subsidiary st companies and advances given to them, taken place till 31 March 2019 with the SPV and were decided to be transferred to an Special held discussions with the senior management of Purpose Vehicle (SPV) formed for the the Air India in order to obtain an understanding proposed disinvestment. of the present position of the various decision taken for the same.

Necessary adjustments/ disclosures are made in the financial Statements of Air India Limited We have reviewed the disclosure made in the based on the present decisions and further financial statements in this regard. adjustments would be made after finalization of the same. Refer Note 28 & 29 of consolidated financial statements and para A(4) of Emphasis of Matter. Refer Note 28 & 29 of standalone financial statements and para (f) of Emphasis of Matter.

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Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon The Holding Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Directors’ Report, Management Discussion and Analysis Report and Report on Corporate Governance but does not include the Consolidated financial statements and our auditor’s report thereon. These reports are expected to bemade available to us after the date of this auditor's report. Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. When we read the reports containing the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements The Holding Company’s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these consolidated financial statements in terms of the requirements of the Act that give a true and fair view of the consolidated financial position, consolidated performance including other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group including its joint venture in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. Further, in terms of the provisions of Act, the respective Board of Directors of the companies included in the Group and its joint venture are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group and of its joint venture are responsible for assessing the ability of the Group and of its joint venture to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate or cease operations, or has no realistic alternative but to do so. The respective Board of Directors of the companies included in the Group and of its joint venture are also responsible for overseeing the financial reporting process of the Group and its joint venture.

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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the Consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Group and joint venture incorporated in India has adequate internal financial controls system in place and the operating effectiveness of such controls. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and its joint venture to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information ofsuch entities or business activities within the Group and joint venture and to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of financial information of such entities included in the consolidated financial statements of which we are the independent auditors. For the other

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entities included in the consolidated financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance of the Holding Company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters I. We did not audit the financial statements of five subsidiaries whose financial statements reflect the total assets and net assets as at March 31, 2019, total revenues and net cash inflow / (outflow) for the year ended on that date as considered in the consolidated financial statements: (Rs. in Million)

Name of the Subsidiary Total Net Total Net Cash Assets Assets Revenue Flows Airline Allied Services Limited (AASL) 3,550.7 (20,005.2) 8,362.8 (24.1) Air India Engineering Services Limited (AIESL) 19,036.9 (19,831.4) 12,064.0 38.8 Hotel Corporation of India Limited (HCI) 1,222.2 (3,674.4) 672.8 83.3 Air India Express Limited (AIEL) [formerly known 37,321.0 (8,486.5) 42,015.3 (22.9) as Air India Charters Limited] Air India Air Transport Services Limited (AIATSL) 8,238.2 3,489.4 7,071.6 (88.9)

II. The Consolidated Financial Statements also include the Group’s share of net profit including other comprehensive income of Rs.221.3 Million for the year ended 31st March, 2019, as considered in the Consolidated Financial Statements, in respect of a Joint Venture, whose Financial Statements have not been audited by us. 251 CFS

These Financial Statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and joint venture, and our report on the consolidated financial statements in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors. Our opinion, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements 1. As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of subsidiaries and its Joint Venture, as noted in the 'Other matters' section above, we report, to the extent applicable, 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 purposes of our audit except as stated in Basis for Qualified Opinion section and Para no. A(5) of Emphasis of Matters section above. (b) Except for the possible effects of the matters described in the Basis of Qualified opinion section above, in our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as appears from our examination of those books and the reports of other auditors. (c) With respect to those foreign stations not visited by us, we have relied upon the summary reports made available to us for the verification of transactions related to major foreign stations, which have been properly dealt by us in preparing this report. (d) The Consolidated Balance Sheet, Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements. (e) Except for the effects of the matter described in para No. 1 of “Basis for Qualified Opinion” section and para A(3),A(5), B(1) & D(1) “Emphasis of Matter” section above, in our opinion, the aforesaid Consolidated Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder; (f) The matters described under “Material Uncertainty in relation to Going Concern” section and Basis of Qualified Opinion section above, may, in our opinion have an adverse effect on the functioning of the respective companies; (g) On the basis of the Auditors' Report of the Joint Venture, none of the directors of that 252 CFS

company is disqualified as on March 31, 2019 from being appointed as directors in terms of Section 164(2) of Companies Act, 2013. The Provisions of Section 164(2) of the Act are not applicable to the Holding Company and its subsidiary companies being Government Companies; (h) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section above; (i) With respect to the adequacy of the internal financial controls over financial reporting of the Group and joint venture and the operating effectiveness of such controls, refer to our separate Report in Annexure ‘A’. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Group’s internal financial controls over financial reporting. (j) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended, we report that, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015 provisions of section 197 of the Act are not applicable to the Group. Further, Joint Venture Company is incorporated as a private company and thus the provisions of Section 197 of the Act are not applicable to the joint venture Company. (k) 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 Group and its joint venture has disclosed the impact of pending litigations on its financial position in its Consolidated financial statements - Refer Note no. 26 to the Consolidated financial statements; ii. The Group and joint venture has made provisions, as required under the applicable laws or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts that have been entered into; and iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Group and joint venture.

Sd/- Sd/- Sd/- Praveen Kumar Jain narendra Jain P R Prasanna Varma Partner Partner Partner M No.085629 M No.048725 M No.025854 UDIN 9085629AAAAAW9579 UDIN 9048725AAAABW8075 UDIN 9025854AAAABT1748 Place : New Delhi Place : New Delhi Place : Chennai Date : October 22, 2019 Date : October 22, 2019 Date : October 22, 2019 253 CFS

ANNEXURE ‘A’ TO INDEPENDENT AUDITORS’ REPORT on “REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS”

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 financial controls over financial reporting of Air India Limited (“the Holding Company”) and its subsidiaries and its joint venture (which are companies incorporated in India as of that date) as of March 31, 2019 in conjunction with our audit of the Consolidated Ind AS financial statements of the Company as of and for the year ended on that date.

Management’s Responsibility for Internal Financial Controls The respective management of the Holding Company and its subsidiary companies and its joint venture, is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective Companies 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 financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective 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 financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company and its subsidiary companies and its joint venture, which are companies incorporated in India, 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 financial controls over financial 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 financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of the reports referred to in the “Other Matters” section below, is sufficient and appropriate to provide a basis for our qualified audit opinion on the internal financial controls system 254 CFS over financial reporting of the Company and its subsidiary companies and its joint venture, which are companies incorporated in India. Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Qualified Opinion According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2019 in respect of the holding company:

1. In respect of Consolidated Financial Statements

The company did not have an effective system for determining the fair value of disposal group held for sale in respect of the Holding Company.

2. In respect of the Holding company,

A. In respect of Air India Limited (Holding Company) (Vide our Report on Standalone Financial Statements dated October 22, 2019

1. The company did not have an effective interface between various functional software relating to Sales/Revenue and Inventory Management (for part of a year) with the accounting software resulting in accounting entries being made manually on periodical basis. 2. The company did not have an appropriate internal control system for reconciliation of Control Accounts in relation to the Sales / Revenue, Inventory and Payroll.

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3. The Company did not have appropriate system to capture incidental cost such as freight, duty etc. in inventory system. 4. The company did not have an appropriate internal control system for deduction, timely deposit and reconciliation of statutory dues. 5. The company did not have an appropriate internal control system for obtaining confirmation of balances on a periodic basis, ageing and reconciliation of unmatched Receivables, Payables, (including certain staff related accounts and suspense / control accounts), inventory lying with third parties, certain bank accounts and statutory dues. 6. The company did not have an effective internal audit system commensurate with the size, nature and complexities of the business. 7. The Company did not have an effective Information Systems Audit to evaluate and test the IT general controls, which may affect the completeness, accuracy and reliability of the reports generated from IT System. 8. The company did not have an effective system for timely accounting of entries including delay in accounting of cash collection/disbursement, reversal of ineligible input tax credit of GST & approval thereof in IT System. 9. The company did not have effective system for control over sale of scrap of inventory and accounting thereof We also draw your attention to the following qualified opinion on adequacy (and therefore operating effectiveness) of Internal Financial Control over Financial Reporting of below mentioned subsidiary companies of the Holding Company issued by Independent firm of Chartered Accountants reproduced by us as under;

I. In Respect of Air India Express Limited (Subsidiary) vide their Auditors' report dated July 30, 2019

1. The Company did not have effective interface between functioning software relating to Revenue, Payroll and Inventory Management with the accounting software resulting in accounting entries being made manually on periodical basis. 2. The Company did not have appropriate Internal Control system for reconciliation of Control accounts in relation to Sales/Revenue, Inventory and Payroll. 3. Controls over planning & monitoring of financial closing process. 4. Controls over spreadsheets used in financial closing process. 5. The company did not have appropriate internal control system for deduction, timely deposits & reconciliation of statutory dues. 6. The company did not have appropriate internal control system for obtaining confirmation of balances on a periodic basis & reconciliation of unmatched receivables & payables however the same has been done at the end of the year. 7. The company did not have effective internal control system for reconciliation of onboard 256 CFS

“Bar sale” with consumption and realisation. 8. The company did not have effective system for timely accounting of entries. 9. Lack of controls to prevent duplicate accounting and maker checker process. 10. System of verification and reconciliation provided by outsourced agency relating to revenue needs to be strengthened. II. In respect of Air India Air Transport Services Limited (Subsidiary) vide their Auditors' report dated September 6, 2019

1. Deficiencies in the design of control over the preparation of the financial statement being audited: a. Standard Operating Procedures for critical processes are not in place. b. Authorization control such as maker/checker control in accounting software is not functional. c. Absent or inadequate segregation of duties within significant accounting process. d. Inadequate design of Information Technology (IT) general & application controls that prevent the information system from providing complete & accurate information consistent with financial reporting objectives & current needs. e. Inadequate design of monitoring controls used to assess the design & operating effectiveness of the entity's internal control over time. f. Payroll is a significant process considering the size of Company’s Operations. However, it has been observed that various processes such as attendance, leave records, details of new joinee’s and resigned employees, payment of statutory dues, etc. are not fully automated and maintained manually. 2. Failure of controls designed to safeguard assets from loss, damage, or misappropriation. The company did not have appropriate internal financial controls for reconciliation of physical inventory & fixed assets with books of accounts. 3. Failure to perform reconciliation of significant accounts such as accounts receivable, accounts payable, statutory dues, with returns & payroll balances are not reconciled in a timely or accurate manner. 4. Following are indicator of deficiency & strong indicator of material weakness in internal control: a. Restatement of previously issued financial statement to reflect the correction of material misstatement. This indicates that cut-off procedures while closing are not working efficiently. b. Identification by the auditor of a material misstatement in the financial statements for the period under audit that was not initially identified by the entity's internal control.

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c. The scope of internal audit is limited & does not cover various essential processes such as payroll, fixed assets, and inventories. An ineffective internal audit function requires important accounting functions to be covered & monitored at reasonable intervals. d. Non-compliances in complying with the laws & regulations by the entity have been observed. This indicates ineffective regulatory compliance function. In subsidiary auditor’s opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, the said subsidiary Company has not maintained adequate and effective internal financial controls over financial reporting as of March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

III. In respect of Airline Allied Services Limited (Subsidiary) vide their Auditors' report dated July 24, 2019

1. Fixed Assets of the Company are not tagged/ numbered. 2. MSME vendors are not identified, therefore balance outstanding towards MSME are not identified. 3. Interface between various functional Software relating to Sale/Revenue and Inventory management with the accounting software is yet to be implemented, resulting in accounting entries made manually. System of verification of data processed by outsourced agency needs to be strengthen as there is significant reliance on the data provided by them. 4. Periodicity of reconciliation of accounts with Parents & Associate Companies needs to be improved, as at present it is on annual basis. Reconciliation with AAI is pending since previous years. 5. The Company does not have appropriate Internal Control system for reconciliation of Control accounts in relation to Sales/Revenue, above is due to periodic delay in transfer of revenue credit by parent company. 6. Internal control system for deduction, deposits & reconciliation of statutory dues need to be strengthened. 7. Procedure to obtain the confirmation of balances on a periodic basis & reconciliation of unmatched receivables & payable needs to be strengthened. 8. The Company do not have an Information System Audit to evaluate & test the IT general controls, which may affect the completeness, accuracy, reliability of the reports generated by the IT System. 9. Company does not have appropriate internal control towards modification of accounting entries. 10. The Company does not have maker checker concept/not adhering maker checker concept in SAP accounting, however the same is followed through vouchers authentication according

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to the powers delegated. 11. Reconciliation of GST paid, ITC claimed with the statutory returns, reconciliation of GST under Cross charge is pending. 12. Reconciliation of advance tax / refund of income tax of pervious years need to be strengthened. IV. In respect of Air India Engineering Services Limited (Subsidiary) vide Independent Auditors' Report dated August 5, 2019

1. The Company did not have an effective internal control system for deduction, timely deposit, filing return and reconciliation of statutory dues. 2. The Company is deducting tax at source (TDS) on GST as per Goods and Service Tax Act, 2017 without obtaining registration of deductor of tax in GST since last 11 months. 3. The Company did not have an effective system for timely accounting of entries, to prevent duplicate accounting entry and maker checker process. 4. The Company did not have effective system of reconciliation of balance with other parties. 5. The Company has Internal Audit on yearly basis. It shall be on Monthly/Quarterly basis. V. In respect of The Hotel Corporation of India Limited (Subsidiary) vide their Auditors Report dated July 23, 2019 has expressed a Disclaimer of Opinion

According to the information and explanation given to us, the Company has not established its internal financial controls over financial reporting on criteria based on or considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at 31st March, 2019.

However, the auditor, in their Audit report under Emphasis of Matter para have stated the following;

“The Company has internal control system which need strengthening for followings:

a. Strengthening the internal audit process so as to ensure adequate coverage of all the areas and ensure effective internal controls at all units of the Company. b. Laying down Standard Operating Procedures with regard to timely accounting of all transactions to ensure that proper books of accounts are maintained.” VI. The auditor of the Joint Venture, AI-SATS, vide their report dated August 30, 2019 has issued an unqualified opinion on the adequacy and operating effectiveness of the internal financial control over financial reporting as on 31st March, 2019. A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control 259 CFS over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, the Holding Company, its subsidiary companies and joint venture, which are companies incorporated in India, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, have maintained, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31st March 2019, based on the internal controls with reference to financial statements 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, to the extent possible, considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the Consolidated financial statements as at and for the year ended 31st March 2019 of the Holding Company, and as also material weakness identified and reported by the respective Auditors of subsidiaries and joint venture, which are companies incorporated in India, and these material weaknesses have affected our opinion on the Consolidated financial statements and we have issued a qualified opinion on the Consolidated financial statements.

Other Matter Our aforesaid reports under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial control over financial reporting insofar as it relates to five subsidiaries and a Joint Venture, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies. Our opinion is not modified in respect of the above matter.

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MANAGEMENT REPLIES TO THE INDEPENDENT AUDITORS REPORT ON THE CONSOLIDATED IND AS FINANCIAL STATEMENTS OF AIR INDIA GROUP COMPANIES FOR THE FINANCIAL YEAR 2018-19

S Audit Observations Management Comments No. REPORT ON THE AUDIT OF 1. CONSOLIDATED FINANCIAL STATEMENTS Qualified Opinion We have audited the accompanying Consolidated Financial Statements of Air India Limited (hereinafter referred to as the ‘Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) which includes Group’s share of profit in its joint venture, which comprise the Consolidated Balance Sheet as at 31st March, 2019, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Consolidated Financial Statements”). In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiaries and joint venture, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid Consolidated Financial Statements give the information (other than certain information mentioned in Para A(5) of Emphasis of Matter section), required by the Companies Act, 2013 (“Act”), in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies

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(Indian Accounting Standard) Rules, 2015, and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its joint venture as at 31st March, 2019 and its consolidated loss (including consolidated other comprehensive income), its consolidated cash flows and the consolidated changes in equity for the year ended on that date. Basis for Qualified Opinion 1. In respect of Consolidated Financial Statements, Adjustments on account of reduction in In this regard it may be noted that the estimated fair value, if any, in the carrying value Disposal Group held for Sale represents of disposal group held for sale which includes the subsidiary companies namely Assets of Rs 11,100.6 million, and liabilities AIATSL, AIESL, AASL and HCI which of Rs 17,319.2 million, in respect of three are to be transferred to AIAHL under the subsidiaries namely Hotel Corporation of India disinvestment program of Air India Limited. Limited, Airline Allied Services Limited and Air India Engineering Services Limited, has not As approved by the Govt, the remaining been determined and provided for in the books assets & liabilities excluding investment/ of accounts as required by Ind AS 105. advances relating to these subsidiary companies will be transferred to AIAHL at book value, hence no fair valuation of the same has been done for such assets and liabilities. 2. We draw your attention to the following qualifications in the audit opinion of the financial statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us, except for the matters eliminated on Consolidation or not considered material at group level, along with our remarks wherever necessary, as under; A. In respect of Air India Limited (Holding Company) (vide our Report on Standalone Financial Statements dated October 22, 2019) Qualification Management Comments 1. Non- reconciliation/non-confirmation of certain In this regard it may be noted that there is receivables, payables (including certain staff a steady and considerable improvement in related accounts and suspense / control this area as compared to previous years as accounts), inventory lying with third parties, can be seen from the following:

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certain bank accounts/ Loans including direct a) All major Borrowings, Bank Balances confirmation for certain cases and statutory have been confirmed and reconciled. dues. Refer Note No.36 & 37. Refer Note Nos 42 & 43 b) In respect of Receivables/Payables, all major parties such as dues of Oil Companies, Airport Operators, Pax/ Cargo Receivables and dues for VVIP Charters are totally reconciled. These parties in fact constitute a major portion of the total Receivables and Payables of the company.

c) Further, in respect of certain other Receivables/Payables such as Staff related accounts and unlinked debits/ credits lying in various such accounts, the company has during the year appointed an outside professional firm to carry out the Reconciliation of such accounts and the necessary accounting effect for the same will be given in the current FY 2019-20. B In respect of Air India Air Transport Services Limited (Subsidiary) – (vide their Independent Auditor’s Report dated September 6, 2019) Qualification Management Comments 1. The Company has carried forward following account balances which are pending reconciliation/ adjustments (if any) as at March 31, 2019: a. The Company has accounted for ground The billing on other airlines thru IATA handling service revenue from IATA platform Clearing House (ICH) is done thru based on service document generated by automated system (MBS), however the the manual system. This revenue is subject basis of billing is as per Ramp Assistance to rejections/adjustments by the IATA. The Forms (RAF), which are serially controlled reconciliation for such rejections/adjustments and proper records are maintained on with IATA is pending since Financial Year manual basis. 2014- 2015. Balance outstanding in respect Billing thru ICH is a well-established laid thereof as at March 31, 2019 is Rs.511.02 down procedure followed by most of the million against which the Company has made airlines world over. As per the procedures expected credit loss allowance of Rs.156.82 laid down by ICH, the airlines reserve the million. We have relied on the management right to recharge after following a protocol, contention for realisation of such balances which is a normal practice. Based on the atleast equivalent to the value reported and merit of the case, the company reviews the hence, no further adjustments are required to recharge and either accept the recharge or be made. rebill to the airline.

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However, as per requirement of IND AS 109 for Providing doubtful under Expected Credit loss model, provision for Rs. 156.82 Million has already been made against dues of all these years and further necessary steps will be taken in due course to follow- up with the airlines to obtain their approval to recharge. b. Recording and accounting of expenses relating While the payroll is drawn based on inputs to Employee Benefits is not automated. During in HR Module of SAP, the attendance of staff the course of verification various statutory non- is maintained manually and SAP records compliances regarding provident fund, ESIC, are updated accordingly. The statutory Professional tax, Tax Deducted at Sources deduction of PF, ESIC, PT, TDS have been have also been observed. Further, we report paid, however, there are a few instances that Employee Benefits related accounts have (viz. non-availability of PAN/Aadhar reported adverse balances which are under card and mismatch in the names in KYC reconciliation and are reported on net basis. documentation of employees, Employees Balances of Goods and Service Tax, Income related other data as required under PF Act Tax assets and Tax Deducted at source the UAN Number not getting generated and are under reconciliation with the respective no payment can be affected in absence of statutory returns. The Company is in the UAN number). The instances of delays are process of reconciling the said balances and being looked into and will be addressed in assessing the impact on financial statements. the next financial year. We are unable to ascertain impact of such balances on the financial statements. We have relied on the management contention that reconciliation of such balances will not result in material impact on the financial statements and hence, no further adjustments are required for the current year. c. Balances of trade payable and trade Total trade receivable includes Rs. 2408.94 receivable are subject to balance million from group company which have confirmation and reconciliation. Pending such been confirmed by respective group reconciliation trade payable has been reported company (which is about 60% of total trade net of debit balance amounting to Rs.58.00 receivable). However, Balance Rs.1599.77 million and trade receivable net of credit Million is (i.e. 40 % only) relates with outside balance amounting to Rs.209.57 million. In parties for which company has sent letters the absence of adequate reconciliation, we for year end balances confirmation. We are unable to ascertain impact of such have received confirmation and also amount reconciliation on the financial statements. subsequently during the current year which will in the region of 80-85% of total outstanding. However, the confirmations of balances are not acknowledged despite of follow up. However, reconciliation /

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knocking off (i.e. debit balance with credit balance of the same parties) will be made in the next financial year. d. The Company has collected airport authority While the company has provided the liability levy in respect of ground handling services as a matter of prudence. The payments to provided to parties other than Air India Limited respective authorities are made on receipt and its group companies. As at March 31, 2019, of invoices from such authorities after cumulative collection towards such levy for the verification of their claim. past five years is classified under other financial liability and trade payables. This amount is yet to be paid to the Airport Authority of India. Pending adjustments of such levy, the management does not expect material impact on the financial statements. C In respect of Airline Allied Services Limited (Subsidiary) – (vide their Independent Auditor’s Report dated July 24, 2019) Qualification Management Comments 1. Reconciliation of account with Airport Authority Suitable disclosure has been made in Notes of India is pending since previous years, further to Accounts No. 37 (2) & (3). liability for interest for non/ delayed payment Under the aegis of ministry of Civil Aviation, to Airport Authority of India has not been a Memorandum of Understanding (MoU) ascertained and provided, therefore impact of with Airports Authority of India (AAI) was the above on the results of the Company is not signed by Headquarters on 26.08.2013 ascertainable at this stage. 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 final decision from MoCA is awaited. 2. Purchases, consumption and closing stock Suitable disclosure has been made in Notes of Aircrafts inventory has been accounted for to Account No. 36. on the basis data/ advices received from AIL, not verified by us. Further as stated in Note No. 36.2, due to implementation of interface with RAMCO during the year, there are some unresolved discrepancies in the inventory and other accounts, impact of such discrepancies are not ascertainable at this stage. Hence we

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are unable to comment upon the impact of the same on the results of the Company. Refer Note 70 (ii) 3. Company has accumulated losses of Rs. This is a statement of fact. 24027.71 Millions and its net worth has been fully eroded. The Company has incurred net Suitable disclosure has been made in Notes loss during the year and in previous years and to Account No. 46. the Company’s liabilities exceed its assets since previous years. Due to liquidity problem, periodic delay/ non-payment for fuel, lease rental, Statutory dues, other payments etc. have been observed. Those conditions along with other matter set out in notes on accounts indicate the existence of material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. However the Financial statement of the Company have been prepared on going concern basis. As stated in Note No. 46 Air India Limited (Parent Company) had formulated a Turnaround Plan (approved by Government of India) for AIL and its Group Companies to improve its operational and financial performance. Company’s management is of the view that with the support of AIL and with other measures taken and considering the future business plan financial position of the Company would improve in future. We are unable to comment on the success of Turnaround Plan. Refer Note 60(d) 4. Other Current Assets includes Indirect Taxes Out of the INR 323.80 Million, sum recoverable amounting to Rs. 323.80 Million amounting to INR 14.38 Cr is unutilized as on account of GST Input Credit, whereas as per the ‘Electronic Credit Ledger’ available per GST portal amount of Input credit available on GSTN portal as on 31.03.2019 as on 31-03-2019 was Rs. 143.81 Million. As explained, Company is in the process to AASL uses cross charge mechanism for reconcile the difference and impact of the above distributing the credit from Delhi to other on results of the Company is not ascertainable at this stage.

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states and the same has been paid in GSTR-3B for AASL on monthly basis. But Refer Note 42(v)(a) such invoices as pertaining to FY 18-19 were not considered in monthly GSTR-1 in the FY 2018-19 and were considered in GSTR-1 of AASL in the GSTR-1 for the period May’19 Since, cross charge invoices of FY 18-19 were not reported in GSTR-1 of FY 18- 19, appropriate debit was not made in the GST Intermediary Output A/c and hence unadjusted amount got created in the Trial Balance. If the entry in a similar fashion will be booked for the period May’19 , then, GST Intermediary Output A/c will be debited with the amount of GSTR-1 for the said period including cross charge invoices of FY 18- 19 (reported in May’19 GSTR-1) but since the payment from bank will not include the value of cross charge invoices (since they have been already paid on monthly basis throughout FY 18-19 via GSTR-3B), the unadjusted balance to that extent created will be knocked off. The impact of the above qualifications on the Consolidated Financial Statements, if any, is not ascertainable. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group and its joint venture in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with ethical requirements that are relevant to our audit of the Consolidated Financial Statements under the provisions of the Act and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us in respect of the Holding Company audited by us and the audit

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evidence obtained by the other auditors of subsidiaries and joint venture in terms of their reports, referred to in section “Other Matters”, is sufficient and appropriate to provide a basis for our qualified opinion on the Consolidated Financial Statements. Material Uncertainty in relation to Going Concern We draw attention to the following comments in relation to going concern in the audit opinion of the Financial Statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us; A In respect of Air India Limited (Holding Company)- vide our report on Standalone Financial Statements dated October 22, 2019 1. The Company has incurred a net loss of Rs. 84,748.0 Million during the year ended March 31, 2019 and, as of that date, the Company’s current liabilities exceeded its Current assets by Rs. 6,52,458.7 Million and it has accumulated losses of Rs. 6,26,936.3 Million which has resulted in complete erosion of the net worth of the company. In spite of these events or conditions which may cast a doubt on the ability of the company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the continued support of the Government of India and having regard to the other facts mentioned in Note 54 of the standalone financial statements and note 60(a) of the consolidated financial statements. Our opinion is not modified in respect of the above matter. B In respect of Hotel Corporation of India (Subsidiary)- vide their Auditor’s Report dated July 23, 2019 We draw attention to Note 51 in the financial Due to the renovation of 80 guest rooms statement, in which net worth of the company and other allied works at Centaur Delhi in is eroded. The Company incurred a net loss of view of the equity infusion of Rs 27 crores Rs.712.0 million during the year ended March by Government of India, the revenue of the 31, 2019 and, as of that date, the Company’s Company increased from Rs. 55.13 crores

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current liabilities excess its total assets by Rs. in 2017-18 to Rs 67.28 crores during the 3203.0 million. These events or conditions, year 2018-19. This was due to increased along with other matters as set forth in Note business from Air India and its subsidiaries) 51 indicate that a material uncertainty exits that may cast significant doubt on the Company’s The Holding company and Government ability to continue as going concern. (Refer of India is continuously supporting to the note 60(c) of consolidated financial statements) Company by way of financial assistance in form of equity infusion and providing Our opinion based on the consideration of financial assistance as and when required Auditors’ report of the said subsidiary is not and committed modified in respect of the above matter. As per note no. 45 above, the property of Delhi needs to be handed over to AAI by 31.12.2019 for which the Company is in the process of negotiating the terms of handing over wherein the Company may be given alternate land or compensation in lieu thereof. This will assist the Company in meeting its long term goals of increasing its business. Emphasis of Matters We draw your attention to the following matter of emphasis on the Financial statements of Holding Company and its subsidiaries issued by respective Independent Firm of Chartered Accountants, reproduced by us except for the matters eliminated on Consolidation or considered not material at group level, as under; A In respect of Air India Limited (Holding Company)-, Vide our Report on Standalone Financial Statements dated October 22, 2019 Sr. Emphasis of Matter Management Comments No. 1. Note No. 26A(a) regarding non provision The subject fact relating to the non- of interest claims from airport operators acceptance of the interest claims received amounting to Rs. 988.6 Million and Note No. from GHIAL on account of delayed 26(A)(b) regarding non-provision of penal payments has already been duly disclosed charges on delayed payment of Guarantee Fee in Note No 26 (A)(a). amounting to Rs. 17,470.4 Million, for reasons stated therein; The Management has not accepted this claim of Rs 988.6 million from GHIAL as Refer Note 26(A)(a) and 26(A)(c) the same has still to be verified/reconciled. However, a Contingent Liability for the same has been disclosed in the books. 269 CFS

It may, however, be stated that during the current year the Management has engaged the services of an outside Professional Firm for verifying these interest claims of GHIAL and necessary action shall be taken in the current year 2019-20 on the same after due verification. 2. i) Note No. 50 regarding Deferred Tax Asset The company has given the detailed status of Rs. 28,425.2 Million carried in the of Deferred Tax in Note No 50. accounts in view of the reasons stated It may be noted that in view of the therein, the realisation of which would clarifications given in Note No 53 regarding depend on generation of sufficient profits the Going Concern status of AI, there is in the future as anticipated / projected by a reasonable certainty that the company the management; will be able to realize its DTA from future taxable profits. The same is evident from Refer Note 57 the following: a) As per the approved Revival Plan, the Govt is giving further support to AI to ii) Note No. 50(d) regarding the effect of sustain/improve its operations. change in tax rate subsequent to the balance sheet date vide amendments in b) There is a huge amount of unabsorbed the Income Tax Act, 1961 and the Finance depreciation amount available with the (No.2) Act 2019, through Taxation Laws company against which the subject (Amendment) Ordinance 2019 on the DTA has been recognized and these carrying value of deferred tax assets (Net) depreciation losses can be carried as disclosed therein. forward indefinitely in terms of the Income Tax Act provisions. Refer Note 57 (c) c) As per the re-casted financial projections for the next five years of the company, the company shall be having substantial taxable profits with it to realize the Net Deferred Tax Assets of Rs 28425.2 million being shown in the books of the company.

d) Moreover, the adoption of IND-AS from FY 2017-18 by AI, further provides an additional leverage to the company for carrying forward of DTA as from “virtual certainty” of realization of DTA against future taxable profits as per Indian GAAP, IND-AS now talks of only the reasonable probability of realization of DTA against future taxable profits.

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In view of the above, AI has decided to carry forward the DTA only to the extent of Rs 28,425.2 crores in its books of accounts as on 31st March 2019. 3. Note No. 35 regarding non-application of This fact has been duly disclosed in Para Appendix B to Ind AS 21- “The effect of changes No 35 (b). However, it may be noted that in Foreign Exchange rates” in respect of the impact on this account is not likely to be advances received or paid in foreign currency. material.

Refer Note 41 4. Note No. 29 regarding; All details regarding the transactions with a. classification of loans identified for transfer the SPV- AIAHL have been disclosed in to AIAHL as current liability; Note No 28 and 29. As stated, Rs 13000.0 million received b. accounting for reimbursement of Rs from AIAHL is towards the reimbursement 13000.0 Million for the period from 1st of interest costs on the Loans of AI to be October 2018 to 31st March 2019 by Air transferred to the SPV. Accordingly, the India Assets Holding Limited (AIAHL) same has been reduced from the Finance towards interest costs paid by the Company Cost as the Rs 13000.0 million was on the identified loans, as a reduction from received by AI for this purpose only. Hence, finance cost; the correct treatment has been given to this amount by AI in its books. c. no effect being given for certain receivables/ Further, it has also been clarified in the transactions with AIAHL pending final above stated Notes that accounting effect reconciliation ; to all the transactions such as transfer of investment and their related Receivables/ d. classification of certain identified properties Payables etc. will be given when all issues as Asset held for sale/ Investment property; regarding this are finalized and approved and by the Govt. e. Classification of assets and liabilities of four subsidiaries as assets/liabilities included in Disposal group held for sale.

Refer Note 29 5. Non-Disclosure of certain information in the consolidated financial statements as required by Schedule-III of the Companies Act, 2013 and Indian Accounting Standards (Ind AS):

Refer Note 13.2, 18, 23(a) and 30(iv)

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a) Terms of repayment, nature of Security This is a statement of fact. Due to the separately for each case of borrowings and confidential nature of the agreements period & amount of continuing default in respect entered into with the consortium of banks of borrowings and interest thereon in respect of wherein the terms of payments, rates of each borrowing - Refer Note No.13.2 & 18 interest, the nature of security has been clearly specified, it has not been disclosed. However, the same is available with the company, the important extracts of which are already disclosed in the accounts. b) Foreign Currency Fluctuation under Finance As already stated in Note No 23(a), the Cost- Refer Note No. 23(a) exchange rate differences in the nature of interest cost on foreign currency borrowings has not been classified due to the complexity of transactions. c) Fair Value of Investment Properties as required As stated in Note No 30 (d) under in Ind AS 40- Investment property - Refer Note disinvestment plan, monetization of the no. 30(d) identified properties is in the process, hence Our Opinion is not modified in respect of above fair value of the investment properties matters. could not be disclosed as a confidentiality measure. B. In respect of Air India Transport Services Limited (Subsidiary)- vide their Auditor’s Report dated September 6, 2019 Sr. Emphasis of Matter Management Comments No. 1. As stated in Note 24 to the financial statements, Restatements of previous year figures have the Company has restated its Financial been made as per requirement of IND AS 8. Statements [except for items as mentioned in para (1) (a) and (b) below] for the year ended March 31, 2018 in accordance with Ind AS – 8, “Accounting Policies, Changes in Accounting Estimates and Errors”. a) We draw attention to Note 34(b) of the Estimate of Deferred Tax/ Liability are being financial statements. The Company has made at the yearend as on balance sheet recomputed deferred tax on taxable temporary date. In the case of any change in estimate differences using balance sheet approach of deferred tax assets / liability, prospective as against income statement approach in impact has been given as stated in the accordance with the requirements of Ind policy of the company as well as per IND AS – 12 “Income Taxes”. The Company AS 8. has computed opening cumulative effect (i.e. April 01, 2018) of an error amounting to Rs. 939.37 million which pertains to one or more prior periods. As per the management, it is impracticable to determine the period-specific effects of this error on comparative financial

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information for reported prior period and hence, the company has given cumulative effect of the error prospectively by restating the opening balances of assets and other equity as at April 01, 2018.

Refer Note 57 b) We draw attention to Note 42(i) of the financial This is a statement of fact. statements, hitherto the Company has not provided for impairments of financial assets (Trade and Other Contractual Receivables) using provision matrix in accordance with the requirements of Ind AS – 109 “Financial Instruments”. During the year, the Company has computed cumulative effect of Expected Credit Loss as on March 31, 2019 applying simplified approach for trade and other contractual receivables from the parties other than the group companies amounting to Rs.436.26 million. The Company has considered Rs.Nil towards expected credit loss in respect of receivable from the group companies. As per the management, it is impracticable to determine the period-specific effects of this omission on comparative financial information and hence, the company has given cumulative effect prospectively from the financial year ended on March 31, 2019.

Refer Note 66(a) c) Other Prior Period adjustments consists of This has been done incompliance with the errors/omissions on account of recording requirement of IND AS 8. of revenue, accounting of net foreign exchange gain/(loss) on realisation, effect of receivable/payable reconciliations and others. Accordingly, net effect amounting to Rs.172.0 million has been considered in the Statement of Profit and Loss of the previous year with corresponding effect in related assets/ liabilities. This has resulted into decrease in profit before tax and other comprehensive income by Rs.172.0 million and Rs.5.0 million respectively with corresponding reduction of other equity by Rs.177.0 million for the previous year. Refer Note 69(e)

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We have verified whether the effects of This is a statement of fact. above misstatements for the previous year dealt with by the management are in accordance with generally accepted accounting principles in India. Our audit procedures for previous year never intended to cover the verification of complete set of financial statements for previous year nor have we conducted such verification. We therefore restricted our verification to the effects of misstatements for the previous year noticed during the course of audit for the current year. Accordingly, the Comparative Financial This is a statement of fact. Statements including related notes to accounts and other disclosures, to the extent made, are as per the published numbers as reported by the predecessor Statutory Auditor of the Company and as adopted by the shareholders after giving effects of (c) above. Possible effects of items reported in para (a) and (b) above on the previous year financial statements cannot be ascertained and hence, reported financial information of the previous year is strictly not comparable. C. In respect of Air India Express Limited (Subsidiary) - vide their Auditor’s Report dated July 30, 2019 Sr. Emphasis of Matter Management Comments No. 1. Note no. 42 regarding accounting of “Insurance The Company has booked the claim as Claim Receivable” pending confirmation for per the Significant Accounting Policy of acceptance by insurance company which is Revenue Recognition and per existing in deviation from the Accounting Policy of the practice, the Insurance Companies would company. provide an acknowledgement to the claims received and during the FY 2018-19 also Refer Note 62 similar such confirmation was obtained and provided to the Statutory Auditors. It may be mentioned that the claims are lodged net of deductibles and the Company is reasonably certain in realization of the claims from Insurance claim as indicated in the note. Further, the periodical meetings with the Insurance authorities and the

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minutes of the meeting would also confirm the claims and acceptance of the same by the Insurers. 2. Note no. 43 regarding penal interest amounting The Company has provided the guarantee Rs. 832.47 Million for delayed payment of fees payable to the Government at the rate Guarantee Commission to Government of of 0.5% on the amount of the respective India. liabilities as outstanding at the end of every financial year. However, since the Refer Note 70 (i)(c) Company has paid the entire amount of guarantee fees payable in full and since it has represented to the Government for waiver of the penal interest amounting to Rs. 832.47 Million and also the Company had not received any claim from the Government of India for such penal interest as aforesaid, no provision for the same has been made in the financial statements. The Company had filed the Income Tax returns for the period ending 2016-17 and the acknowledgement of completion of assessment was received from the Department for the period ending 2014- 15 during the previous year only. During the years, the Company has not received any such demand in this regard for the assessment period. D. In respect of Air India Engineering Services Limited (Subsidiary) - vide their Auditor’s Report dated August 5, 2019 Sr. Emphasis of Matter Management Comments No. 1. As per para 9 of Ind-AS 2 on Inventories, This is a statement of fact. Inventories shall be measured at the cost and net realizable value. The Company has valued the inventories during the year at weighted average cost. Valuation of inventories was not done as per Ind-AS 2 at year end. Hence we are unable to comment on the impact of the same. Refer Note 69(b)

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E. In respect of The Hotel Corporation of India Limited (Subsidiary) - vide their Auditor’s Report dated July 23, 2019 Sr. Emphasis of Matter Management Comments No. 1. During the year, the company has made i) In the previous year 2017-18 it was provision / payment / settlement of old liabilities indicated in the Notes to Accounts such as wage revision, interest on statutory dues note no. 33 that no provision has been payment etc. all these items are classified prior made in the books of accounts with period and retained earnings on 31.03.2017 is regard to wage revision arrears. In the restated. In the accounting policies and notes current year 2018-19 as mentioned in to financial statement it is disclosed that these Note 29, provision for wage revision item will be recognized as and when they are of unionized category of employees paid / settled. So the accounting treatment for the period 18.8.2008 to 31.3.2017 given is not as per accounting policy disclosed has been made and classified under as above. Retained Earnings

ii) In the previous year 2017-18 it was indicated in the Notes to Accounts note no. 42 to 44 that no provision has been made for interest / penalty / damages for overdue statutory dues and that would be accounted in the year dues are settled. During the year 2018-19, as mentioned in Note 43, the interest on overdue payments against statutory dues which pertain to payments made for years prior to 2017-18 have been classified under Retained Earnings. The details thereof have been reflected in Note 42 of Notes to Accounts 2. The Company has reconciled the balances Out of the Trade Receivables of Rs 32.77 from Trade Receivables and Payables from crores, Rs 30.23 crores pertains to AI and the Holding Company and is in the process of its subsidiaries. For the balance Rs 2.54 obtaining confirmation of balances from other crores confirmations have been asked for. Trade Receivables, Trade Payables, Loan and As regards Trade Payables totaling to Rs Advances, Deposits and Other liabilities. Loans 5.18 crores, confirmations have been sent and Advances and Other advances receivable to the suppliers and the same are being are considered good for recovery though the followed up. same are in the process of being reconciled, Loans and Advances totaling to Rs 27.06 referred to in Note Nos. 29 and 33 (ii). crores include employees related advances of interim relief, medical loans granted, etc. Refer Note 42(i) & 55(d) totaling to Rs 6.95 crores, receivable from

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J&K Government for Centaur Srinagar construction and common sharing expenses Rs 15.42 crores, advances paid to statutory bodies for disputed dues Rs 0.77 crores, for which confirmations are not necessary. As regards Other Financial Liabilities totaling to Rs 81.83 crores , the same includes Rs 58.61 crores being lease rentals payable to AAI which has been reconciled , Rs 16.80 crores of employees dues (including arrears provision and interim relief). The remaining balances are being confirmed. 3. The Company has not provided Interest and The GST is being paid on time on a monthly penalty on unpaid/delay payment of Goods basis. The unpaid / delayed payment is in and Service Tax. respect of yearend entries in the books which is being paid. Interest / penalty would be calculated and paid at the time of making the differential payments of GST. Our opinion based on the consideration of reports of other auditors is not modified in respect of the matters reported in para B, C, D and E. Key Audit Matters (KAM) Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section and Material Uncertainty in relation to Going Concern section above, we have determined the matters described below to be the key audit matters to be communicated in this report based on key audit matters reported in audit report issued by us of Holding Company and reported in audit reports issued/communicated to us by respective auditors of the subsidiaries, reproduced by us, except for the matters eliminated on Consolidation or not considered material at group level.

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Key Audit Matters Principal audit procedures performed by the respective auditors Depreciation and impairment of Property, Plant & Equipment, Investment Properties and Intangible assets

In respect of Holding Company, In respect of Holding Company,

The management uses estimates to assess We have reviewed the judgments and useful life of various items of Property, Plant methodology applied by management & Equipment, Investment Properties and including the nature of underlying costs Intangible Assets including in the application capitalized, determination of realizable value of component accounting, recognition of the assets retired from active use, technical of early retirement from use, etc. which assessment conducted in assessing have a significant impact on the accounts. the useful life of assets, considered the The company also assesses whether an applicable rates prescribed in Schedule II of impairment indication exists and performs the Companies Act, 2013, and evaluated the impairment test in respect of Property, Plant system followed for periodic review. & Equipment, Investment Properties, and We have broadly reviewed the Company’s Intangible Assets wherever such indications impairment assessment process and exist, which involve management's workings of property, plant & equipment judgment of various factors including future and intangible assets including technical growth rate etc. assessment of the management, key assumptions and judgement used to Refer Note 55 of standalone financial determine the impairment and future cash statements flows, discount rates applied etc. Refer Note 61 of consolidated financial statements

In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation of India Limited Corporation of India Limited

Measurement of useful life & residual value Verification of lease terms and management of Property, plant and equipment & the report on physical verification of fixed assets assessment as to which components of to ensure appropriate disclosure of these cost may be capitalized. items. Provision for Re-delivery of Aircraft In respect of Holding Company, In respect of Holding Company,

The company has contractually undertaken We have tested the management’s controls to return leased aircrafts taken under over estimating and recognising provisions operating leases to the lessors in a condition for re-delivery expenditure of aircraft held agreed at the inception of each lease. under operating leases and conducted Management estimates the costs required procedures relating to the provisioning

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Key Audit Matters Principal audit procedures performed by the respective auditors to re-deliver the aircrafts in prescribed including evaluating key assumptions and condition based on several factors including judgements adopted by management. aircraft utilisation, expected cost of maintenance, estimated lifespans of parts Refer Note 54 of consolidated financial etc. statements Refer Note 46 of standalone financial statements

In respect of subsidiary, Air India Express In respect of subsidiary, Air India Express Limited Limited

Company operated 8 aircraft under operating Company has calculated the said provision of lease arrangements at 31st March 2019. redeliver expenses based on the information available from vendor for new aircraft taken Under the terms of the operating lease on lease by discounting the present value arrangements with the lessors, Company is thereof for future liability. contractually committed to either return the aircraft and/or engines in a certain condition We have verified the documents provided to or to compensate the lessor based on us for cost of contractual commitment and the actual condition of the aircraft and/or working for calculating the present value of engines at the date(s) of return. the said liability. Accordingly, provision of Rs.56.56 Million for the costs associated with redelivery of the said aircraft has been made during the lease term and is included under Provisions.

279 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors Leases and incentives

In respect of Holding Company, In respect of Holding Company,

The determination of the lease classification, In view of the significance of the matter we fair value in case of Sale and Lease Back applied the following audit procedures in transactions and recording of related this area, among others to obtain sufficient incentives is considered as a complex appropriate audit evidence: accounting matter and involves significant • reviewed the key terms of leasing and management’s judgments. Accordingly, evaluated management judgement the classification of leases, accounting of used in determination of classification of incentives and determining fair value is leases. regarded as a key audit matter. • performed test of details to verify The Company operates aircrafts under both classification of leases and related finance and operating lease arrangements. incentives and traced the same to credit In determining the appropriate lease notes and other underlying contracts / classification, Ind AS 17 - “Leases” is documents. applied by the Company and the substance Refer Note 53 of consolidated financial of the transaction is considered rather than statements just the legal form. The Company receives certain Manufacturer’s credit entitlements (cash & non-cash incentives) which are non- refundable incentives and 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. Refer Note 45 of standalone financial statements Assets held for sale (Other than Investments in subsidiaries held for sale)

In respect of Holding Company, In respect of Holding Company,

The company has classified assets We have verified the procedures in relation earmarked for disposal as assets held for to management’s classification and sale, including as part of the disinvestment valuation of assets held for sale including process in progress. Management has assessing the methodologies used and the estimated the fair value of such assets appropriateness of the key assumptions, having regard to various critical factors checking the accuracy thereof on a sample including market rates. basis etc

Refer Note No. 28 & 32 Refer Note No. 28 & 32

280 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors Recognition of revenue from transportation services

In respect of Holding Company, In respect of Holding Company,

We have identified revenue recognition We have reviewed the internal controls in as a key audit matter because passenger the company for capturing and recognition of revenue is one of the key performance revenue and the reconciliations of revenue indicator, significance of passenger revenue between the reports generated by the to the financial statements, complexity of outsourced service provider and accounting the underlying IT systems of outsourced of revenue in ERP system of the company. service provider and the judgment required by management in determining the revenue We have conducted requisite procedures on from Forward sales and Loyalty Programme. revenue on a test check of selected samples and scrutinised relevant records and journals The company extensively uses the to assess the timing and values of revenues services of outsourced service provider for recorded. measurement and recognition of revenue, which carries an inherent risk around the In addition, we have performed cut-off accuracy of revenue recorded given the tests in order to verify whether the timing of complexity of operations and underlying IT passenger revenue recognition is in line with Systems. company’s policy. The company recognises revenue from We obtained the latest available assurance passenger and cargo sales on flown basis i.e, report on service organisation controls when the service is provided. The Company and bridge letter from outsourced service recognises revenue from unexercised rights provider on effectiveness of controls i.e. forward sales of customers which are confirming no significant changes to the non-refundable in nature, based on past control environment and controls relating to trends in proportion to the pattern of rights revenue accounting and General IT controls. exercised by the customer. With regard to forward sales, we have The company has a Frequent Flyer considered the consistency and continuity of Programme as per which, passengers the methods used to determine the amount earn miles which can be redeemed as per of revenue to be recognised from Forward the policy of the company. The portion of Sales. unearned revenue attributable to miles We reviewed the assumptions used to earned are recognised on the statement of estimate the number of miles as per financial position as deferred revenue, after Frequent Flyer Programme that will expire taking into account the expected utilisation without use, including analysing historical of the miles. expiry pattern.

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Key Audit Matters Principal audit procedures performed by the respective auditors We also reviewed the assumptions used in Revenue is subsequently recognised when determination of fair value of the unredeemed eligible passengers fly. miles.

Significant judgement is required in the Refer Note 67 of consolidated financial following aspects: statements • The number of miles that will expire without use – The Company relies on Refer to para 2(A)(1) & 2(A)(2) in our report historical expiry pattern in determining on Internal Financial Controls (Annexure ‘A’) these estimates; and • The determination of the fair value of frequent flyer miles – The Company relies on historical redemption patterns, weighted for the various geographic regions and booking classes in determining the fair value. Refer Note 59 of standalone financial statements

In respect of subsidiary, Air India Express In respect of subsidiary, Air India Express Limited Limited

Passenger revenue is not recorded Company has appointed outsourced immediately on sale of flight tickets but is agency for reconciliation and accounting the deferred to be recorded at a later time as passenger revenue transactions ascertain Revenue in the statement of profit and loss as to whether the policy of recognition the when passengers are flown. Such deferred revenue is consistently followed. We have revenue is presented in the Financial verified the data received from the said Statement as Forward Sales under Other agency on test check basis and relied Liabilities. also upon the report received from an external chartered accountant opining that As a result of the complexity in determining the design and effectiveness of controls the revenue to be recognized on flight dates, in respect revenue reconciliation process this is a key focus area in our audit. provide reasonable assurance about their effectiveness.

282 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors Provisions and Contingent Liabilities and Evaluation of uncertain tax positions

In respect of Holding Company In respect of Holding Company

There are material claims against the We have obtained details of key claims company and uncertain tax/duty positions against the company, completed tax which are under various stages of dispute, assessments and demands and tax/duty involving significant judgment to determine positions. the possible outcome of these disputes. We reviewed status of disputes and representation taken from the Refer Note 26 of standalone financial management, discussed with appropriate statements and Para (a) of Emphasis of senior management and evaluated the Matter management’s underlying key assumptions, We assessed management’s estimate of the possible outcome of the disputed cases in evaluating management’s position on these uncertain claims and tax positions and assessed the appropriate disclosures in the financials. Refer Note 26 of consolidated financial statements and Para A(1) of Emphasis of Matter

In respect of Subsidiary, Air India In respect of Subsidiary, Air India Express Express Limited Limited

The Company has material Indirect Tax We have obtained the relevant information litigated demands. and reviewed pending litigations regarding indirect tax in terms of legal stand/positions taken by the Company and regulation related the same. We have reviewed the disclosures made in the financial statements in this regard.

In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation of India Limited Corporation of India Limited

Judgment is required to ascertain whether Verification of analysis of legal disputes it is probable or not that an outflow of and other related documents to ensure resources embodying economic benefits will appropriate disclosure of these items. be required to settle the taxation disputes and legal claim.

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Key Audit Matters Principal audit procedures performed by the respective auditors Deferred Tax Assets

In respect of Holding Company In respect of Holding Company

The company has carried deferred tax Our procedures include obtaining an assets recognised on depreciation in an understanding of the process and the earlier year which is based on the likelihood controls over preparation of profit forecast. of future taxable income available for set off We reviewed the inputs and assumptions The recognition of deferred tax asset, used in the forecast including Revival involves judgement regarding the likelihood Plan for Operational & Financial Efficiency of realisation of these assets in particular formulated by the Govt of India. We verified whether there will be sufficient taxable the disclosures for deferred tax asset profits in future periods that support the balance including those related to significant recognition of these assets. Given the accounting estimate and judgements. degree of judgement involved in considering Refer Para A(2) of Emphasis of Matter these deferred tax assets as recoverable or Refer Note. 57 of consolidated financial otherwise, we consider this to be a key audit statements matter. Refer Para (b)(i) of Emphasis of Matter Refer Note. 50 of standalone financial statements

In respect of Subsidiary, The Hotel In respect of Subsidiary, The Hotel Corporation of India Limited Corporation of India Limited

Recognition of Deferred Tax Assets Verification of conservative view on recognition of deferred tax to ensure appropriate disclosure of these items.

Inventory In respect of Holding Company, In respect of Holding Company,

The company carries inventory of materials, We have evaluated the systems and spare parts etc across various locations processes for recording and valuation of centres and correct measurement of inventory, tested a sample of key controls inventory involves making a proper and comparison of net realizable prices. assessment of the lower of net realisable value over cost and assessment of write down necessary on account of obsolescence etc

284 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors Refer Note 39 of standalone financial We have obtained an understanding of the statements company’s policy on control for identification and provision of non-moving inventory based on age-wise analysis and tested the same on a sample basis. Refer Note 45 of consolidated financial statements Refer para 2(A)(1), 2(A)(2), 2(A)(3), 2(A)(5) & A(9) in our report on Internal Financial Controls (Annexure ‘A’) Provision for receivables In respect of Holding Company, In respect of Holding Company,

The company is carrying significant balances We have obtained a list of outstanding as trade receivables including amounts receivables, test checked the ageing of trade outstanding from earlier accounting periods. receivables generated from SAP at year end The management makes an estimate of on a sample basis and reviewed Expected the recoverability of individual debtor with credit loss model used in determining the reference to the aging profile, historical provision requirement. payment pattern and the past record of We have reviewed the controls, systems the customer and makes provision against and processes applied by the management the same with reference to the recoverable to ensure proper recognition of provision for amount. receivables.

Refer para 2(A)(5) in our report on Internal Financial Controls (Annexure ‘A’)

285 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors Accounting & disclosure for proposed disinvestment

In respect of Holding Company, In respect of Holding Company,

Govt. of India has given approval for We have reviewed the relevant minutes strategic disinvestment of the Air India of meeting of Board of Air India Limited and its subsidiaries. Accordingly, Strategic as well as of the committees formed for Revival Plan for Operational & Financial disinvestment and other relevant records Efficiency in Air India was formulated as made available to us in this regard. per which certain portion of debt along with We have verified the transactions which certain assets, including investments in three have taken place till 31st March 2019 with subsidiary companies and advances given the SPV and held discussions with the to them, were decided to be transferred to senior management of the Air India in order an Special Purpose Vehicle (SPV) formed to obtain an understanding of the present for the proposed disinvestment. position of the various decision taken for the Necessary adjustments/ disclosures are same. made in the financial Statements of Air India We have reviewed the disclosure made in Limited based on the present decisions and the financial statements in this regard. further adjustments would be made after finalization of the same. Refer Note 28 & 29 of consolidated financial Refer Note 28 & 29 of standalone financial statements and para A(4) of Emphasis of statements and para (f) of Emphasis of Matter. Matter. Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon The Holding Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Directors’ Report, Management Discussion and Analysis Report and Report on Corporate Governance but does not include the Consolidated financial statements and our auditor’s report thereon. These reports are expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

286 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors In connection with our audit of the Consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. When we read the reports containing the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements The Holding Company’s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these consolidated financial statements in terms of the requirements of the Act that give a true and fair view of the consolidated financial position, consolidated performance including other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group including its joint venture in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. Further, in terms of the provisions of Act, the respective Board of Directors of the companies included in the Group and its joint venture are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each company and for preventing and detecting frauds and other irregularities;

287 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group and of its joint venture are responsible for assessing the ability of the Group and of its joint venture to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate or cease operations, or has no realistic alternative but to do so. The respective Board of Directors of the companies included in the Group and of its joint venture are also responsible for overseeing the financial reporting process of the Group and its joint venture. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but

288 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the Consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Group and joint venture incorporated in India has adequate internal financial controls system in place and the operating effectiveness of such controls.

289 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and its joint venture to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of such entities or business activities within the Group and joint venture and to express an opinion on the consolidated financial statements.

290 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors We are responsible for the direction, supervision and performance of the audit of financial information of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance of the Holding Company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

291 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matters I. We did not audit the financial statements of five subsidiaries whose financial statements reflect the total assets and net assets as at March 31, 2019, total revenues and net cash inflow / (outflow) for the year ended on that date as considered in the consolidated financial statements: (Rs. in Million) Name of the Total Net As- Total Net Subsidiary Assets sets Rev- Cash enue Flows Airline Allied 3,550.7 (20,005.2) 8,362.8 (24.1) Services Lim- ited (AASL) Air India Engi- 19,036.9 (19,831.4) 12,064.0 38.8 neering Ser- vices Limited (AIESL) Hotel Corpora- 1,222.2 (3,674.4) 672.8 83.3 tion of India Limited (HCI) Air India Ex- 37,321.0 (8,486.5) 42,015.3 (22.9) press Limited (AIEL) [formerly known as Air India Charters Limited] Air India Air 8,238.2 3,489.4 7,071.6 (88.9) Transport Ser- vices Limited (AIATSL)

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Key Audit Matters Principal audit procedures performed by the respective auditors II. The Consolidated Financial Statements also include the Group’s share of net profit including other comprehensive income of Rs.221.3 Million for the year ended 31st March, 2019, as considered in the Consolidated Financial Statements, in respect of a Joint Venture, whose Financial Statements have not been audited by us. These Financial Statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and joint venture, and our report on the consolidated financial statements in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors. Our opinion, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors. Report on Other Legal and Regulatory Requirements 1 As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of subsidiaries and its Joint Venture, as noted in the 'Other matters' section above, we report, to the extent applicable, 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 purposes of our audit except as stated in Basis for Qualified Opinion section and Para no. A(5) of Emphasis of Matters section above. 293 CFS

Key Audit Matters Principal audit procedures performed by the respective auditors b Except for the possible effects of the matters described in the Basis of Qualified opinion section above, in our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as appears from our examination of those books and the reports of other auditors. c With respect to those foreign stations not visited by us, we have relied upon the summary reports made available to us for the verification of transactions related to major foreign stations, which have been properly dealt by us in preparing this report d The Consolidated Balance Sheet, Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements. e Except for the effects of the matter described in para No. 1 of “Basis for Qualified Opinion” section and para A(3),A(5), B(1) & D(1) “Emphasis of Matter” section above, in our opinion, the aforesaid Consolidated Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder; f The matters described under “Material Uncertainty in relation to Going Concern” section and Basis of Qualified Opinion section above, may, in our opinion have an adverse effect on the functioning of the respective companies;

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Key Audit Matters Principal audit procedures performed by the respective auditors g On the basis of the Auditors' Report of the Joint Venture, none of the directors of that company is disqualified as on March 31, 2019 from being appointed as directors in terms of Section 164(2) of Companies Act, 2013. The Provisions of Section 164(2) of the Act are not applicable to the Holding Company and its subsidiary companies being Government Companies; h The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section above; i With respect to the adequacy of the internal financial controls over financial reporting of the Group and joint venture and the operating effectiveness of such controls, refer to our separate Report in Annexure ‘A’. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Group’s internal financial controls over financial reporting. j With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended, we report that, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015 provisions of section 197 of the Act are not applicable to the Group. Further, Joint Venture Company is incorporated as a private company and thus the provisions of Section 197 of the Act are not applicable to the joint venture Company.

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Key Audit Matters Principal audit procedures performed by the respective auditors k 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 Group and its joint venture has disclosed the impact of pending litigations on its financial position in its Consolidated financial statements - Refer Note no. 26 to the Consolidated financial statements;

ii. The Group and joint venture has made provisions, as required under the applicable laws or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts that have been entered into; and

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Group and joint venture.

296 CFS management replies to the ANNEXURE ‘A’ to the INDEPENDENT AUDITORS’ REPORT on “REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS”

Sl. Audit Observations Management Comments No. 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 financial controls over financial reporting of Air India Limited (“the Holding Company”) and its subsidiaries and its joint venture (which are companies incorporated in India as of that date) as of March 31, 2019 in conjunction with our audit of the Consolidated Ind AS financial statements of the Company as of and for the year ended on that date. Management’s Responsibility for Internal Financial Controls The respective management of the Holding This is a statement of fact Company and its subsidiary companies and its joint venture, is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective Companies 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 financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective 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 financial information, as required under the Companies Act, 2013. Auditors’ Responsibility

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Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company and its subsidiary companies and its joint venture, which are companies incorporated in India, 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 financial controls over financial 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 financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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We believe that the audit evidence we have This is a statement of fact obtained and the audit evidence obtained by the other auditors in terms of the reports referred to in the “Other Matters” section below, is sufficient and appropriate to provide a basis for our qualified audit opinion on the internal financial controls system over financial reporting of the Company and its subsidiary companies and its joint venture, which are companies incorporated in India. Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over This is a statement of fact financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur 299 CFS

and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Qualified Opinion According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2019 in respect of the holding company: In respect of Consolidated Financial Statements The company did not have an effective system for determining the fair value of disposal group held for sale in respect of the Holding Company. I In respect of the Holding company, In respect of Air India Limited (Holding Company) (Vide our Report on Standalone Financial Statements dated October 22, 2019 1 The company did not have an effective interface The company is having an interface between between various functional software relating to various functional software relating to Sales/Revenue and Inventory Management Sales/Revenue accounting and Inventory (for part of a year) with the accounting software Management. In fact, the Kale and RAMCO resulting in accounting entries being made software both have interface with the SAP manually on periodical basis. System whereby data is being directly pushed 2 The company did not have an appropriate into SAP and these data are being checked internal control system for reconciliation of and reconciled with the Sales entries before Control Accounts in relation to the Sales / incorporating the final accounting entries in Revenue, Inventory and Payroll. SAP System As regards Control Accounts, even in the IFCR Report received for FY 2018-19 there is no comment as such regarding this issue. In fact, it has been stated that this issue basically relates to Revenue booking at stations and liability credited by Kale. It has been stated that this area needs to be strengthened for timely reconciliation of these accounts. Further, periodical rectifications are also carried out subsequent to reconciliations.

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However, it may also be stated that the value of such transactions are not material. 3 The Company did not have appropriate system This fact has been duly disclosed in Note to capture incidental cost such as freight, duty No 30 (d). As stated the accounting of etc. in inventory system. FDI (Freight, Duty and Incidentals) in Ramco is done on block level instead of at transaction level. At the year end, FDI is expensed out on the basis of ratio of closing inventory to consumption of inventory during the year. The total of FDI expensed out during the period amounts to Rs 1031.0 million. This practice has been followed consistently in view of bulk and consolidated movement of spares, and difficulty in identifying and allocating item wise FDI. 4 The company did not have an appropriate All statutory dues are properly reconciled. internal control system for deduction, timely However, due to the shortage of funds deposit and reconciliation of statutory dues. available there is a delay in the deposit of TDS on certain occasions. However, interest on such delays are provided for in the books of accounts. 5 The company did not have an appropriate In this regard it may be noted that there is internal control system for obtaining confirmation a steady and considerable improvement of balances on a periodic basis, ageing and in this area as compared to previous reconciliation of unmatched Receivables, years as can be seen from the following: Payables, (including certain staff related a) All major Borrowings, Bank Balances accounts and suspense / control accounts), have been confirmed and reconciled. inventory lying with third parties, certain bank accounts and statutory dues. b) In respect of Receivables/Payables, all major parties such as dues of Oil Companies, Airport Operators, Pax/ Cargo Receivables and dues for VVIP Charters are totally reconciled. These parties in fact constitute a major portion of the total Receivables and Payables of the company.

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c) Further, in respect of certain other Receivables/Payables such as Staff related accounts and unlinked debits/ credits lying in various such accounts, the company has during the year appointed an outside professional firm to carry out the Reconciliation of such accounts and the necessary accounting effect for the same will be given in the current FY 2019-20. 6 The company did not have an effective internal External Internal Auditors were appointed audit system commensurate with the size, during the year 2018-19 to strengthen nature and complexities of the business. and enhance the scope of Internal audit in several areas of the company’s business. With the assistance of these auditors and strengthening of the in house internal audit team the company intends to strengthen the scope and coverage of internal audit commensurate with the size and nature of the company’s business. 7 The Company did not have an effective The Company has an effective ERP- Information Systems Audit to evaluate and test SAP System in place and IBM has been the IT general controls, which may affect the appointed to implement and hand hold AI completeness, accuracy and reliability of the upto FY 2023. Several computers related reports generated from IT System. applications are checked for accuracy and control by the Service Providers. The reliability of Reports are also checked. 8 The company did not have an effective system GST on an overall basis has been for timely accounting of entries including delay reconciled for FY 2018-19. However, state in accounting of cash collection/disbursement, wise reconciliation is in process which will reversal of ineligible input tax credit of GST & be completed in the current financial year. approval thereof in IT System. 9 The company did not have effective system Such transactions are not material. for control over sale of scrap of inventory and However, in this regard also instructions accounting thereof have been issued by the Competent Authority whereby Regional Scrap Committees have been formed with representatives of all concerned Departments to further stream line this process.

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We also draw your attention to the following qualified opinion on adequacy (and therefore operating effectiveness) of Internal Financial Control over Financial Reporting of below mentioned subsidiary companies of the Holding Company issued by Independent firm of Chartered Accountants reproduced by us as under; II In Respect of Air India Express Limited (Subsidiary) vide their Auditors' report dated July 30, 2019 1 The Company did not have effective interface This is a Statement of fact. between functioning software relating to However, the Company has appointed a Revenue, Payroll and Inventory Management consultant to review the SAP processes with the accounting software resulting in and guide us further process. As on date, accounting entries being made manually on the complete fuel payments are being periodical basis. linked with SAP on real time basis.

2 The Company did not have appropriate The Company has appointed the Internal Internal Control system for reconciliation of Auditor on concurrent basis effective FY Control accounts in relation to Sales/Revenue, 2019-20. Inventory and Payroll. 3 Controls over planning & monitoring of financial The Company is in close liaison with closing process. SAP experts to address this issue and guidance from the SAP consultant. 4 Controls over spreadsheets used in financial In order to be in line with the requirement, closing process. the SAP team is being requested to augment with provisions to comply with the regulations. 5 The company did not have appropriate internal The Company is exercising complete control system for deduction, timely deposits & controls on Compliance and Statutory reconciliation of statutory dues. regulation and remittances are made on or before the due dates. The reports from SAP and manual controls are exercised in this regard since SAP is not been fully compatible for such auto controls 6 The company did not have appropriate internal The Company has been following the control system for obtaining confirmation of system of obtaining the confirmations balances on a periodic basis & reconciliation from Vendors / Customers through an of unmatched receivables & payables however external Audit firm and the certification is the same has been done at the end of the year. obtained from them on annual basis.

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7 The company did not have effective internal Bar Sales are being streamlined and control system for reconciliation of onboard suitable controls are vested with Airport “Bar sale” with consumption and realisation. Coordinators, Airport cashiers and station Finance Officers for effective follow up through System. 8 The company did not have effective system for Monthly closing balances are being drawn timely accounting of entries. with effect from FY 2019-20 and with the help of the Concurrent Audit, the delays are minimized 9 Lack of controls to prevent duplicate accounting Monthly closing balances are being drawn and maker checker process. with effect from FY 2019-20 and with the help of the Concurrent Audit, the delays are minimized 10 System of verification and reconciliation With the appointment of the internal provided by outsourced agency relating to auditor on concurrent basis, the issues revenue needs to be strengthened. as highlighted would be avoided to a great extent including real time revenue reconciliation in SAP. III In respect of Air India Air Transport Services Limited (Subsidiary) vide their Auditors' report dated September 6, 2019

I Deficiencies in the design of control over the The company is in continuous process preparation of the financial statement being of strengthening its internal control audited : processes and the company is in process of defining internal financial control system. a) Standard Operating Procedures for critical The brief process note has already processes are not in place. been prepared for different departments based on the current working in the respective departments, which are reviewed periodically and being further strengthened from time to time. b) Authorization control such as maker/checker The company has the authorisation control in accounting software is not functional. control such as maker/checker defined in SAP, however, due to shortage of sufficient manpower and vast network of the company same could not be used effectively, which is being looked into and necessary action are taken from time to time.

304 CFS c) Absent or inadequate segregation of duties Due to shortage of sufficient manpower in within significant accounting process. the Finance Department and vast network of the company, effective segregation of duties could not be achieved, which is being looked into and necessary action are taken from time to time. d) Inadequate design of Information Technology The company uses SAP system based (IT) general & application controls that prevent on the SOP established for the group of the information system from providing complete companies, which is being followed strictly & accurate information consistent with financial and the company is of the firm opinion that reporting objectives & current needs. same are adequate and consistent with regard to financial reporting objectives and current needs. e) Inadequate design of monitoring controls used Reviewing the internal control process to assess the design & operating effectiveness is a continuous process and necessary of the entity's internal control over time. corrective actions are taken from time to time. f) Payroll is a significant process considering The company is looking into complete the size of Company’s Operations. However, automation of payroll system including it has been observed that various processes attendance monitoring system and other such as attendance, leave records, details of related activities. new joinee’s and resigned employees, payment of statutory dues, etc. are not fully automated and maintained manually. 2. Failure of controls designed to safeguard The company has appointed an external assets from loss, damage, or misappropriation. agency for carrying out the physical The company did not have appropriate internal verification of assets and necessary steps financial controls for reconciliation of physical are being taken to match the same with inventory & fixed assets with books of accounts. books, and to review the internal control systems and to strengthen the same. The inventories which were transferred for the first time last year, have been verified internally and balance confirmed itemwise internally of the inventory of GSE items held, necessary steps are being taken in the matter. 3 Failure to perform reconciliation of significant The company had appointed an external accounts such as accounts receivable, agency for carrying out the reconciliation accounts payable, statutory dues, with returns for the accounts payable and receivable & payroll balances are not reconciled in a timely which was a review of 4 years up to 31st or accurate manner. March 2018, the draft report had been shared however there are a few more areas which needed to be attended to and which we are in discussion for completion

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of the work. Due to shortage of manpower this work could not be completed and we are expecting to complete the same and take necessary actions as may be required. 4 Following are indicator of deficiency & strong indicator of material weakness in internal control : a) Restatement of previously issued financial The point has been noted and necessary statement to reflect the correction of material further action in the matter will be taken. misstatement. This indicates that cut-off The situation is on account of shortage procedures while closing are not working of trained manpower in the finance efficiently. department to manage a company of this size and also due to loss of trained personnel during the year. b) Identification by the auditor of a material The Company has identified the errors and misstatement in the financial statements for the taken the necessary steps to rectify the period under audit that was not initially identified same. As the internal audit is conducted by the entity's internal control. by an external firm and the scope of checking was limited, steps will be taken to enhance the scope and appoint an audit firm to carry out continuous audit so that the yearend rectification scenarios are avoided. c) The scope of internal audit is limited & does The point made has been noted and we not cover various essential processes such will be reviewing and enhancing the scope as payroll, fixed assets, and inventories. An the scope of the audit so that continuous ineffective internal audit function requires audit is taken up and quarterly reports are important accounting functions to be covered submitted. & monitored at reasonable intervals. d) Non-compliances in complying with the laws & The Company always strives to comply regulations by the entity have been observed. with the various acts and statutes which This indicates ineffective regulatory compliance govern it from time to time to ensure that function. it meets the regulatory compliances. In subsidiary auditor’s opinion, because of the The Company has noted the observation effect of the material weaknesses described and effective steps are being taken to above on the achievement of the objectives of the strengthen the internal working and to this control criteria, the said subsidiary Company has end we are proposing the carry out the not maintained adequate and effective internal following: financial controls over financial reporting as of 1) Delinking of the payroll processing March 31, 2019, based on the internal control which was handled by Finance over financial reporting criteria established by the department in June 2019 and the Company considering the essential components same has been moved to Personnel of internal control stated in the Guidance Note. department as a first step.

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2) Steps are being taken to induct qualified and trained manpower in the company. 3) A refresher program in SAP is being proposed for the finance manpower. 4) Revising the scope of work to be carried out by the internal audit firm so that timely reports are submitted to the management. 5) The external agency will be appointed to streamline the various statutory compliances and timely completion is ensured are being taken up, 6) The assistance of an external agency will be taken to ensure the reconciliation of the same are carried out and completed in a timely manner. IV In respect of Airline Allied Services Limited (Subsidiary) vide their Auditors' report dated July 24, 2019 1. Fixed Assets of the Company are not tagged/ This is a statement of fact. The tagging of numbered. assets will be done for all its departments and locations in the F.Y. 2019-20. 2. MSME vendors are not identified, therefore The SAP system has a field, minority balance outstanding towards MSME are not indicator in Vendor Master, which is identified. updated to identify the vendor as SSI. The system is being enhanced to capture more details of SSI Vendors, such as certificate no., issuing agency, validity, etc. However, identification of MSME is in the testing stage and not fully functional. Payments to most of the undertakings covered under the Micro, Small and Medium Enterprises Development Act (to the extent identified) have been made within the prescribed time limit/ date agreed upon with the supplier. The interest liability for delayed payments is very nominal and hence not provided. We are in discussion with MMD to identify the MSME vendors through a certification of all the existing active vendors to ensure compliance.

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3. Interface between various functional Software AASL currently does not have any exclusive relating to Sale/Revenue and Inventory Ticketing and Reservation System of its management with the accounting software is own and is in the process of implementing yet to be implemented, resulting in accounting its portal based Ticket Reservation system entries made manually. System of verification in the mid of F.Y. 2019-20. of data processed by outsourced agency Currently, the ticketing of the AASL needs to be strengthen as there is significant sectors is processed through a dynamic reliance on the data provided by them. software provided by M/S SITA under Air India inventory. Similarly, all the stores related inventory are procured, managed and accounted through an inventory management system (RAMCO), which caters to Air India and its subsidiaries. All the reservation and ticket data are pushed by SITA to the Revenue Accounting software system of outsourced agency of AIL, M/s Acceleya Kale for necessary segregation of the respective sale and uplift data through a AI code separator (9I) for AASL. Both the software i.e. Revenue Accounting of M/s Acceleya Kale and RAMCO system are being now being interfaced with SAP Finance module for accounting ensuring minimum manual intervention. 4. Periodicity of reconciliation of accounts with Regarding reconciliation with AIL and Parents & Associate Companies needs to be subsidiaries, suitable disclosure has improved, as at present it is on annual basis. been made in Notes to Accounts No. 39. Reconciliation with AAI is pending since Regarding AAI reconciliation, suitable previous years. disclosure is made in Note no 37. As suggested, AASL will ensure half yearly reconciliation with AIL & associated companies as well as for AAI. 5. The Company does not have appropriate Since, the interface for Revenue Internal Control system for reconciliation of Accounting is likely to be established Control accounts in relation to Sales/Revenue, shortly, the reconciliation of control above is due to periodic delay in transfer of accounts for sales and revenue carried revenue credit by parent company. out on monthly basis. 6. Internal control system for deduction, deposits The monthly closure of SAP will strengthen & reconciliation of statutory dues need to be the deduction, deposit and reconciliation strengthened. of statutory dues.

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7. Procedure to obtain the confirmation of For the year 2018-19, the confirmation balances on a periodic basis & reconciliation of of Receivables and Payables has been unmatched receivables & payable needs to be outsourced to independent Chartered strengthened. Accountant firm to ensure reconciliation of balances. During the year 2018-19, half yearly reconciliation was carried with vendors like vendor for ATF, Private Airport Operators etc. 8. The Company do not have an Information AASL has a functional IT department, System Audit to evaluate & test the IT general which in coordination with IBM (SAP controls, which may affect the completeness, module agency) ensures controls accuracy, reliability of the reports generated by and accuracy and reliability of reports the IT System. regenerated from IT systems. 9. Company does not have appropriate internal In the SAP system the accounting control towards modification of accounting voucher once posted cannot be altered entries. or modified with respect to amount, date of entry, accounting year etc. The only modification permitted is additional information with regard to narration and other references, which will not dilute the internal control of the accounting entries. 10. The Company does not have maker checker The delegation of Financial Powers based concept/not adhering maker checker concept in on the revised mapping of designations SAP accounting, however the same is followed in the organization for all departments through vouchers authentication according to has been recently approved by the the powers delegated. Board. The company is in the process of implementation of maker-checker concept in SAP. Supplementary control has been exercised to ensure control in processing and accounting of entries. 11. Reconciliation of GST paid, ITC claimed with The reconciliation of GST account the statutory returns, reconciliation of GST has been outsourced to independent under Cross charge is pending. Chartered Accountant firm (as consultant). They are in process of reconciling the balances as per Books of Accounts and returns filed. 12. Reconciliation of advance tax / refund of income The company is in process of tax of pervious years need to be strengthened. reconciliation of these accounts V In respect of Air India Engineering Services Limited (Subsidiary) vide Independent Auditors' Report dated August 5, 2019 1. The Company did not have an effective internal The delay in depositing the statutory control system for deduction, timely deposit, dues was on account of shortage of filing return and reconciliation of statutory dues. funds due to delay in realization of funds

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from company’s customer. The company is taking all needful action for timely depositing of statutory dues. 2. The Company is deducting tax at source (TDS) The company could not get it registered on GST as per Goods and Service Tax Act, for payment of TDS on GST due to lack 2017 without obtaining registration of deductor of address for each of the state, where of tax in GST since last 11 months. the company is having operation. The company is in the process of getting the registration. 3. The Company did not have an effective system In most of the cases, the payment is for timely accounting of entries, to prevent not made to the outside parties only duplicate accounting entry and maker checker after the entries are made in SAP. The process. payments invoice in the SAP is made at respective location, whereas the payment is centrally released at Company’s HQ at Delhi. As regard to Maker and checker process, the company is in process of recruiting sufficient number of man power in the Finance Department, to have more effective maker and checker process. 4. The Company did not have effective system of More than 95% of balances with outside reconciliation of balance with other parties. companies are with AI and its group of companies, which has been 100% reconciled. During the coming years further efforts will be made to reconcile the balances with all other parties as well. 5. The Company has Internal Audit on yearly The company is in process of selecting basis. It shall be on Monthly/Quarterly basis. the new Internal Auditor for next financial year and this aspect will be considered at the time of selection of new internal auditor. VI In respect of The Hotel Corporation of India Limited (Subsidiary) vide their Auditors Report dated July 23, 2019 has expressed a Disclaimer of Opinion According to the information and explanation This is a statement of fact given to us, the Company has not established its internal financial controls over financial reporting on criteria based on or considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason,

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we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at 31st March, 2019. However, the auditor, in their Audit report under Emphasis of Matter para have stated the following; “The Company has internal control system which need strengthening for followings: a. Strengthening the internal audit process so as to ensure adequate coverage of all the areas and ensure effective internal controls at all units of the Company. b. Laying down Standard Operating Procedures with regard to timely accounting of all transactions to ensure that proper books of accounts are maintained.” VII The auditor of the Joint Venture, AI-SATS, vide their report dated August 30, 2019 has issued an unqualified opinion on the adequacy and operating effectiveness of the internal financial control over financial reporting as on 31st March, 2019. A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, the Holding Company, its subsidiary companies and joint venture, which are companies incorporated in India, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, have maintained, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively

311 CFS as at 31st March 2019, based on the internal controls with reference to financial statements 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, to the extent possible, considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the Consolidated financial statements as at and for the year ended 31st March 2019 of the Holding Company, and as also material weakness identified and reported by the respective Auditors of subsidiaries and joint venture, which are companies incorporated in India, and these material weaknesses have affected our opinion on the Consolidated financial statements and we have issued a qualified opinion on the Consolidated financial statements. Other Matter Our aforesaid reports under section 143(3) (i) of the Act on the adequacy and operating effectiveness of the internal financial control over financial reporting insofar as it relates to five subsidiaries and a Joint Venture, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies. Our opinion is not modified in respect of the above matter.

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CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2019 (Rupees in Million) Particulars Note As at March 31, 2019 As at March 31, 2018 No. ASSETS : 1) Non-current Assets (i) Property, Plant & Equipment 1 284,058.6 298,170.1 (ii) Capital Work-in-Progress 1 822.1 814.9 (iii) Investment Property 1 4,377.7 9,919.6 (iv) Intangible Assets 1 194.7 3,115.4 (v) Intangible Assets under development 1 12.5 82.9 (vi) Investments accounted for using the 2 2,212.4 2,015.7 Equity Method 291,678.0 314,118.6 (vii) Financial Assets: a) Investments 2.1 1,094.5 1,046.0 b) Loans 4 3,478.2 3,197.7 c) Others 5 614.2 1,534.2 viii) Income Tax Assets (Net) 7 2,264.1 3,490.1 ix) Deferred Tax Assets (net) 57 28,425.2 28,431.0 x) Other Non Current Assets 6 5,937.7 6,277.7 333,491.9 358,095.3 2) Current Assets i) Inventories 8 10,709.9 12,663.4 ii) Financial Assets: a) Trade Receivables 3 20,303.3 21,325.2 b) Cash and Cash Equivalents 9 3,204.5 3,206.4 c) Bank Balance other than (b) above 10 6,198.8 5,818.4 d) Loans 4 174.3 229.3 e) Others 5 3,515.2 3,226.1 33,396.1 33,805.4 iii) Income Tax Assets 7 1,470.8 888.8 iv) Other Current Assets 6 15,528.3 22,546.6 61,105.1 69,904.2 3) Assets held for Sale and Assets included 10.1 120,546.2 87,918.3 in Disposal Group Held for Sale

TOTAL 515,143.2 515,917.8 The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22nd October 2019 Date : 22nd October 2019 Date : 22nd October 2019

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CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2019 (Rupees in Million) Particulars Note As at March 31, 2019 As at March 31, 2018 No. EQUITY AND LIABILITIES : 1) Equity i) Equity Share Capital 11 326,652.1 286,902.1 ii) Other Equity 12 (684,027.3) (596,231.5) (357,375.2) (309,329.4) 2) Liabilities: Non Current Liabilities a) Financial Liabilities i) Borrowings 13 84,777.6 304,222.3 ii) Other Financial Liabilites 15 53.1 111.8 84,830.7 304,334.1 b) Provisions 16 28,413.7 35,229.1 c) Other Non Current Liabilities 17 - - 113,244.4 339,563.2

Current Liabilities a) Financial Liabilities i) Borrowings 18 289,391.6 233,055.7 ii) Trade Payables 14 91,043.0 93,390.7 iii) Other Financial Liabilites 15 287,733.2 93,843.7 668,167.8 420,290.1 b) Other Current Liabilities 17 66,866.9 61,823.2 c) Provisions 16 2,172.2 3,570.7 737,206.9 485,684.0 3) Liabilities included in disposal group 17.1 22,067.1 - held for Sale 515,143.2 515,917.8 Significant Accounting Policies and A Notes forming part of the Financial 1-73 Statement The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2019 (Rupees in Million) Particulars Note 2018-19 2017-18 No. I Revenue 1. Revenue from Operations 19 i) Scheduled Traffic Services 264,847.1 225,830.6 ii) Non-Scheduled Traffic Services 15,343.6 13,085.9 iii) Other Operating Revenue 12,242.4 20,909.1 Revenue from Operations 292,433.1 259,825.6 II 2. Other Income 20 5,573.9 6,466.7 III Total Revenue (I+II) 298,007.0 266,292.3 IV Expenses 1. Aircraft Fuel & Oil 115,558.9 84,134.6 2. Other Operating Expenses 21 127,341.0 109,519.5 3. Employee Benefit Expenses 22 32,882.9 31,791.4 4. Finance Costs 23 48,969.8 46,514.5 5. Depreciation and Amortization 24 18,518.3 19,123.8 Expenses 6. Other Expenses 25 26,889.5 19,668.8 Total Expenses 370,160.4 310,752.6 V Profit/(Loss) before Share of (72,153.4) Profit/(Loss) of JV and Tax (III-IV) (44,460.3) VI Profit share of joint venture 223.8 254.8 VII Profit/(Loss) before Tax (V+VI) (71,929.6) (44,205.5) VIII Tax Expenses : i) Current Tax 42.0 - IX Profit/(Loss) for the year from con- (71,971.6) (44,205.5) tinuing operations (after Tax) (VII-VIII) X Profit/(Loss) from discontinued operations 25.1 (15,116.4) (13,978.5) XI Tax expense of discontinued operations 25.1 636.0 511.0 XII Profit/(Loss) from discontinued operations (after Tax) (X-XI) (15,752.4) (14,489.5) XIII Profit/(Loss) for the year (IX+XII) (87,724.0) (58,695.0)

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2019 (Rupees in Million) Particulars Note 2018-19 2017-18 No. XIV Other Comprehensive Income (OCI) Items that will not be reclassified to Profit & Loss and its related income tax effect : i) Re-measurements of Defined Benefits (891.8) (138.0) Plans ii) Fair value changes on Equity 48.2 46.6 Instruments through OCI iii) Share of Joint Venture for Re- (3.8) 3.4 measurement of Defined Benefit Plan iv) Income Tax on share of Other 1.3 (1.2) Comprehensive income of Joint Venture v) Re-measurements of Defined Benefits 25.1 (214.1) 475.3 Plans from discontinued operations vi) Income Tax relating to Re-measurement 25.1 (18.0) - of Defined Benefit Plans from Discontinued operations Other Comprehensive Income for the year (1,078.2) 386.1 XV Total Comprehensive Income for the year (XIII+XIV) (88,802.2) (58,308.9) XVI Earning per Equity Share of face value of 58 Rs. 10 each, Basic & Diluted : From continuing operations (Rs.2.46) (Rs.1.63) From discontinuing operations (Rs.0.54) (Rs.0.53) From continuing and discontinuing operations (Rs.3.00) (Rs.2.17) Significant Accounting Policies and A Notes forming part of the Financial Statement 1-73

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2019 (Figures in Million) A. Equity Share Capital (Refer Note 11) As at March 31, 2019 As at March 31, 2018 No. of Amount in No. of Shares Amount in Shares Rupees Rupees Balance at the beginning of the reporting period 28,690.21 286,902.1 26,753.00 267,530.0 Changes in the Equity Share Capital during the year Add : Equity Shares Allotted during the year 3,975.00 39,750.0 1,937.21 19,372.1 Balance at the end of reporting period 32,665.21 326,652.1 28,690.21 286,902.1 (Rupees in Million) B. Other Equity (Refer Note 12) Share Ap- Capital General FCMITDA Retained Equity Total plication Reserve Reserve Earnings Instruments Money through OCI Balance as at 31.03.2018 - 7,144.6 (1,436.7) (2,137.3) (600,546.0) 743.9 (596,231.5) Changes in accounting policy or prior - - - - 939.4 - 939.4 period errors/ Effect of Deferred Tax Assets of earlier years - Discontinued Operations (Loss) for the year - - - - (87,724.0) - (87,724.0) Dividend Distribution Tax pertaining to Joint Venture - - - - (4.4) - (4.4) Transfer from General Reserve to Retained Earnings - - 1,436.7 - (1,436.7) - - Transfer from Reserve - - - - (0.8) - (0.8) Other Comprehensive Income for the year - - - - (1,126.4) 48.2 (1,078.2) Additions during the year - 1,163.5 - (1,135.5) - - 28.0 Amortization during the year - (469.5) - 513.7 - - 44.2 Shares allotted during the year ------Balance as at 31.03.2019 - 7,838.6 - (2,759.1) (689,898.9) 792.1 (684,027.3) Balance as at 31.03.2017 1,372.1 7,475.6 (1,436.7) (2,349.1) (529,972.9) 697.3 (524,213.7) Changes in accounting policy or prior - - - - (12,213.5) - (12,213.5) period errors (Loss) for the year - - - - (58,695.0) - (58,695.0) Dividend Distribution Tax pertaining to Joint Venture - - - - (4.1) - (4.1) Other comprehensive income for the year - - - - 339.5 46.6 386.1 Additions during the year - 147.4 - (126.5) - - 20.9 Amortization during the year - (478.4) - 338.3 - - (140.1) Shares allotted during the year 1,372.1 - - - - 1,372.1 Balance as at 31.03.2018 - 7,144.6 (1,436.7) (2,137.3) (600,546.0) 743.9 (596,231.5)

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019 317 CFS

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2019 (Rupees in Million) Particulars 2018-19 2017-18 A. CASH FLOW FROM OPERATING ACTIVITIES (Loss) before Exceptional Items and Tax from continuing operations (71,929.6) (44,205.5) (Loss) before Exceptional Items and Tax from discontinued operations (15,116.4) (13,978.5) Adjustment for : Unrealised Foreign Exchange (Gain)/Loss 2,925.7 570.6 Depreciation and amortisation 19,608.0 20,112.2 Provision/ Unclaimed Liabilities Written Back (53.8) (23.5) Provision for Obsolescence / Inventory Reconciliation * (518.1) 1,067.2 Provision for Bad & Doubtful Receivables and Advances * 1,798.3 (1,419.3) Provision for Employee Benefits * (433.9) 1,314.8 Provision for Redelivery of Aircrafts * 2,361.9 2,454.0 Reversal of Duty credit entitlement under SFIS 97.0 - Provision for Frequent Flyer Programme - 12.8 (Profit)/Loss on sale of fixed assets (722.1) (1,037.3) Dividend income (72.7) (69.5) Interest income (on Bank Deposits & others) (915.3) (772.9) Profit share of Joint Venture (223.8) (254.8) Interest and Finance Charges 44,794.1 43,493.8 68,645.3 65,448.1 Operating (Loss) / Profit Before Working Capital Changes (18,400.7) 7,264.1 Adjustments for : (Increase) / Decrease in Inventories 1,731.0 596.8 (Increase) / Decrease in Trade and Other Receivables 1,863.4 1,776.9 Increase / (Decrease) in Trade and Other Payables 14,861.2 (3,624.9) 18,455.6 (1,251.2) Cash Generated from Operations 54.9 6,012.9 Direct Taxes paid (1,074.1) (537.7) Net Cash Flow (used in)/ from Operating Activities (1,019.2) 5,475.2

B. CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Property, Plant and Equipment (17,070.0) 39,620.1) (Increase) / Decrease in Assets Held for Sale (net) 4,117.6 3,213.8 (Increase) / Decrease in Investments (net) - (46.6) (Increase) / Decrease in Bank Deposits (Maturity of more than 3 (308.0) (1,211.9) months) Interest received (on Bank Deposits & others) 1,202.3 3,066.1 Dividend Received 92.9 89.7 Net Cash Flow used in Investing Activities (11,965.2) (34,509.0)

C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Shares / Share application money received 39,750.0 18,000.0 Proceeds from Long Term Borrowings 4,221.3 275.7 Repayment of Long Term Borrowings (34,407.7) 22,768.6) Proceeds from ShortTerm Borrowings 63,938.4 122,749.1 Repayment of Short Term Borrowings (10,330.4) (44,026.2) Increase/(Decrease) in Capital Reserve 708.9 (316.1) Increase/(Decrease) in Security Deposit 0.4 - Interest Paid (50,183.9) (45,724.2) Net Cash Flow from/(used in) Financing Activities 13,697.0 28,189.7 Net increase/ (Decrease) in Cash and Cash equivalents 712.6 (844.1) Unrealised Foreign Exchange Gain/(Loss) in Cash & Bank (367.4) 115.2 Balances Cash and Cash equivalents (Opening balance) 3,206.4 3,935.3 Cash and Cash equivalents (Closing balance) ** 3,551.6 3,206.4

318 CFS

Cash flow statement of discontinued operation (Refer Note 10.1(B)) Particulars 2018-19 2017-18 Net Cash Flow (used in)/ from Operating Activities (30.9) 2,529.6 Net Cash Flow used in Investing Activities 16.9 (2,052.4) Net Cash Flow from/(used in) Financing Activities (184.0) (285.9) Net increase/ (Decrease) in Cash and Cash equivalents (198.0) 191.3 Cash and Cash equivalents (Opening balance) 545.1 353.8 Cash and Cash equivalents (Closing balance) 347.1 545.1

Notes * These figures have been taken from Balance Sheet movements. ** Cash and Cash equivalehnts (Closing balance) includes Cash and Cash equivalents of discontinued operation Rs.347.1 Million (Previous Year : Rs.545.1 Million 1 For details of components of Cash and Cash equivalents, see Note No. 9 and Note 10.1(B) 2 Reconciliation of Liabilities arising from Financing Activities:-

Particulars As at Financing Cash Flows Non Cash As at 31.03.2018 Proceeds Repayment Flows 31.03.2019 -Exchange Loss / (Gain) Long Term Borrowings 331,981.5 4,221.3 (30,940.1) 992.7 306,255.4 Short Term Borrowings 219,554.9 66,028.9 10,330.4) 1,050.0 276,303.4

The accompanying notes are an integral part of the Financial Statements. This is the Balance Sheet referred to in our report of even date.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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NOTE: A

Accounting Policies forming part of the Consolidated Financial Statements for the year ended 31 March 2019 (Rupees in Million except otherwise stated)

1. Group Information / Overview Background The Consolidated Financial statements comprise Financial statements of “Air India Ltd“(the holding company) and its subsidiaries (collectively, referred hereunder as the Group) and interest in a Joint Venture Company. The Holding company has been also referred as Company/ AI/Air India Ltd./Air India.

Air India Limited, (a Government of India Company) is a company incorporated in India, registered under the Provisions of Companies Act, 1956. The Govt of India holds 100% of Equity Share Capital of the company. Debentures issued by the company are listed on BSE Limited. The registered office of the company is situated at Airlines House, 113, GurudwaraRakabganj Road, New Delhi -110001.

The group and its Joint Venture Company provides domestic and international air transport services which include passenger and cargo services and other related services namely, ground handling, engineering and hotel services. The aircraft fleet of the group consists of a wide range of aircrafts.

The Consolidated Financial Statements for the year ended March 31, 2019 have been approved by the Board of directors of the Company in their meeting held on 22nd October, 2019.

2. Basis of preparation ofConsolidated Financial Statements (i) Statement of Compliance The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) prescribed under Section 133 of the Companies Act, 2013 (the Act) Companies (Indian Accounting Standards) Rules 2015, as amended from time to time and other relevant provisions of the Act. (ii) Principles of Consolidation (a) The Consolidated Financial Statements present the consolidated audited accounts of Air India Limited with the following Subsidiaries and interest in Joint Venture: Name of the Subsidiary / Joint Venture Extent of Holding as Extent of Holding as Company on 31st March 2019 on 31st March 2018 Subsidiaries incorporated in India Air India Express Ltd. (AIXL) 100% 100%

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Airline Allied Services Ltd. (AASL) (*) 100% 100% Air India Air Transport Services Ltd. (AIATSL) (*) 100% 100% Air India Engineering Services Ltd (AIESL) (*) 100% 100% Hotel Corporation of India Ltd (HCI) (*) 80.38% 80.38% Joint Venture Incorporated in India Air India SATS Airport Services Pvt. Ltd. (AI- 50% 50% SATS)

(Note: (*) These Subsidiaries have been considered as Entities Held for Sale)

(b) Investment in Subsidiaries (i) The Company consolidates entity which it owns or controls. The consolidated financial statements comprise the standalone financial statements of the Company and its subsidiaries as disclosed. Control exists when the parent has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity’s returns. Subsidiaries are consolidated from the date control commences until the date control ceases. (ii) The financial statements of the Group Companies are consolidated on a line-by-line basis (except for Entities Held for Sale as stated above) and intra-group balances, intra-group transactions and unrealized profits & losses are eliminated upon consolidation. These consolidated financial statements are prepared using uniform accounting policies for like transaction and other events in similar circumstances and are presented to the extent possible, in the manner as the company's separate except as otherwise stated. (iii) The excess of the Equity of the Subsidiary over the cost of investment in the Subsidiary Company at the date on which investment is made is recognized as Capital Reserve in the Consolidated Financial Statement. Similarly, the excess of cost of investment in Subsidiary Companies over the equity of the Subsidiary Companies at the date on which investment is made is recognized as Goodwill in the Consolidated Financial statement. (c) Investments in Joint Venture Investment in Joint Venture is accounted for on Equity Method as stated in IND AS-28 “Investments in Associates and Joint Ventures”. Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter torecognize the group’s share of the post - acquisition profits or losses of the investee in profit and loss, and the group’s share ofother comprehensive income of the investee in other comprehensive income. Dividends received or receivable from joint ventures are recognized as a reduction in the carrying amount of the investment.

321 CFS

When the group’s share of losses in an equity accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity. The Group assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof. (d) non-controlling Interest (Minority Shareholder) Government of India is the only Minority Shareholder in one of the Subsidiary of Air India Ltd. Since the Govt of India is the sole shareholder of Air India Ltd also, the Govt of India is not considered as a Minority Shareholder and hence the minority interest is not segregated and disclosed separately. (iii) Basis of Measurement The Consolidated Financial Statements have been prepared under the historical cost convention on accrual basis except for certain financial assets and liabilities which are measured at fair value or amortized cost at the end of each financial year. (iv) Critical Accounting Estimates /Judgments In preparing these Consolidated Financial 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 and 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. Significant areas of estimation and judgments (as stated in the respective Accounting Policies) that have the most significant effect on the Financial Statements are as follows: a) Impairment of Assets and Investment in Joint Venture b) Estimate of revenue recognition from “Forward Sales Account” c) Fair value of liability on account of Frequent Flyer Programme (FFP) d) 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. e) Basis of classification of a Property as Investment Property f) Basis of classification of Non-Current Assets held for sale g) Estimation of Costs of Re-delivery h) Recognition of Deferred Tax Assets i) Recognition and measurement of defined benefit obligations

322 CFS

j) Judgment required to ascertain lease classification k) Measurement of Fair Values and Expected Credit Loss (ECL) l) Judgment is required to ascertain whether it is probable or not that an outflow of resources embodying economic benefits will be required to settle the taxation disputes and legal claim. (v) Functional Currency Currency of the primary economic environment in which the Company operates (“the Functional Currency”) is Indian Rupee (Rs.) in which the Company primarily generates and expends cash.Accordingly, the Management has assessed its functional currency to be Indian Rupee (Rs.) The Stand-alone Financial Statements are presented in Indian Rupees (INR) which is Group’s Presentation and Functional currency and all amounts disclosed in the Financial Statements and Notes have been rounded off to the nearest Million (up to one decimal), unless otherwise stated. (vi) Operating cycle & Classification of Current & Non-Current Presentation of assets and liabilities in the consolidated financial statement has been made based on current / non-current classification provided under the Companies Act, 2013. The Group being in service sector, there is no specific 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 financial liabilities and assets. 3. Significant Accounting Policies : The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

I. Property, Plant and Equipment (PPE) a) Property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses, if any. b) Property, plant and equipment 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, up to the date of putting the concerned asset to its working condition for its intended use. c) Significant parts which meet the definition of property, plant and equipment (i.e. Aircraft Rotables, Repairables (with Serialized Control) including the major cost incurred on modernization / modification / conversion of aircraft and engines) have been capitalized as a separate component. d) Assets under leases, in respect of which substantially all the risks and rewards of ownership are transferred to the Group, are considered as ‘Finance Leases’ and are capitalized. e) All Revenue expenses directly attributable to ongoing projects are set apart as

323 CFS

expenses during construction and capitalized on the basis of value of work completed during the year in which the assets are put to use. f) Physical Verification of Assets is done on a rotational basis so that every asset is verified in block of two years and the discrepancies observed in the course of the verification adjusted in the year in which report is finalized. II. 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) On the basis of technical assessment, the useful life of B-777, B-787 and A-320 family aircraft (procured from 2006-07 onwards) are considered as 25 years (instead of the life of 20 years as prescribed under Schedule II of the Companies Act 2013) keeping a residual value of 5% of the original cost. c) In the case where life of the Property, plant and equipment, has not been prescribed under Schedule II of the Companies Act 2013 the same have been determined by technically qualified persons and approved by the Board of Directors keeping a residual value of 5% of the original cost as under : 1. Rotables: (i) Aircraft Rotables relating to Airbus family are depreciated over the residual average useful life of the aircraft fleet relating to the respective family and of the respective engineering base, from the relevant year of purchase. (ii) Aircraft Rotables relating to Boeing are depreciated over the residual average useful life of the related aircraft fleet from the relevant year of purchase. 2. Aircraft Repairables: Repairables which are serially controlled are treated as Property, Plant & Equipment and accordingly are amortized over a period of 10 years (in case of post migration) and 5 years (in case of pre-migration) from the date of its purchase unless scrapped earlier. d) In respect of operating leases of aircraft/engines in which the Group 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 flying hours. e) Major overhaul costs relating to engine and airframe are identified as separate components for owned aircrafts and aircrafts under finance lease and are depreciated over the expected lives between major overhauls. f) Cost incurred on major modifications/refurbishment, modernization/conversion carried

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to owned and leased assets are depreciated over the useful life/period of lease of the asset. g) In the case of AIATSL, assets of small value not exceeding INR 5,000/- in each case, are fully provided for in the year of purchase. h) Leasehold Property, Plant and Equipment (including land other than perpetual lease) is amortized over the period of lease. i) Kitchen utensils purchased for the first time for a new unit are written off equally in four years. Any additions in the subsequent years are written off in the year of purchase. j) Carpets purchased initially for a new unit/major renovation are capitalized as Fixed Assets in the year of purchase and depreciated on the Straight Line Method as specified in Para (a) above. Carpets purchased in the subsequent years are being written off as Soft furnishings in the year of purchase.

k) Heavy curtains are written off in the year of issue. l) In case of AIESL, Depreciation on addition to assets is provided for the full year in the year of acquisition,however no depreciation is provided in the year of disposal m) In case of AASL, Depreciation on Ground Support Equipment specific 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. III. Assets (Disposal Groups) Held for Sale and Discontinued Operations Assets included and identified for divestment purposes are classified 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 and are measured at the lower of carrying amount and fair value less costs to sell. The same are measured at the lower of carrying amount and fair value less cost to sell except for assets such as deferred tax assets, assets arising from employee benefits, financial assets which are specifically exempt from this requirement. No depreciation is provided, while the asset is classified as held for sale.

The assets held for sale and assets of a disposal group classified as held for sale are presented separately from the other assets in the Balance sheet and the liabilities of a disposal group classified as held for sale are presented separately from the other liabilities in theBalance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations. The results of discontinued operations are presented separately in the Statement of Profit and Loss."

IV. Investment Properties Investment Properties are properties held to earn rentals and / or for capital appreciation. 325 CFS

Investment properties are measured initially at cost including transaction cost, Subsequently, Investment properteis are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided as per Note No 3(II). Any gain or loss on disposal is recognized in Statement of Profit & Loss.

V. Intangible Assets i) 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. Intangible assets which have finite useful lives are amortized on straight line method over the estimated useful life, which is reviewed by the management every year i.e. a) Software of Passenger Services System, over 10 years, and b) Other software/website, over 5 years. ii) DGCA License- all expenses incurred including man power cost prior to three months from the date of obtaining license and directly attributable to DGCA License for CAR- 145 MRO with certification has been capitalized. VI. Capital work-in-progress Cost of property, plant and equipment including intangible assets not ready for use as at the reporting date are disclosed as capital work-in-progress.

VII. Leases (i) Finance lease a) A lease is classified as finance lease or operating lease at the inception date. Leases of property, plant and equipment that transfer to the Group substantially all of the risks and rewards of ownership are classified as finance lease. b) Assets held under finance 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. c) Minimum lease payments made under finance lease are apportioned between the finance costs and the reduction of the outstanding liability treated as loan. The finance 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 Group’s general policy on borrowing cost. (ii) Operating Lease a) Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased assets are classified as Operating Lease. b) Lease payments in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with the expected general inflation to

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compensate the lessors expected inflationary cost increases. Any change in the lease terms are accounted prospectively over the remaining term of lease. c) Contributions made to lessors on account of MaintenanceReserve for which, maintenance is expected to arise during the lease period is treated as Expense. d) The Group has in its fleet, aircrafts 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 Profit & 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. (iii) Sale and Lease Back (SLB)Transactions Profit or losses arise on sale at fair value and lease back transactions of asset resulting in an operating lease of such assets, are recognized immediately in the statement of Profit and Loss. Where the sale price is below fair value, any profits/ losses are immediately recognized in the Statement of Profit and Loss except wherehe loss is compensated by future lease payments at below market price. In such cases loss is deferred and amortized in proportion to the lease payments over the initial period for which the asset is expected to be used. In the case where the sale price is above fair value of the asset, the excess over fair value is amortized over the initial period of the lease period for which the asset is expected to be used.

VIII. 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). 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. b) Inventories are valued at lower of cost and Net Realizable Value ('NRV') except in respect of subsidiary AIESL which values its inventory at weighted average cost. 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) Expendables/consumables are charged off at the time of initial issue, except those meant for repairs of repairable items 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 five years (net of 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 Aircrafts.

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(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 five years. f) Spares retrieved from the cannibalization of the scrapped aircraft are accounted for at Rupee One. IX. Impairment of Non-Financial Assets The Group assesses at each Balance Sheet date whether there is any indication that carrying amount of its non- financial asset has been impaired. If any such indication exists, the provision for impairment is made in accordance with IND AS-36.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Units (CGUs). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

X. 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 are recognized in profit or loss on a systematic basis over the periods in which the Group 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 profit 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 profit or loss on a systematic basis over the expected useful life of the related assets.

XI. Revenue Recognition

Effective April 01, 2018, the Group has adopted Ind AS 115 Revenue from Contracts with customers under the cumulative effect method and therefore the comparatives have not been retrospectively adjusted. The Standard is applied to contracts that remain in force as at April 01, 2018. The application of the standard does not have any significant Impact on the retained earnings as at April 01, 2018 or on these financial statements.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is

328 CFS being made and Revenue is recorded when the recovery of consideration is probable and determinable. a) The Group’s revenue primarily derives from transportation services for Passengers,Cargo and Mail Revenue. Revenue is recognized when the transportation service has been provided. Passengers tickets paid for in advance of transportation are recognized, net of discounts, as deferred revenue on ticket sales in current liabilities until the customer has flown. At the end of each financial year, unutilised balance in Forward sales for more than two years is fully recognized as Revenue and for balance amount Revenue is recognized at a certain estimated percentage of the value of tickets/airway bills sold based on available historical statistical data.The Group considers whether it is an agent or a principal in relation to transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. Other operating revenues arerecognized as the related performance obligation is satisfied (over the time) using an appropriate methodology which reflects the activity that has been undertaken to satisfy the related obligation. b) Frequent FlyerProgramme : The Group operates Frequent Flyer Programme that provides loyalty points based on accumulated mileage points to those who have joined this facility. The revenue recognized when the transportation service is provided is reduced by the estimated fair value of the mileage points issued in the year such loyalty points are earned. The fair value attributed to the awarded loyalty points is treated as a deferred liability and recognized as revenue on redemption of the points.The fair value of the loyalty points is computed taking into account the proportion of miles that are expected to lapse i.e. breakage. The fair value is calculated on the basis of past redemption patterns, weighted for the various geographic regions and booking classes. c) Loss or gain on reissue/refund/ involuntary transfer of passengers to other carriers is also deducted or included, as the case may be, in the transport revenue. d) Blocked Space arrangements/Code share revenue/expenditure is recognized on an actual basis, based on uplift data received from the code share partners. Wherever details from code share partners are not available,revenue/expenditure is booked to the extent of documents/information received, and adjustments, if any,required are carried out at the time of availability of such information. e) In case of AIESL, In the case of contract based on Block Hours flown by Aircraft and Aircraft Engines, the revenue is recognized on the basis of actual Block Hours flown. In case of other contracts for Line Maintenance services, revenue is being recognized based on number of flights handled. Revenue from the training services is recognized as and when fees are received. f) In case of HCI,

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Rooms, Food and Beverage & Banquets: Revenue is recognized at the transaction price that is allocated to the performance obligation. Revenue includes room revenue, food and beverage sale and banquet services which is recognized once the rooms are occupied, food and beverages are sold and banquet services have been provided as per the contract with the customer. Credit notes received from vendors are recognized on acceptance of claim/receipt of credit note. Space and shop rentals: Rentals basically consists of rental revenue earned from letting of spaces for retails and office at the properties. Theses contacts for rentals are generally of short terms in nature. Revenue is recognized in the period in which services are being rendered. Other allied services: In relation to laundry income, communication income, health, club income and other allied services, the revenue has been recognized by reference to the time of service rendered. Gain or loss arising out of sale/scrap of PPE over the net depreciated value is taken to Statement of Profit & Loss as Non-Operating Revenue or Expenses. g) In case of AIATSL,Ground Handling services are recognized when the services are provided. Un-billed services at the end of each financial year, based on available data, are estimated and are recognized as Revenue. h) In case of AASL, 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. i) 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. j) Dividend is recognized as, income, if the right to receive is established before the close of the year. k) The claims receivable from Insurance Company are accounted for on the acceptance by the Insurance Company of such claims. l) Warranty claims/credit notes received from vendors are recognized on acceptance of claim/ receipt of credit note. m) Other Operating Revenue is recognized when goods are delivered or services are rendered. n) Gain or loss arising out of sale/scrap of PPE including aircraft over the net depreciated value is taken to Statement of Profit & Loss as Non-Operating Revenue or Expenses. o) 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/ Claims for amounts payable towards IATA dues are recognized to the extent of claims/ invoices received.

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XII. manufacturer’s Credit (Cash & Non Cash Incentives) Manufacturer’s 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.

XIII. 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. 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. XIV. Foreign Currency Transactions The management has determined the currency of the primary economic environment in which the company operates i.e. functional currency to be Indian Rupees. The financial 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 ofrealization/settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognized in the Statement of Profit 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 financial 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.

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XV. Employee Benefits The Retirement Benefits to the employees comprise of Defined Contribution Plans and Defined Benefit Plans.

a) Defined Contribution Plans consist of contributions to Employees Provident Fund and Employees State Insurance Scheme. The Group 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, and Post Retirement Medical Benefits and other benefits. The liability for these benefits except for (i) below is actuarially determined under the Projected Unit Credit Method at the year end as per Indian Laws. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit 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 defined benefit obligation resulting from settlement or curtailments are recognized immediately in Statement of Profit and Loss as past service cost. Liability for Gratuity,Pension and other retirement Benefits for staff directly recruited at foreign stations is provided in compliance with local laws prevailing in the respective countries based on available information as at the year end. c) Other Long-Term Employee Benefits Benefits in the form of Leave Encashment are accounted as other long-term employee benefits. The Group’s net obligation in respect of Leave Encashment is the amountof benefit to be settled in future, that employees have earned in return for their service in the current and previous years. The benefit 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-measurements arerecognized in Statement of Profit and Loss in the period in which they arise. d) Short Term Benefits : Short Term Employee Benefits are accounted for in the period during which the services have been rendered. XVI. Taxes on Income : (i) Current Tax Current tax comprises the expected tax payable or receivable on the taxable income or 332 CFS

loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously. (ii) Deferred Tax Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial 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 deductible temporary differences to the extent that is probable that future taxable profits 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 theextent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assetto be recovered. Deferred tax is measured at the tax rates that are expected to apply to the period when the assets arerealized or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group 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. Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint venture where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint venture where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised. (iii) Minimum Alternate Tax Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company, AIEL recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried

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forward. In such year the Company recognizes MAT credit as a deferred tax asset. XVII. 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 outflow of resources. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. The expense relating to a provision is presented in the statement of profit 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 confirmed by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Group. c) Contingent assets are possible assets that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent asset is disclosed, when an inflow of economic benefits is probable. XVIII. 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 insignificant risk of changes in value.

XIX. Earnings per Share The Group 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 profit 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 profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.

XX. Fair Value Measurement The Group measures financial instruments and specific 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 financial statements are categorized within the fair value hierarchy, described as below, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

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Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group 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.

XXI. Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

A. Financial Assets (i) Classification The Group classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset. (ii) Initial recognition and measurement All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset. (iii) Subsequent measurement For purposes of subsequent measurement financial assets are classified in below categories: (a) Financial assets carried at amortized cost: A financial asset other than derivatives and specific 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 flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. (b) Financial assets at fair value through other comprehensive income: A financial asset comprising specific 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 flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable 335 CFS

election for its investments which are classified 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 financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss. (iv) De-recognition A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset (v) Impairment of other financial assets The Group assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc. (vi) Write-off The gross carrying amount of a financial 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 Group determines that the counterparty does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due. B. Financial Liabilities (i) Initial recognition and measurement All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments. (ii) Classification The Group classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value. (iii) Subsequent measurement The measurement of financial liabilities depends on their classification, as described below. a) Financial liabilities at amortized cost: After initial recognition, interest-bearing loans and borrowings are subsequently 336 CFS

measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in Statement of Profit 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 finance costs in the Statement of Profit and Loss. b) Financial liabilities at fair value through Statement of Profit and Loss: Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified 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 Profit and Loss. (iv) De-recognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. (v) Offsetting of financial instruments Financial assets and financial 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 sell on a net basis, to realize the assets and sell the liabilities simultaneously. XXII. Threshold Limits : In case of Holding Company : (Rupees in Million) No Threshold Items Threshold Value i) Fair Valuation of Financial Instruments 50.00 ii) Prior Period Items -Recognition based on individual limits 25.00 -Restatement based on overall limits 1% of Total Revenue of Previous FY

In case of AIESL, the prior period expenses/revenue below Rs. 50 million are accounted for in the respective head of income/ expenses of the year.

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XXIII. Recent Accounting Pronouncements i) Ind AS 116 - Leases On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing Standard Ind AS 17 Leases, and related interpretations. The standard set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e. the lessee and the lessor. Ind AS 116 introduces a singlelessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. A lessee recognises right-of-use asset representing its right to use theunderlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The new standard is mandatory for financial years commencing on or after 1 April 2019. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Group is in the process of assessing the detailed impact of Ind AS 116. Presently, the Group is not able to reasonably estimate the impact that application of Ind AS 116 is expected to have on its financial statements. ii) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments : On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, which specifies that the amendment is tobe applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, whenthere is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement,to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the entity isto assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Group does not expect any significant impact of the amendment on its financial statements. iii) Other Amendments : Amendments to Ind AS 12- Income Tax, Ind AS 23- Borrowing costs, Ind AS 28- Long term interest in Associates and Joint ventures, Ind AS 103- Business combinations, Ind AS 111, Joint arrangements, Ind AS 19 – Plan Amendment, Curtailment or Settlement and Ind AS 109 – Prepayment Features with Negative Compensationare either not applicable to the Group or the Group does not expect any material impact on its financial statements.

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NOTE “1” : (Rupees in Million) Sl. Particulars GROSS BLOCK DEPRECIATION NET BLOCK No. As at Additions/ Deductions As at Upto For the Deductions Upto As at As at April 01, Reclassifi- / * Reclas- March April 01, year / * Reclas- March March 31, March 2018 cation sification 31, 2019 2018 sification 31, 2019 2019 31, 2018 PROPERTY,PLANT & EQUIPMENT A. LAND & BUILDINGS 1. Land-Freehold 5,725.4 43.6 2,775.0 2,994.0 - - - - 2,994.0 5,725.4 2. Land-Leasehold 1,839.8 - 1,195.9 643.9 - - - - 643.9 1,839.8 3. Buildings 9,775.7 22.0 1,075.0 8,722.7 282.6 508.9 245.3 546.2 8,176.5 9,493.1 SUB TOTAL "A" 17,340.9 65.6 5,045.9 12,360.6 282.6 508.9 245.3 546.2 11,814.4 17,058.3 B. AIRCRAFT FLEET, ROTABLES & REPAIRABLES 1. Airframes Owned 190,195.6 3,623.4 836.6 192,982.4 17,341.3 9,246.6 644.1 25,943.8 167,038.6 172,854.3 2. Aero Engines & Power Plants (a) Owned-Fixed Cost 69,119.2 6,129.3 2,833.3 72,415.2 5,445.6 3,182.7 - 8,628.3 63,786.9 63,673.6 (b) Owned-Variable Cost (Component) 16,259.7 1,200.6 628.7 16,831.6 4,889.7 1,821.0 235.9 6,474.8 10,356.8 11,370.0 (c) Owned-Repair Cost 5,282.7 2,321.2 - 7,603.9 2,054.9 1,417.8 - 3,472.7 4,131.2 3,227.8 3. Simulators & Link Trainers 3,034.1 - - 3,034.1 150.6 179.8 - 330.4 2,703.7 2,883.5 4. Airframe Rotables 10,585.7 1,137.9 158.3 11,565.3 1,119.4 637.8 82.8 1,674.4 9,890.9 9,466.3 5. Aero-Engine Rotables 883.8 - 1.5 882.3 136.5 66.6 0.2 202.9 679.4 747.3 6. Aircraft Repairables 10,419.1 1,231.2 203.8 11,446.5 2,138.8 1,063.7 136.2 3,066.3 8,380.2 8,280.3 SUB TOTAL "B" 305,779.9 15,643.6 4,662.2 316,761.3 33,276.8 17,616.0 1,099.2 49,793.6 266,967.7 272,503.1 C. OTHER- FIXED ASSETS 1. Workshop Equipment, Instruments, 5,972.3 965.8 1,654.0 5,284.1 1,172.8 660.0 890.5 942.3 4,341.8 4,799.5 Plant & Machinery and Vehicles 2. Ground Support & Ramp Equipment 3,485.3 191.8 3,248.0 429.1 684.2 344.5 724.3 304.4 124.7 2,801.1 3. Furniture & Fixtures 243.6 8.6 23.9 228.3 68.5 25.6 7.5 86.6 141.7 175.1 4. Office Appliances & Equipment 212.5 6.8 46.3 173.0 60.6 39.5 24.2 75.9 97.1 151.9 5. Computer System 353.1 42.5 36.7 358.9 87.3 70.7 16.1 141.9 217.0 265.8 6. Electrical Fittings & Installations 495.9 1.5 8.5 488.9 80.6 57.5 3.4 134.7 354.2 415.3 7. Object D'art (Net Block Rs.39,969.43) 0.6 - - 0.6 0.6 - - 0.6 - - SUB TOTAL "C" 10,763.3 1,217.0 5,017.4 6,962.9 2,154.6 1,197.8 1,666.0 1,686.4 5,276.5 8,608.7 TOTAL PROPERTY, PLANT & EQUIPMENT 333,884.1 16,926.2 14,725.5 336,084.8 35,714.0 19,322.7 3,010.5 2,026.2 284,058.6 98,170.1 INVESTMENT PROPERTY 1. Investment Property Land - Freehold - 191.7 - 191.7 - - - - 191.7 - 2. Investment Property Land - Leasehold 4,213.0 - 108.4 4,104.6 - - - - 4,104.6 4,213.0 3. Investment Property - Buildings 6,591.4 - 6,489.0 102.4 884.8 59.6 923.4 21.0 81.4 5,706.6 TOTAL FOR INVESTMENT PROPERTY 10,804.4 191.7 6,597.4 4,398.7 884.8 59.6 923.4 21.0 4,377.7 9,919.6 INTANGIBLE ASSETS : A. COMPUTER SOFTWARE 886.4 64.9 - 951.3 612.7 143.9 - 756.6 194.7 273.7 B. OTHERS 3,097.5 - 2,713.9 383.6 255.8 127.8 - 383.6 - 2,841.7 TOTAL FOR INTANGIBLE ASSETS 3,983.9 64.9 2,713.9 1,334.9 868.5 271.7 - 1,140.2 194.7 3,115.4 TOTAL ASSETS 348,672.4 17,182.8 24,036.8 341,818.4 37,467.3 19,654.0 3,933.9 53,187.4 288,631.0 311,205.1 Capital Work-in-Progress 814.9 519.7 512.5 822.1 - - - - 822.1 814.9 Intangible Assets under Development 82.9 - 70.4 12.5 - - - - 12.5 82.9 GRAND TOTAL 349,570.2 17,702.5 24,619.7 342,653.0 37,467.3 19,654.0 3,933.9 53,187.4 289,465.6 312,102.9

1 During the year,the Company has during the year capitalized translation difference of Rs.4,047.0 Million (Previous Year : Rs 244.4 Million) arising on settlement and reporting of long term monetary items. Additions to “Aircraft Fleet, Rotables & Repairables” includes Exchange Rate Fluctuations (Net of Debit & Credit) on underlying loans in foreign currency : Rs. 4,521.9 Million (Previous Year: Rs.263.8 Million). 2 “Aircraft Fleet, Rotables & Repairables” includes 34 Aircraft - {One B777-300ER, Six B787-800, Four B747-400, Five A-320, Ten A319 and Eight A-321), 22 Spare Engines ( includes 10CFM-5B, 2 CFM Leap Engines) and 4 Spare APUs (Previous 39 Aircraft (one B777-300ER, Six B787-800, Five B 747-400, Nine A-319, Ten A-320 and Eight A-321) 20 Spare Engines & 4 APUs) owned by Air India Limited. 3 “Aircraft Fleet, Rotables & Repairables” includes 46 Aircraft - {Three B777-200LR, Twelve B777-300ER, Nine A319, Twelve A321 and 10B 737-800 Aircrafts) (Previous 54 Aircraft- (Three B77-200LR, Twelve B777-300ER, Ten A-319, Twelve A-321 & 17 B737-800)) & 5 GE Spare Engines (Previous year 5 Ge Spare Engines) and Registration of these 36 Aircraft and 5 Spare Engines continues to be in the name of SPV Company for which beneficial ownership is with Group Companies (Refer Note 53(i)) 4 Borrowing costs capitalized during the year are Rs.21.0 Million (Previous Year : Rs.1,636.8 Million) 5 Depreciation includes debit of Rs.469.5 Million (Previous Year : Debit of Rs.478.4 Million) to Capital Reserve. 6 As per Accounting policy, the company has carried out impairment of assets as required under Ins AS 36. 7 Special tools included in Workshop Equipment, Instrument Machinery & Plants and Other Fixed Assets are being Depreciated at year wise total Block Amount. 8 Leasehold land on long term basis with the option to extend the same are identified as perpetual lease and are not amortised during the period of lease. 9 “Intangible Asset - Others” represents Membership Fees for joining Star Alliance. 10 Object D are reflected in Property, Plant & Equipment Note as a separate line item are old assets and have been fully depreciated appearing at nil value(Rs.1) 11 The assets from “Airframes” having an aggregate written down value of Rs. 32.6 Million have been reclassified as “Assets Held for Sale” which is valued at their respective written down value or net realisable value whichever is lower i.e Rs. 1.4 million. Accordingly, the impairment loss of Rs. 31.2 Million is charged to Profit and Loss. * Property, Plant & Equipment : Deduction to the Gross Block includes Rs.5,390.3 Million and Deduction to Accumulated Depreciation includes Rs.1843.0 Million and Intangible Assets : Deduction to the Gross Block includes Rs.2,713.9 Million transferred to Assets Held for Sale for Disposal Group (Refer Note 10.1)

339 CFS

NOTE “1” : (Rupees in Million) Sl. Particulars GROSS BLOCK DEPRECIATION NET BLOCK No. As at Additions/ Deductions As at Upto For the Deductions Upto As at As at April 01, Reclassifi- / Reclassifi- March 31, April 01, year / Reclassi- March March 31, March 2017 cation cation 2018 2017 fication 31, 2018 2018 31, 2017 PROPERTY,PLANT & EQUIPMENT A. LAND & BUILDINGS 1. Land-Freehold 6,986.3 - 1,260.9 5,725.4 - 5,725.4 6,986.3 2. Land-Leasehold 54,523.8 52,684.0 1,839.8 75.6 75.6 - 1,839.8 54,448.2 3. Buildings 10,145.6 306.1 676.0 9,775.7 262.3 737.7 717.4 282.6 9,493.1 9,883.3 SUB TOTAL "A" 71,655.7 306.1 54,620.9 17,340.9 337.9 737.7 793.0 282.6 17,058.3 71,317.8 B. AIRCRAFT FLEET, ROTABLES & REPAIRABLES 1. Airframes Owned and self Operated 157,437.9 32,908.7 151.0 190,195.6 8,328.4 9,012.9 - 17,341.3 172,854.3 149,109.5 2. Aero Engines & Power Plants (a) Owned-Fixed Cost 57,785.6 14,452.5 65.7 72,172.4 2,736.5 3,163.8 - 5,900.3 66,272.1 55,049.1 (b) Owned-Variable Cost (Component) 6,704.2 1,495.1 1,395.5 6,803.8 1,753.8 1,636.8 - 3,390.6 3,413.2 4,950.4 (c) Owned-Repair Cost 9,427.3 1,755.2 (502.9) 11,685.4 1,606.0 1,655.7 162.4 3,099.3 8,586.1 7,872.3 3. Simulators & Link Trainers 2,553.3 658.9 178.1 3,034.1 152.9 161.3 163.6 150.6 2,883.5 2,400.4 4. Airframe Rotables 9,033.4 1,552.3 - 10,585.7 577.8 544.0 2.4 1,119.4 9,466.3 8,456.9 5. Aero-Engine Rotables 883.8 - - 883.8 69.6 66.9 - 136.5 747.3 812.8 6. Aircraft Repairables 8,846.1 1,957.1 384.1 10,419.1 1,124.4 1,324.8 310.4 2,138.8 8,280.3 7,721.7 SUB TOTAL "B" 252,671.6 54,779.8 1,671.5 305,779.9 16,349.4 17,566.2 638.8 33,276.8 272,503.1 236,373.1 C. OTHER- FIXED ASSETS 1. Workshop Equipment, Instruments, 5,147.9 850.6 26.2 5,972.3 678.9 615.3 121.4 1,172.8 4,799.5 4,384.3 Plant & Machinery and Vehicles 2. Ground Support & Ramp Equipment 2,398.1 1,171.8 84.6 3,485.3 420.0 342.5 78.3 684.2 2,801.1 1,978.1 3. Furniture & Fixtures 221.9 23.3 1.6 243.6 40.5 28.5 0.5 68.5 175.1 181.4 4. Vehicles - - - 84.7 5. Office Appliances & Equipment 173.4 44.7 5.6 212.5 27.9 32.8 0.1 60.6 151.9 145.5 6. Computer System 265.9 89.1 1.9 353.1 40.6 48.2 1.5 87.3 265.8 225.3 7. Electrical Fittings & Installations 518.3 2.4 24.8 495.9 64.3 66.6 50.3 80.6 415.3 454.0 8. Object D'art (Net Block Rs.39,969.43) 0.6 0.6 0.6 0.6 0.0 - SUB TOTAL "C" 8,726.1 2,181.9 144.7 10,763.3 1,272.8 1,133.9 252.1 2,154.6 8,608.7 7,453.3 TOTAL PROPERTY, PLANT & EQUIPMENT 333,053.4 57,267.8 56,437.1 333,884.1 17,960.1 19,437.8 1,683.9 35,714.0 298,170.1 315,144.2 INVESTMENT PROPERTY 1. Investment Property Land - Freehold ------2. Investment Property Land - Leasehold 8,983.7 - 4,770.7 4,213.0 - - - - 4,213.0 8,983.7 3. Investment Property - Buildings 6,568.1 23.3 6,591.4 439.4 445.4 884.8 5,706.6 6,128.7 TOTAL FOR INVESTMENT PROPERTY 15,551.8 23.3 4,770.7 10,804.4 439.4 445.4 - 884.8 9,919.6 15,112.4 INTANGIBLE ASSETS : A. COMPUTER SOFTWARE 870.2 16.2 - 886.4 496.5 116.2 - 612.7 273.7 373.7 B. OTHERS 3,097.5 3,097.5 127.9 127.9 - 255.8 2,841.7 2,969.6 TOTAL FOR INTANGIBLE ASSETS 3,967.7 16.2 - 3,983.9 624.4 244.1 - 868.5 3,115.4 3,343.3 TOTAL ASSETS 352,572.9 57,307.3 61,207.8 348,672.4 19,023.9 20,127.3 1,683.9 37,467.3 311,205.1 333,599.9 Capital Work-in-Progress 2,322.2 364.0 1,871.3 814.9 - - - - 814.9 2,774.2 Intangible Assets under Development 13.5 69.4 - 82.9 - - - - 82.9 13.5 GRAND TOTAL 354,908.6 57,740.7 63,079.1 349,570.2 19,023.9 20,127.3 1,683.9 37,467.3 312,102.9 336,387.6

1 During the year, the Company has capitalized translation difference of Rs.244.4 Million (Previous Year : Rs 1,620.0 Million) arising on settlement and reporting of long term monetary items. Additions to “Aircraft Fleet, Rotables & Repairables” includes Exchange Rate Fluctuations (Net of Debit & Credit) on underlying loans in foreign currency : Rs. 263.8 Million (Previous Year: Rs.2,307.1 Million). 2 “Aircraft Fleet, Rotables & Repairables” includes 39 Aircraft - {One B777-200LR, Six B787-800, Five B747-400, Nine A-319, Ten A320 and Eight A-321), 20 Spare Engines and 4 Spare APUs owned by Air India Limited. 3 “Aircraft Fleet, Rotables & Repairables” includes 54 Aircraft - {Three B777-200LR, Twelve B777-300ER, Ten A-319, Twelve A-321 and Seventeen B737-800) (Previous : 54 Aircraft - ( Three B777-200LR, Twelve B777-300ER, Ten A-319, Twelve A-321 and Seveteen B737-800) & 5 GE Spare Engines (Previous 5 GE Spare Engines) and Registration of these 37 Aircrafts & 5 Spare Engines continues to be in the name of the SPV Company for which beneficial ownership is with Group Companies (Refer Note 46(i)) 4 Borrowing costs capitalized during the year are Rs.1,636.8 Million (Previous Year : Rs.82.5 Million) 5 Depreciation includes debit of Rs.478.4 Million (Previous Year : Debit of Rs.329.7 Million) to Capital Reserve. 6 “Intangible Asset - Others” represents Membership Fees for joining Star Alliance. 7 Special tools included in Workshop Equipment, Instrument Machinery & Plants and Other Fixed Assets are being Depreciated at year wise total Block Amount. 8 Three old classic A320 Aircraft (VT-EPO, VT-EPL and VT-EPD), two boeing 737 (VT-EGJ and VT-EGI), 18V2500 Engines, one Boeing JT8D Engine and 10A320 Classic APU with WDV of Rs. 149.7 Million removed from Surplus Assets on sale and a loss of Rs. 4.99 million booked during the year. 9 As per IND AS 16, Rs.NIL Million (Previous Year 382.4 Million) has been trasferred from Engine fixed cost to Engine Variable cost. The depreciation charged on the Engine Variable Component is Rs. 969.5 Million (Previous Year Rs.1,478.3 million)

340 CFS

NOTE “2” : INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 A EQUITY INSTRUMENTS - UNQUOTED IN JOINT VENTURE 40,424,975 Equity Shares (Previous Year : 40,424,975 Equity 2,212.4 2,015.7 Shares) of Rs.10 each fully paid up in Air India SATS Airport Services Private Ltd. (40,419,975 Equity Shares of Rs.10 each issued at a premium of Rs.0.79 per share)

TOTAL INVESTMENT UNDER EQUITY METHOD 2,212.4 2,015.7

341 CFS

NOTE “2.1” : NON-CURRENT INVESTMENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 A INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI) 1.1 EQUITY INSTRUMENTS (QUOTED) 375,407 Equity Shares (Previous Year : 375,407 Equity Shares) of EUR 0.48 422.8 418.2 each fully paid up in Orange S.A. (formerly known as France Telecom ) SUB TOTAL 422.8 418.2 1.2 WITH OTHERS / STRUCTURED ENTITIES TRADE INVESTMENTS i) 2,617,098 Equity Shares (Previous Year : 2,617,098 Equity Shares) of MAR 10 131.4 105.3 each fully paid up in Air Mauritius Ltd. # ii) 2,301,244 Equity Shares (Previous Year : 2,301,244 Equity Shares) of MAR 10 45.5 44.8 each fully paid up in Air Mauritius Holding Ltd. # iii) 12,500,000 Equity Shares (Previous Year : 12,500,000 Equity Shares) of Rs. 10 451.2 434.3 each fully paid up in Cochin International Airport Limited. # (Includes 2,500,000 Equity Shares of Rs.10 issued and subscribed at a premium of Rs.40 per share) iv) 277 Equity Shares (Previous Year : 266 Equity Shares) of EUR 5.00 ^ each fully 0.1 0.1 paid up in SITA (Societe Internationale de Telecommunications Aeronautiques). (11 Shares allotted during the year) v) 890,139 Depository Certificates of SITA Information Network Computing N.V. ^ 42.7 42.7 (Previous Year : 890139) vi) 2348 class B Shares (Previous Year : 1,270 Shares) of BHT 100 ^ each fully 0.4 0.2 paid up in Aeronautical Radio of Thailand Ltd. (1078 Shares allotted during the year) vii) 50 Equity Shares (Previous Year : 50 Equity Shares) of EUR 152.45 each ^ fully 0.4 0.4 paid up in Association Sportive Du Golf Isabella. SUB TOTAL 671.7 627.8 1.3 DEBENTURES 6% Debenture Bonds of Banco De Roma face value EUR 15.49 ^ guaran- ** 0.0 ** 0.0 teed by the Government of Italy (Deposited with Civil Aviation Department, Italy) (**Rs.3,057.69) SUB TOTAL - - TOTAL INVESTMENTS AT FAIR VALUE THROUGH OTHER 1,094.5 1,046.0 COMPREHENSIVE INCOME (FVTOCI)

Aggregate amount of unquoted investments (including investments accounted for 2,884.1 2,643.5 using Equity Method) Aggregate provision for diminution in value of investments Aggregate amount of quoted investments (Market value : Rs.422.8 Million 422.8 418.2 (Previous Year : Rs.418.2 Million)) (Equivalent to EUR 5.5 Million (Previous Year : EUR 5.2 Million))

# Fair valuation of Investments carried out at book value based on latest available Audited Financial Statements.

^ Investments carried at cost.

342 CFS

NOTE “3” : TRADE RECEIVABLES (Rupees in Million) Particulars Non-Current Current As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018

Considered Good - Unsecured * - - 20,303.3 21,325.2 Trade Receivables having significant increase - - 1,389.6 1,265.4 in credit risk Trade Receivables - Credit Impaired 9,399.7 9,169.7 - - 9,399.7 9,169.7 21,692.9 22,590.6 Less : Allowance for Significant increase in - - 1,389.6 1,265.4 credit risk Less : Allowance for Credit Impaired 9,399.7 9,169.7 - - TOTAL - - 20,303.3 21,325.2

* Trade Receivables amounting to Rs. 447.3 Million (Previous Year : Rs.70.0 Million ) are backed by Bank Guarantees.

NOTE “4” : LOANS (Rupees in Million) Particulars Non-Current Current As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018 Security Deposits Considered Good - Unsecured 3,478.2 3,197.7 174.3 229.3 Credit Impaired 42.4 42.9 - - 3,520.6 3,240.6 174.3 229.3 Less : Allowance for Credit Impaired 42.4 42.9 - - Deposits 3,478.2 3,197.7 174.3 229.3 TOTAL 3,478.2 3,197.7 174.3 229.3

343 CFS

NOTE “5” : OTHER FINANCIAL ASSETS (Rupees in Million) Particulars Non-Current Current As at As at As at As at March March March March 31, 2019 31, 2018 31, 2019 31, 2018 A Advance Recoverable from Parties Unsecured Considered Good - - 835.8 1,528.3 Unsecured Considered Doubtful 68.1 201.1 - - 68.1 201.1 835.8 1,528.3 Less : Allowance for Doubtful Advances 68.1 201.1 - - (A) - - 835.8 1,528.3 B Advance Recoverable from Employees Unsecured Advances Considered Good 117.0 73.3 592.0 501.7 Unsecured Considered Doubtful 10.8 16.0 - 5.5 127.8 89.3 592.0 507.2 Less : Allowance for Doubtful Advances 10.8 16.0 - 5.5 (B) 117.0 73.3 592.0 501.7 C Advance to Subsidiary Companies Unsecured Considered Good - - - - Unsecured Considered Doubtful ------Less : Allowance for Doubtful Advances - - - - (C) - - - - D Deposits-Others (having maturity of more than 434.7 1,416.0 - 15.6 12 months) Less : Allowance for Doubtful Deposits 0.1 0.1 - - (D) 434.6 1,415.9 - 15.6 E Interest Accrued on i) Fixed Deposits 61.2 42.4 39.4 30.2 ii) Loan to Employees 1.4 2.6 4.7 5.5 (E) 62.6 45.0 44.1 35.7 F Other Non-Trade Receivables Unsecured Considered Good - - 2,043.3 1,144.8 Other Non Trade Receivables- Credit Impaired 2,653.6 2,043.1 - - 2,653.6 2,043.1 2,043.3 1,144.8 Less : Allowance for Credit Impaired 2,653.6 2,043.1 - - (F) - - 2,043.3 1,144.8 TOTAL 614.2 1,534.2 3,515.2 3,226.1

344 CFS

NOTE “6” : OTHER NON FINANCIAL ASSETS (Rupees in Million) Particulars Non Current Current As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018 Capital Advances Unsecured Considered Good 126.7 199.2 - - Doubtful 28.7 7.6 - - 155.4 206.8 - - Less : Allowance for Doubtful Advances 28.7 7.6 - - (A) 126.7 199.2 - - Advances other than Capital Advance Unsecured Considered Good 12.6 276.1 6,046.7 6,735.3 Doubtful 583.2 215.3 - - 595.8 491.4 6,046.7 6,735.3 Less : Allowance for Doubtful Advances 583.2 215.3 - - (B) 12.6 276.1 6,046.7 6,735.3 Non-Trade Receivables Unsecured Considered Good - - 1,801.5 9,058.6 Doubtful 149.3 135.1 - - 149.3 135.1 1,801.5 9,058.6 Less : Allowance for Doubtful Non- Trade Receivables 149.3 135.1 - - (C) - - 1,801.5 9,058.6 Other Advances Unsecured Advances Considered Good Prepaid Expenses 5,798.4 5,794.7 2,408.7 1,458.8 Balances with Statutory / Government Authorities - 7.7 5,271.4 5,293.9 (D) 5,798.4 5,802.4 7,680.1 6,752.7 TOTAL (A + B + C + D ) 5,937.7 6,277.7 15,528.3 22,546.6

NOTE “7” : INCOME TAX ASSETS NET OF PROVISION (Rupees in Million) Particulars Non Current Current As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018 Advance Payment of Income Tax and TDS 2,264.1 3,490.1 1,470.8 888.8 (net of provision for taxation) TOTAL 2,264.1 3,490.1 1,470.8 888.8

345 CFS

NOTE “8” : INVENTORIES (As taken, valued & certified by the Management) (Rupees in Million) Particulars As at March As at March 31, 31, 2019 2018 Stores and Spare Parts * 19,308.3 21,454.8 Loose Tools 52.4 492.8 19,360.7 21,947.6 Less : Provision for Obsolescence / Inventory Reconciliation 8,719.8 9,345.4 10,640.9 12,602.2 Goods-in-Transit 69.0 61.2 TOTAL 10,709.9 12,663.4

* Stores and Spare Parts includes an amount of Rs.255.0 Million (Previous Year : Rs. 308.3 Million) with third party for repair work for Air India Ltd.

NOTE : “9” : CASH AND EQUIVALENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 Cash and Cash Equivalents 1. Balances with Banks : a) In Current Accounts 2,425.6 2,409.8 b) In Deposit Accounts (Maturity less than 3 months) 726.2 703.0 2. Cheques, Drafts on Hand 28.3 56.3 3. Cash on Hand (as certified) 24.4 37.3 TOTAL 3,204.5 3,206.4

NOTE : “10” : BANK BALANCE OTHER THAN CASH AND CASH EQUIVALENTS (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 1. Margin money deposits 4,534.0 4,396.1 2 Fixed Deposits - Others (More than 3 months but Less than 1,664.8 1,422.3 12 Months) TOTAL 6,198.8 5,818.4

346 CFS

NOTE “10.1” A : ASSETS HELD FOR SALE (Rupees in Million) Particulars As at March 31, 2019 As at March 31, 2018 1. Properties * 68,066.3 58,223.8 2. Others (net of provision) ** 35,550.1 29,694.5 TOTAL 103,616.4 87,918.3

* Includes properties transferred from Investment Property during the year amounting to Rs. 6,583.7 Million

** Others includes 2 B777-300 SESF aircraft along with one Spare Engine and QEC Kit amounting to Rs.35,223.6 Million (Previous Year : Rs.29,674.0 Million) (Refer Note 32(b)) B : ASSETS INCLUDED IN DISPOSAL GROUP HELD FOR SALE (Refer Note 33(c))

Particulars As at March 31, 2019 As at March 31, 2018 Non-current Assets (i) Property, Plant & Equipment 3,547.3 - (ii) Capital Work-in-Progress 2.4 - (iii) Intangible Assets 2,713.9 - (iv) Financial Assets: a) Loans 8.2 - b) Others 1,096.5 - (v) Income Tax Assets (Net) 339.8 - (vi) Deferred Tax Assets (net) 1,077.7 - (vii)Other Non Current Assets 7.7 - TOTAL (I) 8,793.5 - Current Assets i) Inventories 957.5 - ii) Financial Assets: a) Trade Receivables 4,352.4 - b) Cash and Cash Equivalents 347.1 c) Bank Balance other than (b) above 305.1 d) Loans 178.5 - e) Others 452.4 iii) Income Tax Assets 895.9 - iv) Other Current Assets 647.4 - TOTAL (II) 8,136.3 - TOTAL (I + II) 16,929.8 - TOTAL - (A + B) 120,546.2 87,918.3

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(Number of Shares in Million) (Share Value Rupees in Million) Particulars 2018-19 2017-18 2018-19 2017-18

Equity Shares at the beginning of the year 28,690.21 26,753.00 286,902.1 267,530.0 Add : Equity Shares Allotted during the year 3,975.00 1,937.21 39,750.0 19,372.1 Equity Shares at the end of the year 32,665.21 28,690.21 326,652.1 286,902.1 ii) Terms/rights attached to equity shares : The Company has single class of shares i.e. Equity Shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after all the creditors have been paid. The distribution will be in proportion to the number of equity shares held by the shareholders. iii) Share Holding Pattern : The Company is a Government Company with 100% shares held by the President of India and his nominees, through administrative control of Ministry of Civil Aviation.

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NOTE “12” : OTHER EQUITY (Rupees in Million) Particulars As at March As at March 31, 2019 31, 2018 1. Share Application money pending allotment * Balance as per Last Balance Sheet - 1,372.1 Add : Additions during the year - - - 1,372.1 Less : Share Alloted during the year - 1,372.1 - - 2. CAPITAL RESERVE Balance as per Last Balance Sheet 7,144.6 7,475.6 Add : Additions during the year ** 1,163.5 147.4 8,308.1 7,623.0 Less : Transfer to the Statement of Profit and Loss to offset 469.5 478.4 Depreciation (Refer Note 24) Closing Balance 7,838.6 7,144.6 3. GENERAL RESERVE *** Balance as per Last Balance Sheet (1,436.7) (1,436.7) Less : Transfer to Retained Earning 1,436.7 - Closing Balance - (1,436.7) 4. OTHER RESERVES a) Foreign Currency Monetary Item Translation Difference Account (FCMITDA) Balance as per last Balance Sheet (2,137.3) (2,349.1) Add : Exchange gain/(loss) during the year (1,135.5) (126.5) (3,272.8) (2,475.6) Less : Amortization during the year 513.7 338.3 Closing Balance (2,759.1) (2,137.3) 5. Retained Earning Balance at the beginning of the reporting period (600,546.0) (529,972.9) Changes in accounting policy or prior period errors / Effect of 939.4 (12,213.5) Deferred Tax Assets of earlier years - Discontinued Operations Restated Balance at the beginning of the reporting period (599,606.6) (542,186.4) Profit/(Loss) for the year (87,724.0) (58,695.0) Dividend Distribution Tax pertaining to Joint Venture (4.4) (4.1) Add: Transfer from General Reserve *** (1,436.7) - Add : Transfer from Reserve (0.8) - Other Comprehensive Income (Remeasurement of defined benefit (1,126.4) 339.5 plans) Closing Balance (689,898.9) (600,546.0) 6 Fair value change on Equity Instruments through Other Com- prehensive Income Opening Balance 743.9 697.3 For the year 48.2 46.6 Closing Balance 792.1 743.9 TOTAL (1+2+3+4+5+6) (684,027.3) (596,231.5) * Share Application Money : Share application money amounting to Rs.NIL Million (Previous Year : Rs.NIL Million) represents money paid by the Government of India towards capital infusion during the year, but allotment of shares not yet made. ** Represents MRO Allowance received from GE towards construction of Test Cell Facility at Nagpur. *** General Reserve of Vayudoot Ltd. transferred to Retained Earnings during the year. 349 CFS

NOTE “13” : LONG TERM BORROWINGS (Rupees in Million) Particulars Non-Current Current * As at As at As at As at March 31, March 31, March 31, March 31, 2019 2018 2019 2018 I Debentures 55,000.0 136,950.0 81,950.0 - II Term Loans a) from Banks (Secured) - 109,258.3 109,952.5 6,176.0 b) from Banks (Unsecured) 7,597.9 14,703.6 8,751.5 7,104.0 c) from Other Parties (Unsecured) 108.3 209.5 12.7 10.3 III Long Term Maturities of Finance Lease 22,071.4 43,100.9 25,633.9 22,759.2 Obligations TOTAL 84,777.6 304,222.3 226,300.6 36,049.5

13.1 Debentures a) 136,950 Redeemable, Unsecured Non-convertible Debentures of face value of Rs.1 Million each (Previous Year : 136,950 Debentures), are guaranteed by Government of India. Maturity Profile and Rate of interest are as set out below : (Rupees in Million) Month of Redemption Amount to be Redeemed Rate of Interest Dec-2031 4,714.0 9.08% Nov-2031 10,086.0 9.08% Sep-2031 15,000.0 10.05% Dec-2030 4,714.0 9.08% Nov-2030 10,086.0 9.08% Dec-2029 4,714.0 9.08% Nov-2029 10,086.0 9.08% Dec-2028 4,714.0 9.08% Nov-2028 10,086.0 9.08% Dec-2027 4,714.0 9.08% Nov-2027 10,086.0 9.08% Sep-2026 40,000.0 9.84% Mar-2020 7,000.0 9.13% Mar-2020 950.0 9.38% Total 136,950.0 b) Debenture Redemption Reserve as required under Section 71(4) of the Companies Act, 2013 has not been created in the absence of earned profits by the Company. c) Current maturities includes 74,000 Redeemable, Unsecured Non-convertible Debentures

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of face value of Rs.1.0 Million each amounting to Rs.74,000.0 Million identified for transfer to SPV Air India Asset Holding Limited by way of Novation Agreement (Refer Note 29(ii) & (v)) 13.2 (a) Details of Secured Term Loans from following Banks which are identified for transfer to SPV Air India Assets Holding Limited are classified as current maturities (Refer Note 29(ii) & (v)):

(Rupees in Million) Sr No. Restructuring Lender As at March 31, 2019 As at March 31, 2018 1 Allahabad Bank 2,524.6 2,645.2 2 Andhra Bank 3,021.7 3,178.9 3 Bank of Baroda 11,346.5 11,903.7 4 Bank of India 15,107.0 15,727.2 5 Canara Bank 7,402.8 7,763.8 6 Central Bank of India 8,022.4 8,463.3 7 Corporation Bank 6,560.9 6,883.9 8 Dena Bank 1,180.6 1,243.6 9 The Federal Bank Limited 1,864.1 1,893.2 10 IDBI Bank Limited 3,763.5 3,967.4 11 Indian Bank 3,757.9 3,962.7 12 Indian Overseas Bank 6,199.8 6,509.3 13 Oriental Bank of Commerce 7,648.9 8,097.9 14 Punjab National Bank 10,561.9 11,136.9 15 Punjab & Sind Bank 2,386.0 2,513.0 16 State Bank of India 5,764.8 6,051.9 17 Syndicate Bank 5,572.3 5,819.6 18 UCO Bank 4,996.6 5,290.6 19 United Bank of India 2,270.2 2,382.2 TOTAL 109,952.5 115,434.3 For all Secured Term Loans from Banks, interest rate is linked to respective Bank’s Prime Lending Rate / Base Rate / Libor plus Margin. These loans are repayable in Quarterly Installments starting from 31st December 2013 and ending in 30th September 2026. Disclosure as regards amount of repayment installment and rate of interest are not made due to complexity of repayment schedules and confidentiality clause with the banks as regards interest rate in case of Air India Ltd..

All Term Loans from above Banks are secured by Hypothecation of 25 aircraft and 10 immovable properties at market value and all Current Assets (Previous Year 25 aircrafts, 11 immovable properties and all Current Assets). However equitable mortgage for 7 immovable properties with banks are yet to be created.

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13.2 (b) Total Unsecured Term Loan from Banks of Rs.16,349.4 Million (Previous Year Rs.21,807.6 Million) has been guaranteed by the Government of India. (Rupees in Million) Equal Number of Amount of Loan as Rate of Interest Starting Month Month of Loan Installments at March 31, 2019 of Repayment Maturity Bullet 4,775.6 Libor + 1.45 /2.5 Sep-2016 Sep-2021 10 562.7 Libor + 2.13455 Apr-2015 Apr-2021 9 557.3 Libor + 2.15 Mar-2015 Mar-2021 9 662.0 Libor + 1.55 Mar-2016 Mar-2021 9 732.5 Libor + 1.55 Mar-2016 Mar-2021 5 9,059.3 Libor + 1.80 Jun-2016 Mar-2020 TOTAL 16,349.4

13.2 (c) Unsecured Term Loan from Others of Rs.121.0 Million (Previous Year Rs.219.8 Million) are guaranteed by the Government of India. (Rupees in Million)

Equal Amount of Discounted Rate of Starting Month of Number Loan as at As per Ind AS Interest Month of Maturity of Loan March 31, as at March Repayment Installments 2019 31, 2019 42 153.7 79.8 Interest Free Oct-1990 Oct-2039 39 70.3 41.2 Interest Free Oct-1987 Mar-2037 TOTAL 224.0 121.0

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13.3 Long Term Maturities of Finance Lease Obligations of Rs. 47,705.3 Million (Previous Year Rs. 65,860.1 Million) are guaranteed by the Government of India to the extent of Rs. 40,805.6 Million (Previous Year Rs. 54,886.0 Million) (Rupees in Million) Number of Amount of Loan Rate of Interest Starting Month Month of Equated Loan as at March 31, of Repayment Maturity Installments 2019 27 8,730.7 Libor + 0.24 Aug-2011 Jul-2022 31 14,442.0 Libor + 0.93 Mar-2010 Sep-2021 8 10,633.5 Libor + 0.75 Feb-2008 Feb-2021 11 2,180.0 Libor - 0.05+0.55 Jan-2009 May-2020 10 2,294.0 2.46% to 2.89% Oct-2007 Dec-2019 Fixed 3 5,552.4 Libor + 0.75 Mar-2007 Dec-2019 6 401.6 2.46% to 2.73% Dec-2007 Oct-2019 Fixed 13 1,511.8 Libor + 0.50 Feb-2009 Mar-2021 10 1,959.3 Libor + 0.93 Apr-2010 Oct-2021 TOTAL 47,705.3

* Current maturities of long term borrowings have been grouped under the head Other Current Financial Liabilities (Refer Note No.15)

NOTE “14” : TRADE PAYABLES (Rupees in Million) Particulars Non Current Current As at March 31, As at March 31, As at March 31, As at March 31, 2019 2018 2019 2018 Trade Payables - - 91,043.0 93,390.7 TOTAL - - 91,043.0 93,390.7

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NOTE “15” : OTHER FINANCIAL LIABILITIES (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Other Liabilities - - 91,043.0 93,390.7 a) Current maturities of long-term - - 200,666.7 13,290.3 debts * b) Current maturities of finance - - 25,633.9 22,759.2 lease obligations * c) Interest accrued but not due on - - 6,579.6 6,393.4 borrowings d) Interest accrued and due on - - 1,981.1 3,196.9 borrowings ** e) Others Liabilities (Net) *** 53.1 111.8 52,871.9 48,185.7 f) Book Overdraft - - - 18.2 TOTAL 53.1 111.8 287,733.2 93,843.7 * For details of Current maturities of long term debts / Finance Lease Obligation Refer Note 13. Current Maturities of long-term debts includes Rs.183,952.5 Million identified for transfer to SPV Air India Assets Holding Limited (Refer Note 13) ** Interest accrued and due includes : Rs.236.6 Million being interest on Secured Loans repayable on demand from Banks (Previous Year : Rs. 2,078.3 Million), paid subsequently (Refer Note 18). Rs.1597.6 Million being interest on Unsecured Loans repayable on demand from Banks (Previous Year : Rs. 1,063.5 Million), paid subsequently (Refer Note 18). Rs.146.8 Million being interest on Future Lease Obligation (Previous Year : Rs. 55.1 Million), paid subsequently (Refer Note 13) Rs. 0.1 Million being interest on debenture for the period Apr-18 to Sep-18 being default in payment of interest to Caledonian Jute Mills Co. Ltd. in respect of Air India Express Ltd. *** Other Liabilities (Net) includes : Rs.14,970.6 Million towards Guarantee Fee Liability (Previous Year : Rs.8,391.5 Million) Rs.19,332.8 Million towards Provision for Employees including JDC impact (Previous Year : Rs.19,154.4 Million) Rs.8,583.2 Million towards Delayed Payment Interest to Oil Marketing Companies (Previous Year : Rs.7,590.6 Million)

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NOTE “16” : PROVISIONS (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Provision for Employee Benefits a) Gratuity 6,175.8 9,999.4 1,064.7 1,792.3 b) Leave Encashment 3,050.1 5,628.4 473.4 1,025.0 c) Post Employment Medical and 11,559.0 14,106.7 592.1 645.2 Other Benefits (A) 20,784.9 29,734.5 2,130.2 3,462.5 Other Provisions a) Taxes - - 42.0 - b) Redelivery of Aircraft 7,628.8 5,494.6 - 108.2 (B) 7,628.8 5,494.6 42.0 108.2 TOTAL (A + B) 28,413.7 35,229.1 2,172.2 3,570.7

NOTE “17” : OTHER NON FINANCIAL LIABILITIES (Rupees in Million) Particulars Non Current Current As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 Other Liabilities a) Forward Sales (Net) [Passenger - - 28,767.9 25,330.0 / Cargo] b) Advance from customers (Net) * - - 35,807.0 31,329.1 c) Others Liabilities (Net) ** - - 1,463.3 4,527.2 d) Frequent Flyer Programme - - 828.7 636.9 TOTAL (A + B) - - 66,866.9 61,823.2

* Advance from customers (Net) includes Rs.34,675.2 Million (Pevious Year : Rs.30,000.0 Million) pertains to 2 B777-300 SESF Aircraft.

** Other Liabilities (Net) includes Govt. Taxes / Statutory Dues amounting to Rs.764.9 Million (Previous Year : Rs.1,839.8 Million)

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NOTE “17.1” : LIABILITIES INCLUDED IN DISPOSAL GROUP HELD FOR SALE (Refer Note 33(c)) (Rupees in Million) Particulars As at March 31, 2019 As at March 31, 2018 Non Current Liabilities a) Other Financial Liabilites 10.4 - b) Provisions 9,507.9 - TOTAL (A) 9,518.3 - Current Liabilities a) Financial Liabilities i) Trade Payables 4,019.4 - ii) Other Financial Liabilites 3,306.3 - b) Other Current Liabilities 3,694.8 - c) Provisions 1,528.3 - TOTAL (B) 12,548.8 - TOTAL (A + B) 22,067.1 -

NOTE “18” : SHORT TERM BORROWINGS (Rupees in Million)

Particulars As at March 31, 2019 As at March 31, 2018

I Loans repayable on demand : a) from Banks (Secured) 1 / 2 / # / * 113,992.6 110,915.7 b) from Banks (Unsecured) # / * 149,039.0 122,140.0 c) from Other Parties (NSSF) (Unsecured) 26,360.0 - TOTAL 289,391.6 233,055.7

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1. Secured loans repayable on demand from Banks are to the tune of Rs.66,857.9 Million (Previous Year Rs.66,482.2 Million). Details are as under : (Rupees in Million) Sr. No. Name of the Lender As at March 31, 2019 As at March 31, 2018 1 Allahabad Bank 3,344.0 3,350.0 2 Andhra Bank 1,005.2 1,010.0 3 Bank of Baroda 18,343.3 13,985.4 4 Bank of India 5,345.5 4,891.8 5 Canara Bank 4,853.9 4,794.2 6 Central Bank of India 2,688.8 2,716.5 7 Corporation Bank 2,162.0 2,186.6 8 Dena Bank 381.9 407.3 9 HDFC Bank Ltd. 40.5 50.0 10 The Federal Bank Limited 698.3 651.9 11 IDBI Bank Limited 1,247.9 1,273.4 12 Indian Bank 1,280.0 1,280.0 13 Indian Overseas Bank 1,575.0 1,613.9 14 Oriental Bank of Commerce 2,575.1 2,597.7 15 Punjab National Bank 3,854.1 3,761.0 16 Punjab & Sind Bank 2,269.0 786.8 17 Standard Chartered Bank 7,343.3 11,955.3 18 State Bank of India 3,807.2 1,640.9 19 Syndicate Bank 1,845.9 1,867.7 20 UCO Bank 1,694.4 4,447.8 21 United Bank of India 52.6 764.0 22 PNB Discounting 450.0 450.0 TOTAL (1) 66,857.9 66,482.2 The loans to the tune of Rs.66,857.9 Million are secured by Hypothecation of 30 aircraft, 2 engines, 11 immovable properties at market value and all Current Assets (Previous Year : 29 aircraft, 11 immovable properties and all Current Assets). However equitable mortgage for 7 immovable properties with banks are yet to be created.

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2. Secured loan repayable on demand from Bank is to the tune of Rs.47,134.7 Million (Previous Year Rs.44,433.5 Million). Details of Secured Loans from Banks are as under : (Rupees in Million) Sr. No. Name of the Lender As at March 31, As at March 31, 2019 2018 1 Investec Bank 32,779.5 30,893.0 2 First Gulf Bank 14,522.5 13,686.7 47,302.0 44,579.7 Less : Deferred amount of upfront fees 167.3 146.2 TOTAL (2) 47,134.7 44,433.5 TOTAL (1 + 2) 113,992.6 110,915.7 The loans to the tune of Rs.47,134.7 Million (Previous Year Rs.44,433.5 Million) are secured by Hypothecation of 6 aircraft at market value (Previous Year : 6 aircraft). 3. Unsecured loan repayable on demand from Bank of Rs.149,039.0 Million (Previous Year Rs.122,140.0 Million) has been guaranteed by the Government of India to the extent of Rs.129,791.5 Million (Previous Year Rs.104,522.4 Million). # Disclosure as regards Bank wise rate of interest and period of default is not made due to complexity of data & confidentiality clause with the banks in case of Air India Ltd.. (Also refer Note 13 & 15) * As indicated in Note 29(ii) & (v), a sum of Rs.294,640.0 Million as on 1st October 2018 is identified for transfer to the SPV / AIAHL. A sum of Rs.74,000.0 Million and Rs. 109,952.5 Million pertaining to Note 13 - Long Term Borrowings is identified for transfer. The balance amount of Rs.110,687.5 is included in Short Term Secured & Unsecured Borrowings from Banks above.

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NOTE “19” : REVENUE FROM OPERATIONS (Rupees in Million) Particulars 2018-19 2017-18 i) Scheduled Traffic Services 1. Passenger 247,283.9 210,691.1 2. Excess Baggage 1,827.8 1,782.7 3. Mail 576.2 713.4 4. Cargo 15,159.2 12,643.4 (A) 264,847.1 225,830.6 ii) Non-Scheduled Traffic Services 1. Charter 14,526.2 12,459.5 2. Block Seat Arrangement 462.4 516.8 3. Subsidy for Operations from Government 355.0 109.6 (B) 15,343.6 13,085.9 iii) Other Operating Revenue 1. Handling and Servicing 1,435.3 1,440.9 2. Manufacturers Credit 356.7 1,363.3 3. Incidental 10,450.4 18,104.9 (C) 12,242.4 20,909.1 TOTAL (A + B + C) 292,433.1 259,825.6

NOTE “20” : OTHER INCOME (Rupees in Million) Particulars 2018-19 2017-18 1 Interest Income on : a) Bank Deposits 406.8 306.8 b) Others 693.4 284.0 2 Dividend from Long Term Investments (Trade) 52.5 49.3 3 Rent from Air India Building 901.1 886.4 4 Profit / (Loss) on Sale of Assets (Net) 1,225.6 1,761.5 5 Other 0.9 484.8 6 Provisions No Longer Required written back 2,293.6 2,693.9 TOTAL 5,573.9 6,466.7

* Interest Income on Others includes interest pertaining to discounting of Security Deposits as per Ind AS amounting to Rs.257.6 Million (Previous Year : Rs.211.8 Million)

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NOTE “21” : OTHER OPERATING EXPENSES (Rupees in Million) Particulars 2018-19 2017-18 1 Insurance 1,079.5 1,111.8 2 Material Consumed - Aircraft 5,141.7 7,194.7 3 Outside Repairs - Aircraft 20,146.9 14,245.8 4 Navigation, Landing, Housing and Parking 21,581.1 20,593.5 5 Hire of Aircraft 34,323.5 26,097.1 6 Handling Charges 15,119.4 13,517.9 7 Passenger Amenities 10,668.5 9,183.8 8 Booking Agency Commission (Net) 5,634.8 5,249.8 9 Communication Charges i) Reservation System 11,908.2 10,163.6 ii) Others 1,737.4 2,161.5 TOTAL 127,341.0 109,519.5

NOTE “22” : EMPLOYEE BENEFIT EXPENSES (Rupees in Million) Particulars 2018-19 2017-18 1 Salaries, Wages and Bonus 16,558.3 16,052.5 2 Crew Allowances 11,966.5 11,318.4 3 Contribution to Provident and Other Funds 1,083.6 901.6 4 Staff Welfare Expenses 1,284.5 370.4 5 Provision for Gratuity 772.8 1,714.3 6 Provision for Leave Encashment 211.8 551.2 7 Provision for Retirement Benefit 1,005.4 883.0 TOTAL 32,882.9 31,791.4

NOTE “23” : FINANCE COST (Rupees in Million) Particulars 2018-19 2017-18 1 Interest on : a) Debentures 12,890.9 12,890.9 b) Short Term and Long Term Loans 34,799.6 27,051.8 47,690.5 39,942.7 Less: Interest Cost Reimbursement through SPV 13,000.0 - AIAHL (Refer Note 29(vi)) 34,690.5 39,942.7 2 Other Borrowing Costs 7,497.0 3,322.7 3 Interest on Delayed Payment other than borrowings 6,782.3 3,249.1 TOTAL 48,969.8 46,514.5 a) Exchange rate difference in the nature of interest cost on foreign currency borrowing has not been reclassified due to complexity of transactions. 360 CFS

NOTE “24” : DEPRECIATION AND AMORTIZATION EXPENSE (Rupees in Million) Particulars 2018-19 2017-18 1 Depreciation of Tangible Assets 18,684.9 19,358.1 2 Amortization of Intangible Assets 271.7 244.1 3 Impairment of Assets 31.2 - (A) 18,987.8 19,602.2 Less : Recoupment from Capital Reserve (Refer Note 12) 469.5 478.4 (B) 469.5 478.4 TOTAL (A- B) 18,518.3 19,123.8

NOTE “25” : OTHER EXPENSES (Rupees in Million) Particulars 2018-19 2017-18 1 Travelling Expenses i) Crew 3,011.9 2,607.6 ii) Others 691.1 699.1 2 Rent 628.7 1,063.5 3 Rates and Taxes 77.3 168.7 4 Repairs to : i) Buildings 200.3 404.1 ii) Others 875.0 1,130.9 5 Hire of Transport 918.6 833.7 6 Electricity & Heating Charges 499.4 630.4 7 Water Charges 10.9 28.5 8 Directors' Sitting Fees 0.7 0.2 9 Publicity and Sales Promotion 873.0 1,217.4 10 Printing and Stationery 124.6 124.0 11 Legal Charges 144.5 166.7 12 Payments to the Auditors' (Refer Note No.59) i) Audit Fees 13.0 11.4 ii) Other Expenses 2.7 1.6 13 Provision for Bad & Doubtful Receivables and Advances 2,109.7 889.1 14 Write-off / Write back / Provision of Obsolete Inventory 1,936.7 1,612.0 15 Write off Duty Credit Entitlement under SFIS 388.5 786.4 16 Expenses on Block Seat Arrangements 151.7 176.1 17 Exchange Variation (Net)* 8,421.9 562.8 18 Loss on Sale / Discarded Fixed Assets (Net) 465.9 730.4 19 Bank Charges 2,249.2 2,180.6 20 Professional Expenses 412.8 506.2 21 Miscellaneous Expenses 2,675.7 3,134.4 22 CSR Expense 5.7 3.0 TOTAL 26,889.5 19,668.8 * Includes exchange variation on Bridge Loans amounting to Rs.3,272.4 Million ( Previous Year: Rs. 362.2 Million) 361 CFS

NOTE “25.1” : PROFIT/(LOSS) FROM DISCONTINUED OPERATIONS (Refer Note 33(b)) (Rupees in Million) Particulars 2018-19 2017-18 Revenue from Operations i) Scheduled Traffic Services 6,919.3 4,940.5 ii) Non-Scheduled Traffic Services 1,246.0 891.2 iii) Other Operating Revenue 4,483.3 4,874.7 Total Revenue from Operations 12,648.6 10,706.4 Other Income 405.2 262.5 Total Revenue 13,053.8 10,968.9 Expenses 1. Aircraft Fuel & Oil 2,065.1 1,254.8 2. Other Operating Expenses 5,978.5 4,624.1 3. Employee Benefit Expenses 15,096.6 16,253.2 4. Finance Costs 158.5 291.1 5. Depreciation and Amortization 666.2 525.1 6. Other Expenses 4,205.3 1,999.1 Total Expenses 28,170.2 24,947.4 Profit/(Loss) Before Tax (15,116.4) (13,978.5) Tax Expenses : i) Current Tax 600.0 491.5 ii) Tax Adjustment relating to earlier year 186.6 - iii) Deferred Tax (150.6) 19.5 Total Tax Expenses 636.0 511.0 Profit/(Loss) after Tax for the year (15,752.4) (14,489.5) Other Comprehensive Income Items that will not be reclassified to Profit & Loss and its related income tax effect: i) Re-measurements of Defined Benefits Plans (214.1) 475.3 ii) Income Tax relating to Re-measurements of Defined Benefit (18.0) - Plans Total Other Comprehensive Income (232.1) 475.3 Total Comprehensive Income for the year (15,984.5) (14,014.2)

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Notes forming part of the Consolidated Financial Statements of Air India Limited for the year ended 31 March 2019 (Rupees in Million except otherwise stated)

26. Contingent Liabilities& Contingent Assets: A. Contingent Liabilities: The group has contingent liability as at 31st March, 2019 in respect of:

i) Claims against group not acknowledge as debt: Claims against group not acknowledged as debts(excluding interest and penalty, in certain cases) and the required information, in compliance of Ind AS 37, is as under:

No Description Balance as on Balance as on 31st March 2019 31st March 2018 (i) Pax Claims on account of Misc Commercial 417.3 396.9 Reasons. (ii) Income Tax Demand Notices received by the 1,303.0 582.6 Company which are under Appeal (iii) Customs Duty, Excise Duty and Service Tax 10,147.4 8,595.6 demanded by the Tax Authorities (iv) Property Taxes/House Tax demanded by the 135.8 132.5 Municipal Authorities (v) Claims of Airport Operators/Others (*) 2,082.4 6,614.4 (vi) Other Claims on account of Staff/Civil/ 2,294.4 3,354.8 Arbitration/Labour Cases pending in Courts (vii) Government Guarantee Fee a) Difference between Applicable Rate & the rate - 3066.1 of 0.5% at which Guarantee Fee has been provided (**) b) Additional Guarantee Fee (**) 17,470.4 14,748.6 (viii) Others 297.8 50.6 Total 34,148.4 37,542.1

[Note:The above amount includes Contingent Liability in respect of Entities Held for Sale amounting to Rs. 1,448.2 millions]

Explanatory Statement in respect of Other Contingent Liabilities a) Claims of Airport Operators includes (*)-In the case of GHIAL, a claim of Rs 988.6 million (PY- Rs. 4,806.5 Million)for interest on delayed payments has not been accepted and pending determination of actual liability for the same, the amounts demanded by them have been shown as Contingent Liability. In the case of other Airport Operators namely DIAL and MIAL their claims have been duly verified and reconciled during the

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year except as stated in Note No 46(i) and liability provided for the same during the year. b) In the case of HCI, interest on account of outstanding dues payable to AAI: Rs. 311.6 million, MIAL:Rs. 89.7 million and DIAL:Rs. 454.1 million are disclosed as Contingent Liability. c) Government Guarantee Fee (**): The group has taken up the issue of waiver of guarantee fee and related penal charges with the Ministry of Finance through the Ministry of Civil Aviation. As regards the penal charges on the delayed payments of Guarantee Fee the group has disclosed a Contingent Liability for the same amounting to Rs 17,470.4 million (PY: Rs14,748.6million).However, as a matter of prudence, AIL has provided Rs.4,080.8 million towards difference between applicable rate and the rate of 0.5% on working capital loans. d) In the case of AIXL, no Contingent Liability has been provided on account of penal interest on Guarantee Fees as the company has already paid the due Guarantee Fees to the Govt as on 31st March 2019. e) In the case of AIXL, the amounts of court cases filed by employees are unascertainable. f) In the case of AASL, the figure of ‘Others’ also include interest liability on account of delay in foreign remittance calculated at agreed interest rates amount to Rs 23.9 million (PY: Rs 10.7 million) ii) Contingent Liabilities in Joint Venture Refer Note 51 for Group share in the Contingent Liabilities of AI-SATS Joint Venture. B. Contingent Assets i) During the year 2017-18, the Hon’ble Supreme Court of India has vacated the stay granted by the Hon’ble High Court of Delhi in respect of implementation of tariff fixed by AERA applicable with effect from 01/01/2016. In this regard the tariff fixed for the 2nd control period (i.e.from 1.1.2016), was lower than the tariff fixed for the 1stcontrol period (tariff prior to 1.1.2016).In view of this judgment, DGCA issued AIC (Aeronautical Information Circular) for the implementation of 2nd control period tariff with immediate effect, however, the same is still to be implemented. In the intervening period DIAL has collected from Air India, an excess amount to the tune of Rs 2,299 million (approx.) on account of Landing & Parking Charges. The company has requested AERA that while fixing the tariff, the airlines who have shouldered the burden of excess amount collected maybe compensated by way of discount in tariff in proportion to the excess amount collected by DIAL from respective airlines. ii) During the normal course of business, certain unresolved claims are outstanding. The inflow ofeconomic benefits in respect of such claims cannot be measured due to uncertainties that surroundthe related events/circumstances. iii) In case of HCI, The Hon'ble Arbitral Tribunal published their award under which M/s Sahara Hospitality Ltd. (formerly known as M/s Batra Hospitality Pvt. Ltd.), the buyer of Centaur Hotel Mumbai Airport had to pay an amount of Rs 18.8 millionand interest thereon along

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with legal costs of Rs 4.0million. The buyers preferred an appeal in the Hon'ble High Court of Bombay against the award.The Hon'ble High Court has set aside the Arbitration Award which has been challenged by the Company before the Divisional Bench of the Hon'ble High Court of Bombay which has been admitted and is pending for hearing. 27. Commitments: (i) Capital Commitments Estimated amount of contracts remaining to be executed on Capital Account are given hereunder: (Rs in Million) Particulars As on 31st March 2019 As on 31st March 2018 Aircraft Related Payments 2,195.5 3,051.4 Others 1,156.1 1,550.7 Total 3,351.6 4,602.1

[Note: The above amount includes Capital Commitments in respect of Entities Held for Sale amounting to Rs. 0.3 million]

(ii) Other Long-Term Commitments a) Corporate Guarantees, Letters of Comfort given by the Group on behalf of its Subsidiary Companies: (Rs in Million) Particulars As on 31 March 2019 As on 31 March 2018 Letters of comfort 12,284.9 11,508.1

b) Commitment in respect of non-cancellable Operating Leases in respect of the aircraft/ other assets as at 31st March 2019 is Rs288,932.7million (PY:Rs300,239.6million). [Note: The above amount includes Commitments towards non-cancellable operating lease in respect of Entities Held for Sale amounting to Rs. 27,626.9 million] 28. Disinvestment of Air India Ltd i) In view of the NITI Aayog recommendations on the disinvestment of AI and followed by the recommendations of the Core Group of Secretaries on disinvestment (CGD), the Cabinet Committee on Economic Affairs (CCEA) had given an ‘In-Principle’ approval for considering the strategic disinvestment of the Air India group in its meeting held on 28th June 2017. CCEA also constituted the Air India Specific Alternative Mechanism (AISAM) to guide the process of strategic disinvestment. The Transaction Advisor, Legal Advisor and Asset Valuer have also been appointed to guide the Govt and to carry forward the process of Disinvestment. ii) The AISAM in its meetings held on 21st September, 2017 and 5th October. 2017 decided that :

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a. The following Four Subsidiaries of Air India be demerged and parked in the newly created SPV:. i) Air India Air Transport Services Limited (AIATSL) ii) Airline Allied Services Limited, (AASL) iii) Air India Engineering Services Limited( AIESL), iv) Hotel Corporation of India (HCI) b. Accumulated working Capital loan not backed by any assets be parked in the newly created SPV c. A Special Purpose Vehicle (SPV) be created for warehousing accumulated working capital loan not backed by any asset along with four subsidiaries AIATSL, AASL, AIESL, HCI, non-core assets, paintings and artifacts and other non-operational assets. This entity be named “Air India Assets Holding Limited”. iii) Pursuant to the above decision of the AISAM, the SPV Air India Assets Holding Limited (AIAHL) was formed. iv) The Ministry of Civil Aviation vide their Letter No. AV.17046/368/2017- AI dated 3rdNovember, 2017 directed Air India to demerge the above mentioned four subsidiaries to park it in the SPV. It further directed to transfer the investment in the shares of the subsidiary companies namely AIATSL, AASL, AIESL and HCI from Air India to the SPV company at book values (at value shown in the Balance Sheet as of 31.03.2017 with any addition to “Equity” thereto during the year) v) The Board of Air India in its 82nd Board meeting held on 17thNovember, 2017 had given in- principle approval for transferring the interest of Air India in the subsidiary companies viz. AIATSL, AIESL, AASL and HCI to the SPV after following the necessary procedures under the Companies Act, 2013 and other legal formalities as may be recommended by the legal advisor. vi) Pursuant to the fact that no bids were received on the Expression of Interest for strategic disinvestment of Air India, the AISAM in its meeting held on 18th June 2018 decided that: a) In view of the volatile crude prices and adverse fluctuation 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 efficiencies 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,

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the option of strategic disinvestment of Air India should be brought before AISAM, for deliberating the future course of action. vii) Accordingly, in line with the above decisions conveyed by AISAM, and in view of the deteriorating financial health of Air India Ltd, a Strategic Revival Plan was formulated to take AI back on the path of profitability. The main modalities/directions of this Plan were discussed in the meeting taken by the Hon’ble Finance Minister to discuss the “Plan for Operational & Financial Efficiency in Air India” on 7th September 2018. viii) The objective of the Strategic Revival Plan was to establish a strong competitive and self- sustaining airline which can be strategically divested or listed in the next few years. Focus on increasing the operational efficiencies whereby substantial increase in revenue or cost saving can be achieved.The Revival Plan contained the following major components: Organizational Reforms Financial Package Disinvestment of Subsidiaries Sale of non-core Assets Improving Internal Efficiencies Tapping the human resource potential to the fullest ix) After deliberations in the meeting held on 7th September, 2018 under the chairmanship of Hon’ble Finance Minister the “Plan for Operational & Financial Efficiency in Air India” was approved. The following decisions were also taken in the same meeting: Debt amounting to Rs 294,640.0 million to be transferred from Air India Ltd to the SPV viz Air India Assets Holding Ltd effective 1st October 2018. A Cash Support of Rs 39,750.0 million to Air India, inclusive of Rs 16,300.0 million already infused in AI in the current financial year. Provide a Govt Guarantee of Rs 76,000.0 million, (inclusive of Rs 30,000.0 million already provided to Air India in FY 2018-19), to raise new debt for payment of stretched liabilities. Rs 13,000.0 million to be provided to the SPV to meet the interest for Q3/Q4 of FY 2018-19 on the debt transferred to the SPV The entire interest on the debt of Rs 294,640.0 million transferred to the SPV, would be serviced by the Government from FY 2019-20 Sale/Disinvestment of AIATSL within the Financial year 2018-19 x) In line with the above directives issued by the Ministry of Finance, Govt of India dated 7th September 2018, the Board of Directors of the company, in the Board meeting held on 16th October 2018 decided to transfer 100% share holding of its Subsidiary AIATSL to Air India Asset Holding Ltd (AIAHL, the SPV), subject to necessary approvals and authorized

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the Company to initiate the talks with AIATSL/AIAHL to finalize the detailed terms and conditions of the transfer. The Board approved the above transfer at a minimum price corresponding to the Net worth of AIATSL as on 31st March, 2018. It also decided that in the event AIAHL is subsequently able to sell AIATSL to a third party at a higher price, then such additional amount shall also be payable by AIAHL to AI as part of the consideration for the purchase of AIATSL. The process of legal transfer of shareholding of AIATSL to AIAHL is still under process and likely to be completed shortly. xi) Further, in this regard the PIM (Preliminary Information Memorandum) for the invitation of bids for Expression of Interest (EoI) for the disinvestment of AIATSL has already been issued the details of which are given hereunder: PIM released on 12th Feb, 2019 Deadline for submission of EOI - 16th May, 2019 which has been extended till 16th August 2019. Last date of Intimation to the Qualified Interested Bidders (QIB) has also been extended to 30thAugust 2019 xii) From the above, it is evident that as part of the disinvestment process, the Government has taken a series of measures to improve Air India’s Operational and Financial Efficiency and the same are summarized below: a) Transfer of Debt of Air India to AIAHL amounting to Rs 294,640.0 million effective 01st October, 2018 b) Transfer of non-core Assets, paintings and artifacts from AI to AIAHL c) Transfer of the investment in four subsidiaries viz. AIATSL, AASL, AIESL, HCI to AIAHL along with any receivables or payables related to these subsidiaries d) Interest on the transferred debt to AIAHL will be borne by AIAHL effective 1st October 2018 and thereafter e) Provision of Rs 13,000.0 million for AIAHL for servicing the Interest xiii) The above decision of the Government amounts to vesting of debt to the extent of Rs 294,640.0 million against transfer of subsidiaries, non-core assets, paintings and artifacts. The total book value of the investment in subsidiaries and the assets are less than the loan being taken over. Further, amongst the subsidiaries, only one subsidiary viz. AIATSL is a profit making subsidiary with a positive net worth. The specially formed SPV - AIAHL has therefore accepted liabilities of Air India far in excess of the book value of the Investments/ Assets being transferred. The exact value would be determined only after the actual monetization of properties and sale of subsidiaries is completed. 29. Transactions with the SPV relating to Disinvestment of Air India Ltd i) In line with the decision of AISAM, a Company by the name of Air India Assets Holding Ltd (AIAHL) has been incorporated with 100% shareholding held by the Government. This entity is an SPV specially formed for the purpose of acquiring from Air India Limited:

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a) Its shares held in AIATSL, AASL, AIESL, and HCI, b) Paintings artifacts and other non-operational assets as may be decided by Air India Ltd and the Government of India c) Non-core assets as may be decided by Air India Ltd and the Government of India d) Immoveable properties whether leasehold or freehold e) Accumulated working capital loans not backed by any asset and f) Other assets / liabilities or of its subsidiaries, as may be decided by Air India Ltd/ Government of India ii) Pursuant to the decisions taken in the various AISAM meetings stated above, Air India began the exercise of transfer of identified debt amounting to Rs 294,640.0 million as on 1st October 2018. However, in view of lenders approval for transfer not forthcoming, the debt transfer could not take place and the debt continued to be in the books of Air India Limited. Air India continued to service the interest due on these loans identified for transfer to AIAHL. iii) In view of the constraints faced in the transfer of Loan from Air India Ltd to AIAHL, the Ministry of Finance approved a refinancing strategy for the identified debt. Based on the Meeting held on 30thMay, 2019 in the Ministry of Finance, it was decided that the SPV would raise finances in the following manner to refinance the identified debt of Air India amounting to Rs 294,640.0 million: a) Non-Convertible Debentures (NCD) of Rs 74,000.0 million to be novated to AIAHL against GoI guarantee b) Issue of Govt Fully Serviced Bonds for Rs 70,000.0 million against Letter of Authorization c) Issue of Bonds worth Rs 150,640.0 million with full Government Guarantee for the payment of interest and principal thereof, iv) The Ministry of Finance, Department of Economic Affairs vide its Letters dated 18th June 2019 have already conveyed the Govt of India’s approval for raising the above debt by AIAHL to repay AI’s debt proposed to be transferred to the SPV. The process of issuing of the above Bonds has been initiated and likely to be completed soon. v) As such, as on 31st March, 2019 the identified debt of Rs 294,640.0 million continues to be reflected as Long term/Short term borrowings in the books of Air India Limited as Current and the interest serviced on these debts from 1st October 2018 are reflected as Finance Costs. vi) As per the decision of AISAM the interest on the identified debt were to be serviced by AIAHL and a sum of Rs 13,000.0 million was approved and transferred to AIAHL by the Government. This amount in turn was transferred to Air India by AIAHL as reimbursement of the interest costs serviced by Air India effective 1st October 2018. Accordingly, this amount of Rs 13,000.0 million has been reduced from the Finance costs of AIL.

369 CFS vii) As seen from Paragraph 29 (i) above along with the debt of Air India, certain assets are also part of the transfer to SPV. Some of these assets which are part of the proposed transfer are earning income in the form of Rentals. There are associated costs also involved in the earning of the income and maintenance of the said assets. These assets are also meant to be monetized and the proceeds are to be credited to the SPV/ AIAHL through an escrow mechanism for ultimately servicing the transferred debts. viii) Accordingly, Air India had initially identified111 such properties as non-core assets for monetization purposes. However, subsequently based on the operational requirement 108 properties have now been identified for monetization and transfer of proceeds to the SPV, of which 9 properties have already been sold. The remaining 99 properties are reflected in ‘Assets held for Sale’ and ‘Investment Properties’ as given hereunder:

Particulars No of Properties Net Block Value (Rs in Million) Assets Held For Sale 97 68,066.3 Investment Properties (*) 2 4,377.8 (*) Being redeveloped under an agreement prior to monetization ix) As per the decisions of AISAM detailed above and as mentioned in the Preliminary Information Memorandum for Inviting Expression of Interest for Strategic Disinvestment of Air India Limited, including AI’s shareholding interest in AIXL and AISATS, which was also duly approved by AISAM, issued on 28th March, 2018, the investments in Subsidiary Cos including investment in Equity Shares and any balance receivable from and payable to the Subsidiaries will be transferred to the AIAHL. Accordingly, the investment in Subsidiary Cos along with receivables/payables relating to the Subsidiary Companies which are proposed to the transferred to AIAHL, have been presented as “Assets held for Sale” in the Standalone Financial Statements of Air India Ltd. Accordingly, the following Subsidiary Companies balances will be transferred to the AIAHL: (Rs in Million) No Name of Subsidiary Company Investment to Receivables/Payable be Transferred to be Transferred a) Airline Allied Services Ltd (AASL) 4,022.5 16,681.9 b) Air India Air Transport Service Ltd (AIATSL) 1,384.2 (606.2) c) Air India Engineering Services Ltd (AIESL) 1,666.7 17,181.7 d) Hotel Corporation of India Limited (HCI) 1,106.0 3,052.1 Total 8,179.4 36,309.5 x) Since the properties are still in the name of Air India, the company i.e. Air India will be disposing off these properties and the sale proceeds of the same will be transferred to the AIAHL through the escrow mechanism as and when received. The rental income also is accounted for in the books of Air India as Rental Income as the rental agreements with the lessees are signed by Air India. These also would be reconciled at a subsequent date when all the loans are transferred and the net balance receivable or payable, after adjusting for expenses incurred in maintenance of the property, would be transferred/received from AIAHL. Similarly any Revenue sharing arrangements by the subsidiary viz. AIATSL to be 370 CFS

transferred to AIAHL, would be accounted for in Air India as the legal transfer of subsidiary AIATSL to AIAHL has yet to take place, but would be part of the cash flow reconciliation. xi) In the meeting held on 30th May, 2019 it was very clearly agreed that the revenue sharing/ dividend of AIATSL, rental income of the assets proposed to be monetized shall be deposited in Escrow Account from 1st August, 2019. A proposal is required to be moved for accounting and transferring the old receipts subsequent to 1st October, 2018, either in lumpsum or in installments to AIAHL Escrow account. The Escrow account is in the final stages of being opened. xii) As per the preliminary reconciliation up to 31st March 2019 of the various amounts due against the identified loan and the netting off of the income received from the assets in the form of rentals, revenue sharing arrangements of AIATSL and actual monetization of the identified properties for the period 1st October 2018 to 31st March 2019 is as under: No Particulars (Rs in Million) a) Interest Due on the identified Loans 13,651.4 b) Principal Amount Repayable 2,553.8 Sub-Total 16,205.2 c) Disbursable Monetization proceeds 608.3 d) Net Amount of Rental Income 381.5 e) Revenue Sharing with AIATSL (Prov) 150.0 1,139.8 Net Amount Due from AIAHL 15,065.4 f) Amount received from the SPV in March 2019 13,000.0 Final Net Amount Due from AIAHL 2,065.4

a. The above amount due from AIAHL will be reconciled after the Loans are transferred in the current year 2019-20 and adjusting for all expenses incurred by Air India, exchange adjustments and any reimbursement received from AIAHL in 2019-20. No effect has been given for the above amount of Rs 2,065.4 million due from AIAHL as on 31st March 2019, as the same are not finalized, except for accounting for the receipt of Rs 13,000.0 million towards reimbursement of interest cost. b. In view of the Loans amounting to Rs 294,640.0 million not yet transferred to AIAHL as on 31.3.2019, no effect has been given to the entire package of transfer of non- core assets/transfer of investment in Subsidiaries along with their receivables and payables. However, these assets/investments are classified as “Assets held for Sale”/ ”Liabilities classified as held for Sale”. xiii) The effect of all the decisions of various AISAM meetings and decisions of the Government stated above are reflected in the Financial Statements as summarized below: a) The balance of the principal identified debt for transfer to AIAHL amounting to Rs 294,640.0 million is reflected as Long term/ short term borrowings as current as on 31st March,2019; b) The reimbursement of Rs 13,000.0 million from the AIAHL towards interest costs paid by Air India on the identified loan has been netted off against Finance costs; 371 CFS

c) The book value of the 99 identified properties, that are transferred from Property Plant and Equipment to Assets held for Sale/Investment Property amounting to Rs 72,444.1 million d) Pending transfer of Four Subsidiaries to AIAHL, the same have been consolidated as on 31st March, 2019 and classified as Assets Held for Sale.(Refer note 33 for detail). e) The net amount due from AIAHL towards the interest and Principal amounts due on the identified loans from 1st October, 2018 are not accounted as receivable as the same will be finally reconciled at the completion of the entire transaction. 30. Property, Plant and Equipment i) Land and Buildings include certain properties for which title deeds are not available. Details of the same are as under: (Rs in Million) Particulars 31.03.2019 31.03.2018 Area (Sq Gross Net Area (Sq Gross Net Mtrs) Block Block Mts) Block Block Land/Buildings Freehold - - - 23,904.26 387.1 387.1 Land/Buildings Lease- 76,874.0 180.0 180.0 93,551.52 412.7 412.7 hold Total 76,874.0 180.0 180.0 117,455.78 799.8 799.8

ii) In terms of decision taken, as per the records of the discussions held in the Ministry of Finance on 1st June 2017 for the development of assets of AI located at Vasant Vihar Housing Colony 121,410 sqmtrs. (Rs 51,295.1 million) and Baba Kharag Singh Marg Land 14,326.38 sqmtrs. (Rs 4,770.7 million), the physical possession of these unregistered properties have been handed over to the Ministry of Urban Development (MoUD).The MoUD has been entrusted with the overall responsibility of development and sale of these two properties by the Govt. The sale proceeds from these two properties shall be utilized in liquidating Air India debts.These properties are under charge against working capital loans taken from various banks.Till the above process is completed, the said properties have been classifiedas “Assets held for Sale”, iii) AI had 508 flats constructed in Nerul on a portion of land admeasuring 28,626 sqmtrs. and it has been decided to sell these flats to the employees of the AI and organizations under the control of Ministry of Civil Aviation. In terms of the Orders of Hon’ble High Court at Bombay (the Court), the company issued allotment letters to 334 allottees out of 508 flats. However, title to the underlying land can only be conveyed by a tripartite conveyance deed between Societies, Air India and CIDCO which is not yet done. Pending conveyance of title of land in favor of the registered societies and completion of all legal formalities necessary adjustments have been made as at the Transition date (01/04/2016). The value of this propertyis being carried as on 31.03.2019 as given hereunder: a. Net Value of 334 flats (including cost of land) amounting to Rs 1,483.9 million allotted in earlier years were transferred to Assets held for Sale

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b. Carrying Value of the balance 174 flats and the vacant land amounting to Rs 4,177.8 million being depreciated cost has been shown under Investment Property. Necessary entries for the sale of the flats will be made on the completion of the legal formalities. iv) Under disinvestment plan, monetization of the identified properties is in the process, hence fair value of the investment properties could not be disclosed as a confidentiality measure. v) Disclosure under IND-AS 40-Investment Property (Rs in Million) No Particulars 2018-19 2017-18 Properties Properties not Properties Properties not Earning Rent Earning Rent Earning Rent Earning Rent A Rent Earned 893.8 - 923.7 - B Operating Expenses i) Repair & Maintenance 21.9 22.5 59.8 36.4 ii) Electricity 45.7 18.5 58.7 24.5 iii) Property Taxes 22.0 2.4 23.1 2.5 iv) AMC Expenses - 22.5 - 21.3

vi) In the case of AASL, the company has registered charges of Rs 2,683.0 million (PY: Rs 2,601.5 million with the Registrar of Companies. The company is in the process of getting the said charge satisfied by following the procedure. vii) In case of AIATSL, during the current Financial Year, the Company has updated its depreciation computation and accordingly revised depreciation working are based on opening net block as on April 01, 2018 divided by remaining useful life. 31. Advance against Land at Nerul Long Term Loans & Advances include a sum of Rs 24.6 million (PY: Rs 24.6 million) being the advance paid by the company to CIDCO for the purchase of another plot of Leasehold Land at Nerul for the purpose of construction of staff quarters. However, the possession of the plot allotted by CIDCO in this regard has not been handed over to the company and no agreement/ lease deed has been executed so far.

32. Assets Held for Sale Assets held for sale mainly includes

a) Immovable Properties in respect of which the Board has accorded its approval for sale/ monetization. Hence, these properties have been transferred to “Assets Held for Sale A/c” at lower of their carrying value and fair value less cost to sell.“Assets held for Sale” include certain properties for which title deeds are not available. Details for the same areas under:

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(Rs in Million) Particulars 31.03.2019 31.03.2018 Area Gross Net Area Gross Net Block (SqMtrs) Block Block (SqMts) Block Land/Buildings 23,904.3 387.1 387.1 - - - Freehold Land/Buildings 152,413.9 56,403.2 56,403.2 135,736.4 56,191.0 56,191.0 Leasehold Total 176,318.2 56,790.3 56,790.3 135,736.4 56,191.0 56,191.0

b) Two B-777-300ER aircraft have been procured on behalf of Govt of India has been classified as Assets held for Sale. The entire cost of these aircraft including the cost of modification will be borne by the Govt of India. 33. Assets/Liabilities included in Disposal Group held for Sale and Discontinued Operations(Also refer Note No 28 and 29) a) Description In terms of Disinvestment process of Air India Limited and its Subsidiary Companies, the Government of India has decided to sell four subsidiary companies of AI namely AASL, AIESL, AIATSL and HCI, and accordingly, the assets and liabilities of these four companies, have been classified as Assets/Liabilities included in Disposal Group held for Sale in the Consolidated Financial Statements. Since, these four Subsidiaries constitute a major portion of the total five subsidiary companies plus one Joint Venture share company of AI, the same have been shown as “Discontinued Operations” in the Consolidated Financial Statements of the group as on 31st March, 2019. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss before tax from discontinued operations in the Statement of Profit and Loss. The details of the same are given hereunder. b) Financial performance and cash flow information i) The financial performance and cash flow information presented are for the year ended 31st March, 2019 and the year ended 31st March, 2018:

Particulars 2018-19 2017-18 Total Revenue 13,053.8 10,968.9 Total Expenses 28,170.2 24,947.4 Profit/(Loss) before income tax (15,116.4) (13,978.5) Income tax expense 636.0 511.0 Profit/(Loss) after income tax (15,752.4) (14,489.5) Profit/(Loss) from discontinued operations (15,752.4) (14,489.5)

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Particulars 2018-19 2017-18 Other comprehensive income from discontinued operationsItems that will not be reclassified to Profit & Loss and its related income tax effect: (214.1) 475.3 (a) Re-measurements of Defined BenefitsPlans (b) Related Income Tax impact (18.0) - Total Comprehensive Income for the period (15,984.5) (14,014.2) Net cash inflow (outflow) from operating activities (30.9) 2,529.6 Net cash inflow (outflow) from investing activities 16.9 (2,052.4) Net cash inflow (outflow) from financing activities (184.0) (285.9) Net increase/(Decrease) in cash generated from (198.0) 191.3 discontinued operations Note: Refer Note 25.1 for details of Financial Performance of Entities Held for Sale. ii) In terms of IND-AS 105, the Loss (After Tax) for the period from Continuing Operations is Rs 71,971.6 million (P.Y: Rs 44,205.5 million) and Loss (After Tax) for the period from Discontinuing Operations is Rs 15,752.4 million (P.Y: Rs 14,489.5 million) after elimination of Inter-Co transactions as per IND AS 110. Had these inter-co eliminations not been done then the Loss (After Tax) for the period from Continuing Operations would have been Rs 82,900.6 million (P.Y: Rs 50,959.9 million) and from Discontinuing Operations the Loss (After Tax) would have been Rs 4,823.7 million (P.Y: Rs 7,735.1 million). c) Assets and liabilities of Discontinued Operations classified as held for sale The following assets and liabilities were reclassified as held for sale in relation tothe discontinued operation as at 31st March, 2019: (Rs in millions) Particulars 31st March, 2019 Assets classified as held for sale Property Plant and Equipment (including CWIP) 6,263.6 Other Non Current Assets 2,529.9 Trade Receivables 4,352.4 Other Current Assets 3,783.9 Total Assets of Discontinued Operations Held for Sale 16,929.8

Liabilities directly associated with Assets classified as Held for Sale Non Current Liabilities 9,518.3 Other Current Liabilities 12,548.8 Total Liabilities of Discontinued Operations Held for Sale 22,067.1

Note: Refer Note 10.1 and Note 17.1 for details of Assets/Liabilities of Entities Held for Sale.

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34. Grants Receivable and Regional Connectivity Scheme of AASL i) AASL is operating following sectors under VGF Arrangements with respective Govt. authorities: Sr. No VGF Signed With Sectors i North-East Council North-East ii UT-Lakshadweep Agatti Iii UT-Daman & Diu Diu

ii) MOU executed between the Company and Union Territory of Daman & Diu for providing Air Operation Service on VGF model was valid up to 25.10.2017 . AASL is still providing Air operation services and claiming the VGF amount in terms of MOU valid up to 25.10.2017 and also receiving the payments against the services provided. AASL request dated 16.1.2019 for the extension of MOU for the years 2017-18 & 2018-19 to Union Territory of Daman & Diu and Dadar Nagar Havelli is in the process of execution. iii) In the case of AASL, till 31.3.2019 AASL has been awarded (through bidding process) 83 routes under RCS, out of which 29 are operational. Remaining routes are proposed to be launched in the coming months, which includes 14 routes awarded in second round of allotment, remain non operational till 31.03.2019, though as per terms of the LOI these are required to be operational during the year 2018-19. Management is of the view that delay in the route to make operational is based on various factors, delay is not on the part of AASL, therefore AASL has no liability for the above stated delay in the route making operational. 35. Corporate Compliance and CSR Activities

i) In respect of AIESL, as per Companies Act 2013, Sec 149(4), AIESL has not appointed independent director. Consequently, the Audit Committee has no independent director. There is no remuneration committee as per Section 178. ii) In respect of AIATSL, CSR activities the Gross amount required to be spent by the Company during the year was Rs. 19.2 million (PY: 18.0 million). iii) In case of AIXL, since, financial year F.Y. 2016-17, the Company has been incurring expenditure towards “Corporate Social Responsibility” (CSR) at the rate of 2% of its “average net profits” computed in accordance with Section 198 of the Companies Act, 2013. Accordingly, Rs. 31.1 million pertaining to earlier years remains to be spent by the Company towards Corporate Social Responsibility for the purpose other than Construction/ acquisition of any asset. 36. In the case of AIESL, DGCA License: All expenses incurred including man power cost prior to three months from the date of obtaining the License and directly attributable to DGCA License for ‘CAR-145 MRO with certification’ has been capitalized in FY 2014-15 for Rs. 2,713.8 Million.

As per the company’s accounting policy on depreciation/amortization, the Intangible assets which have a definite useful economic life are amortized over the estimated useful life. Intangible Assets which have an indefinite useful life are tested for impairment. However, since

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the intangible asset so created by the company is the “MRO License” which is valid for infinite period and has financial economic benefits till the company is in operation. Further, without the license, the company cannot operate in the industry. As such, the company has not amortized the intangible assets, in line with the provision as stated in IND AS 38.

37. In the case of AASL, 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 filed by Air India Limited before the Hon'ble Delhi High Court which has also upheld the decision of Arbitral Tribunal. To file 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-judice.

38. a) In the case of AIXL, AIXL did not filed the form 3CEB in respect of Specified Domestic Transactions as required under section 92E of the Income Tax Act, 1961 for F.Y. 2012-13 to F.Y. 2015-16 (Both inclusive) as the said matter was pending confirmation by the Holding Company. The Company is unable to ascertain the liability if any due to non-filling of form 3CEB at this juncture and hence, no provision has been made therefore. b) AIXL’s Debentures are listed on BSE Limited and hence, the Company is required to comply with Chapter V of the Listing Obligation and Disclosures Requirements (Amendment) Regulations, 2017 (LODR). The Company has not filed the financial results on half yearly basis as prescribed by regulation 52 of the LODR. The Company is in the process of complying with the requirements post facto by submitting requisite documents with Bombay Stock Exchange. 39. Vayudoot

After carrying out all disbursements as per the directions of the Ministry of Civil Aviation pertaining to the merger of Vayudoot with Air India Ltd, a balance amount of Rs 28.2 million (PY: Rs.38.5 million) remains which has been reflected in the books of accounts of AI as “Liability” under “Vayudoot Settlement Account” However, necessary decision regarding the adjustment of this outstanding amount can be taken only when certain Contingent Liabilities relating to Vayudoot Ltd which continue to be disclosed in the Accounts of the AI are settled. This is mainly because these may lead to future liabilities for AI as they mainly pertain to legal cases pending against Vayudoot.AIL has already written to the Ministry of Civil Aviation Govt of India with regard to the unspent balance of Rs 28.2million out of the amounts sanctioned and released towards liquidating the dues of creditors/parties of erstwhile Vayudoot Ltd.

40. Physical Verification & Reconciliation a) Fixed Assets: i) Physical Verification and Reconciliation of major assets viz. Airframes, Aero-engines, APUs and Simulators has been carriedout at the year end and reconciliation of the same has also been completed. Further, in the case of land and building (including Investment Properties)reconciliation of number of properties as per fixed assets 377 CFS

register vis-à-vis records of holding departments was done. These assets together constitute substantial portion of the Gross Block of Assets as on 31.03.2019. No major discrepancies were found on the same. ii) The physical verification and reconciliation of assets other than above, including assets migrated in Fixed Assets Register at block level as one item for which line item identification is under progress. Further, the physical verification of these assets for the biennial period 2016-18 has been completed. However, the necessary action on the Physical Verification Report received is under progress.In the case of AI, necessary action will be taken on receipt of approval from the Competent Authority for shortages identified amounting to Rs 154.5 million (Net). iii) In case of HCI, The Company has conducted physical verification of each group of fixed assets in 2018-19. The extent of discrepancies if any, are being ascertained. The resultant impact of the same on the accounts will be dealt with in the year in which finality is reached. The Physical Verification of Other Assets for the biennial period 2018-20 is under progress. iv) In case of AIATSL, the necessary action on the Physical Verification Report received is under progress and necessary action on the same will be taken on receipt of approval from the Competent Authority for shortages identified amounting to Rs 27.2 million (Net). b) Inventory: i) In the case of AI, Physical Verification of aircraft/non-aircraft inventory (except inventory relating to phased out fleet and lying with third parties) for the biennial period 2016-18 has been completed. Pending finalization/approval of the Physical Verification Report, by the competent authority, the net ofexcess/shortages found on reconciliation amounting to Rs 23.6 million (PY: Rs 114.0 million) has been provided for. Further during the year AI has charged/written off Rs 89.7 million to P&L Account based on the requisite approval from the competent authority. ii) The Physical Verification of Inventory for the biennial period 2018-20 is under progress. The Final Report received for the regions covered as of date does not have any material differences and verification for the other regions is under progress. iii) However, in the case of AIXL, physical verification of Inventories has been carried out during the year 2018-19. On reconciliation shortage/excess found for amounting to Rs. 15.6 million has been adjusted with the Inventories by corresponding entries with material consumptions. iv) In the case of AASL and AIATSL, physical verification of Inventories has been carried out during the year 2018-19. On reconciliation shortage/excess found for amounting to Rs. 23.1 million has been adjusted with the Inventories by corresponding entries with material consumptions. 41. Effect of changes in Exchange rates (IndAS-21)

a) Transactions relating to Foreign Inventory Procurements and closing balances of certain

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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. b) The Group has not adopted Appendix B to Ind AS 21 – Foreign Currency Transactions and Advance Consideration which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income when an entity has received or paid advance consideration in a foreign currency. However, the effect of on account of adoption of this amendment is not likely to be material. 42. Confirmations/Reconciliations i) The reconciliation and matching of certain unmatched receivables and payables including, suspense/ control ledgers and staff related accounts is under process. Impact, if any, of consequential adjustment arising out of reconciliation will be dealt with in the year of completion of Reconciliation. ii) The group has sought the confirmation of balances for major receivables, payables and inventory lying with third parties. However, only some of the parties have responded. Wherever the balances confirmed by the parties are not in agreement with the books, reconciliation of difference is under process. iii) Group has requested for confirmation/Bank Statements/Direct confirmation to Statutory Auditors, however, in respect of certain bank accounts the same were not received by Group/Statutory Auditors. iv) GST, Tax Deducted at source (TDS), provident fund liability, Refunds in respect of Income Tax, are still pending to be reconciled with the Returns filed/ statutory records maintained. v) In case of AASL, a) Indirect taxes recoverable includes GST input amounting to Rs. 323.80 millions and as per GST portal amount of GST input credit available as on 31.03.2019 was Rs.143.81 million. Job of GST compliances is outsourced to an outside agency and Company is in the process to reconcile the GST input credit difference with the help of outsourced agency. Impact, if any, due to said difference on the results of the Company at this stage is not ascertainable. b) During the year 2018-19 Rs. 13.37 Million (Rs.0.20 Million) has been provided as interest on late/ non-payment of statutory dues. Penalty on delay deposit of statutory dues is not ascertainable at this stage, hence not provided for. c) Interest liability on delay/ nonpayment of lease rent and Maintenance Reserve (Supplemental Rental) to foreign vendors for the delay in payment due to liquidity problem during the year 2018-19 and in previous years has not been ascertained and provided as the Company is in the process with the lesser for the waiver of the same. vi) In case of HCI a) The matter relating to the cost of construction of Centaur Lake View Hotel Srinagar

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and the cost sharing arrangement between the hotel and Sher-e-Kashmir Convention Centre (SKICC) between the Company and Government of Jammu & Kashmir (J&K) had been agreed by both the parties in a joint meeting held on 15 October 2004 and all the matters of divergent views were settled. Amount receivable from J & K government in respect of cost sharing arrangements with SKICC is Rs 112.4 million (PY: Rs 98.2 million). The amount payable to J & K government on account of joint construction is Rs. 45.2 million and amount receivable on account of joint construction is Rs. 41.8 million. These balances are subject to reconciliation and confirmation. Adjustment, if any will be accounted in the year in which finality is reached. b) At Centaur Delhi, compliance in respect of Tax Deducted at Source (Contractors and Professionals) has been done at the time of payment. Consequently, interest and penalty, if any, will be accounted for as and when the liability arises. vii) In the case of AIATSL, The Royalties recovered from clients and payable to Airport Authority of India and MIAL are under reconciliation. 43. In the case of AI, the company has requested for confirmation/Bank Statements/Direct confirmation as on 31st March 2019 to Statutory Auditors.Company has obtained confirmation/ bank statements in respect of bank accounts/fixed deposits/loan accounts except for 2 bank accounts carrying aggregate balance of Rs.0.3 million. However, as per the Statutory Auditors they have not received the confirmations directly in respect of 168 bank accounts carrying aggregate balance of Rs 1,589.5 million, 34 Fixed Deposit accounts carrying aggregate balance of Rs 803.9 million and Loans taken from a foreign bank carrying balance amounting to Rs 9,059.3 million as on 31st March 2019.

44. Internal Control

The group 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 offices, user departments and Central Accounts Office.To comply with the same, Independent Chartered Accountants firms have been appointed by the group.System for uniform and timely accounting in SAP as well as other software, including interface with each other, is under process of being strengthened.

45. Inventories

a) In the case of AI, the Work Order Suspense account includes items other than repairables of Rs. 2371.3 million (PY: Rs 1765.9 million) out of which provision has been made for Rs 2233.9 million (PY: Rs 1277.6 million) for items up to September 2018 and heavy checks/ transit checks/express checks up to Feb 2019. b) Pending reconciliation/rectification, provision of Rs. 246.1million (PY: Rs 319.7 million) has been made towards the inventory balances lying under various intermediary /suspense heads under RAMCO system for which consumption / issue / scrappage has not been

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updated until 31.03.2019. Amount lying in such accounts as at 31.03.2019 is 448.9 million (PY: Rs. 645.8 million). c) The accounting of FDI (Freight, Duty and Incidentals) in Ramco is done on block level instead of at transaction level. At the year end, FDI is expensed out on the basis of ratio of closing inventory to consumption of inventory during the year. The total of FDI expensed out during the period amounts to Rs 1,031.0 million (PY: Rs 823.9 million). This practice has been followed consistently in view of bulk and consolidated movement of spares, and difficulty in identifying and allocating item wise FDI. d) In case of AIXL i) During the year the Company has completed the process of reviewing the “negative balances” of Inventory. The process has revealed that the “negative balances” aggregating to Rs.425.11 Million as on March, 2018 had to be adjusted against the “positive balances” of the same inventories in the other Inventory Ledgers which have been adjusted during year. The said adjustment does not have any impact on the financial statements of the company. ii) On the basis of information provided by MMD department and verified / accepted by the Company in relation to non-moving items of Inventory, the Company has made the provision for inventory obsolescence as on 31st March, 2019 to Rs.197.42 Million as against as on 31st March 2018 of Rs. 158.20 Million. iii) Inventories at the yearend include balances under in-house repairing jobs being carried as “Work order Suspense Internal / External” which contains materials issued and repair charges valued at Rs. 1,329.7 million issued in respect of closed/ completed/ pre-closed/ cancelled/ initiated/ in-progress Work Orders completed till the year end, lying unadjusted. These items are to be accounted for as consumption of material / repairs, as per the accounting process followed in the RAMCO software. Further to aforesaid, the work order suspense account, include expendable items of Rs.112.6million which are to be charged off to consumption on issuance. As against the above, a provision of Rs. 56.3 million has been made in the books of the FY 2018- 19 as per the existing practice and accounting for the remaining items shall be done as and when these work orders are closed in the RAMCO. 46. Status of Reconciliation with Airport Operators i) In the case of AI, the reconciliation with various Airport Operators such as AAI, MIAL, DIAL, CIAL and GHAIL has been carried out during the year and the status of the same as on 31st March 2019 is given hereunder:

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(Rupees in Million) No Name of Airport Operator Balance Balance Receivable Difference Payable as per as per Airport Air India Ltd as Operators as on on 31.3.19 31.3.19 1 Airport Authority of India (AAI) 14,374.7 20,336.6 (5,961.9)

2 Mumbai International Airport Ltd 1,516.4 1,852.1 (335.7) (MIAL) 3 Delhi International Airport Ltd 2,598.1 2,790.6 (192.5) (DIAL) 4 Cochin International Airport Ltd 173.2 187.8 (14.6) (CIAL) 5 Greater Hyderabad International 226.6 1,251.5 (1,024.9) Airport Ltd (GHIAL)

Note:a) The balances as per M/s GHIAL include demand for interest on delayed payment and pending verification, the same have been disclosed as contingent liabilities by the group Amounting to Rs 988.6 million (PY: 951.1 million) b) The balance of M/s MIAL is inclusive of an interest amount of Rs 237.7 million, which subsequentto balance confirmation as on 31.3.2019 has been waived off by MIAL in FY 2019-20. Thus the actual difference as on 31st March 2019 is only Rs 98.0 million for Contingent Liability has been disclosed ii) In addition to above, other major reasons for the difference are due to payments/credits given by AI up to 31.3.2019 for which accounting effect by the Airport Operators is yet to be given and the difference due to disputes in rates applied for landing & parking charges, ground handling, royalty, space rentals, etc. which are not as per terms & condition of agreements. iii) The additional compensation receivable from MIAL is to be accounted for on the completion of the entire process i.e. after comprehensive review of total leased areas/premises ultimately held once the expansion work is completed/certified and handing/taking over is completed. iv) The balances in respect of AAI are in the process of reconciliation and during the year various pending issues have been sorted out as per the ‘Umbrella Agreement’ signed between AI and AAI. Necessary effect for the same will be given in the FY 2019-20 on the completion of the reconciliation of all balances with AAI. v) As per AASL books of Accounts, an amount of Rs. 622.52 million (previous year Rs. 652.84 Million) was payable to AAI as on 31st March 2019 (excluding interest). 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. Reconciliation

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with Airports Authority of India (AAI) is under process since previous years. vi) In case of AASL, 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 final decision. 47. Entitlement of “Service Export from India Scheme” (SFIS): a) In case of AIXL, the Company submitted the application for applicable credit under the “Service Export from India Scheme” (SEIS) based on the service exports from India and accounted an aggregate amount of Rs. 915.14 Million as income in the previous year. In the current year, on the basis of the approvals from the DGFT, the Company has realized/ received licenses for an aggregate amount of Rs. 872.68 Million against the said amount of Rs. 915.14 Million net of the expenditure towards commission and DGFT charges. The differential amount of Rs. 42.46 Million between the income accounted in the earlier year and the amount realized in the current year is debited as Previous Year Expenditure. For the current year, the Company has accounted for income of Rs. 552.47 Million in respect of the said credit under SEIS Scheme, net of the commission and DGFT charges as applicable. b) In case of AIATSL, The Company is entitled for credit under the “Service Export from India Scheme” on the basis of the foreign exchange earned by the Company through export of Services. The said benefit, in the form of License/Scrips, is provided by the DGFT, the Company is in the process of submitting of claim for the year 2017-18 and 2018-19 and will be recognized in the 2019-20 on collection basis. 48. In case of AIXL, the Current Assets and Loans and Advances and Liabilities are approximately of the value stated if realized in the ordinary course of business. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

49. Segment Reporting:

a) The Group has a number of entities which are managed as individual operating companies including Airline and platform functions. The platform functions of the business primarily support the airline operations. These activities are not considered to be reportable operating segments as they earn revenues incidental to the activities of the Group. Accordingly, the airline related business is the only reportable segment.The details of geographical area wise revenue earned (derived by allocating revenue to the area in which the sales were made) are given hereunder:

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i) Segment Reporting of Continuing Operations: (Rs in Million)

Particulars 2018-19 2017-18 a) USA/Canada 31,177.6 24,578.7 b) UK/Europe 23,338.4 18,986.9 c) Asia (excluding India), Africa and Australia 53,266.3 40,256.3 d) India 184,650.8 176,003.7 Total 292,433.1 259,825.6 ii) Segment Reporting of Discontinued Operations:

Particulars 2018-19 2017-18 a) India 12,648.6 10,706.4 Total 12,648.6 10,706.4 Note: Refer Note 25.1 for details of Financial Performance of Entities Held for Sale. b) Major revenue-earning asset of the Group is the aircraft fleet, which is flexibly deployed across its worldwide route network. Other non-current assets (other than financial instruments) located outside India are not material, hence, not disclosed. 50. Related Party Transactions: Disclosure of the names and designations of the Related Parties as required under IND AS- 24are as under:

A. Key Management Personnel &Relatives: i) Transactions with Key Managerial Personnel

There are no transactions with key managerial personnel other than Remuneration and Perquisites to Chairman & Managing Director and Functional Directors. ii) Key Management Personnel &Relatives: i) List of Board of Directors of Air India Limited (AIL) During FY 2018-19 and upto 1st September, 2019 Name Designation (A) Whole-Time Directors 1 Shri Pradeep Singh Kharola Chairman & Managing Director (Appointed as CMD effective 12.12.2017 and ceased to be CMD w.e.f 14.02.2019) 2 Shri Ashwani Lohani Chairman & Managing Director (Appointed as CMD effective 14.02.2019)

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Name Designation 3 Shri Pankaj Srvastava Director-Commercial (Upon superannuation, ceased to be on Board w.e.f. 01.05.2018) 4 Shri Vinod Hejmadi Director- Finance 5 Shri Arvind Kathpalia Director Operations (Ceased to be on the Board w.e.f. 13.11.2018) (B) Government Nominee Directors 6 Ms. Gargi Kaul Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Ceased to be on the Board w.e.f. 24.01.2019) 7 Shri Arun Kumar Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 24.01.2019) 8 Shri Praveen Garg Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 31.08.2019) 9 Shri Satyendra Kumar Mishra Joint Secretary, Ministry of Civil Aviation. (C) Independent Directors 10 (Dr) Shri Ravinder Kumar Tyagi Appointed on the Board w.e.f 31.05.2017 11 Shri Syed Zafar Islam Appointed on the Board w.e.f 31.05.2017 12 Shri Y.C. Deveshwar Appointed on the Board w.e.f 08.08.2018) (Ceased to be on the Board w.e.f. 11.05.2019) 13 Shri Kumar Mangalam Birla Appointed on the Board w.e.f 08.08.2018 14 Smt. Purandeswari Daggubati Appointed on the Board w.e.f 04.10.2018 ii) List of Board of Directors of Air India Express Limited (AIXL) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No 1 Shri Pradeep Singh Kharola Part-time Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Part-time Chairman (Appointed w.e.f. 14.02.2019 ) 3 Shri Vinod Hejmadi Nominee Director of Air India 4 Smt (Dr.) Shefali Juneja Government Nominee Director (Ceased w.e.f. 31.08.2018) 5 Shri Pranjol Chandra Government Nominee Director (Appointed w.e.f. 31.08.2018) 6 Shri Angshumali Rastogi Government Nominee Director (Appointed w.e.f. 12.05.2017)

385 CFS iii) List of Board of Directors of Airlines Allied Services Ltd. (AASL) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No. 1 Shri Pradeep Singh Kharola Part-time Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Part-time Chairman (Appointed on the Board w.e.f. 14.02.2019 ) 3 Shri Vinod Hejmadi Nominee Director of Air India 4 Shri Pankaj Srivastava Nominee Director of Air India (Ceased w.e.f. 30.04.2018 ) 5 Shri S S Uberoi Nominee Director of Air India (Ceased to be on the Board w.e.f. 1.05.2018) 6 Capt. A K Govil Nominee Director of Air India (Ceased w.e.f. 31.05.2018) 7 Shri Pankaj Kumar Nominee Director of Air India (Appointed w.e.f. 30.08.2018 and ceased to be on the Board w.e.f. 1 .05.2019 8 Smt. (Dr.) Shefali Juneja Government Nominee Director (Ceased w.e.f. 31.08.2018) 9 Shri Pranjol Chandra Government Nominee Director (Appointed w.e.f. 31.08.2018) 10 Shri Angshumali Rastogi Government Nominee Director iv) List of Board of Directors of Air India Air Transport Services Ltd.(AIATSL) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No 1 Shri Pradeep Singh Kharola Part-time Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Part-time Chairman (Appointed on the Board w.e.f. 14.02.2019 ) 3 Shri Vinod Hejmadi Nominee Director of Air India 4 Ms Gargi Kaul Government Nominee Director (Ceased to be on the Board w.e.f. 24.01.2019) 5 Shri Arun Kumar Government Nominee Director (Appointed on the Board w.e.f. 24.01.2019) 6 Shri Praveen Garg Government Nominee Director Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 21.08.2019) 7 Shri Satyendra Kumar Mishra Government Nominee Director

386 CFS v) List of Board of Directors of Air India Engineering Services Limited (AIESL) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No 1 Shri Pradeep Singh Kharola Part-time Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Part-time Chairman (Appointed on the Board w.e.f. 14.02.2019 ) 3 Shri Vinod Hejmadi Nominee Director of Air India 4 Ms Gargi Kaul Government Nominee Director (Ceased to be on the Board w.e.f.24.01.2019) 5 Shri Arun Kumar Government Nominee Director (Appointed on the Board w.e.f. 24.01.2019) 6 Shri Praveen Garg Government Nominee Director Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 21.08.2019) 7 Shri Satyendra Kumar Mishra Government Nominee Director vi) List of Board of Directors of Hotel Corporation of India Limited (HCI) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No 1 Shri Pradeep Singh Kharola Part-time Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Part-time Chairman (Appointed on the Board w.e.f. 14.02.2019) 3 Shri Vinod Hejmadi Nominee Director of Air India 4 Ms Gargi Kaul Government Nominee Director (Ceased to be on the Board w.e.f. 24.01.2019) 5 Shri Arun Kumar Government Nominee Director (Appointed on the Board w.e.f. 24.01.2019) 6 Shri Praveen Garg Government Nominee Director Additional Secretary & Financial Advisor, Ministry of Civil Aviation. (Appointed on the Board w.e.f. 21.08.2019) 7 Shri Satyendra Kumar Mishra Government Nominee Director 8 Shri Pankaj Kumar Managing Director (Ceased to be on the Board w.e.f. 01.05.2019)

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vii) List of Board of Directors of Air India SATS Airport Services Private Limited (AI-SATS) During FY 2018-19 and upto 1st September, 2019 Sr. Name Designation No 1 Shri Pradeep Singh Kharola Chairman (Ceased to be on the Board w.e.f. 14.02.2019) 2 Shri Ashwani Lohani Chairman (Appointed on the Board w.e.f. 14.02.2019) 3 Mr Chew Teck Chye CEO and Director (Ceased to be on the Board w.e.f. 10.11.2018) 4 Shri Ramanathan Rajamani Director (Appointed on the Board w.e.f. 10.11.2018) 5 Mr Alexander Hungate Director (Resigned on 07.03.2019) 6 Shri Denis Suresh Kumar Marie Director (Appointed on the Board w.e.f. 07.03.2019) 7 Shri Vinod Hejmadi Nominee Director of Air India 8 Mr Yacoob Piperdi Director 9 Shri S S Uberoi Director (Ceased to be on the Board on Superannuation w.e.f. 31.01.2019) iii) Key Managerial Remuneration a) Salary and Allowances (Rs in Million) No Particulars 2018-19 2017-18 (a) Chairman & Managing Director Salaries & Allowances 3.1 2.3 (including value of perquisites 2018-19 : Rs Nil million (PY: Rs 0.02 million) (b) Functional Directors i) Salaries & Allowances 15.7 16.2 (including value of perquisites 2018-19 : Rs 0.06 million (PY: Rs 0.08 million) ii) Contribution to Provident Fund 0.6 0.6 (c) Independent Directors Sitting Fees paid to Independent Directors 0.7 0.2

Note:Transactions such as providing airline related services in the normal course of business are not included above.

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b) Employee Benefits Payable (Rs in Million) No Particulars 2018-19 2017-18 i) Gratuity Provision 3.4 5.1 ii) Leave Encashment Provision 4.5 6.0 iii) Salary Outstanding at year end 1.7 1.3

B. Transactions and Balances with Air India SATS Airport Services Private Ltd. (AI-SATS) i) Entities and Nature of Transactions (Rs in Million) No Transactions 2018-19 2017-18 1 AI-SATS a) Expenditure i) Handling Charges 2734.0 2564.1 ii) Others b) Revenue i) Loan of Equipment - Lease Charges - 186.1 ii) Others 729.5 655.1 iii) Dividend 20.2 20.2 c) Payables 859.1 1000.5

d) Transactions of JV with Subsidiary Cos i) AASL 108.8 53.1 ii) AIESL 255.0 162.7 iii) AIXL 176.9 154.5 iv) AIATSL 2.6 - v) HCI - - Total 543.3 370.5 e) Closing Balances of JV with Subsidiary Companies i) AASL 185.9 77.1 ii) AIESL 558.8 205.6 iii) AIXL 77.0 30.7 iv) AIATSL 2.6 - v) HCI - - Total 824.3 313.4

ii) The holding company has entered into Joint Venture (JV) agreement with SATS, Singapore in the equity ratio of 50:50 to provide ground handling services to airlines at certain airports this was in pursuance of GOI notification on the ground handling policy.

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iii) As per the books of AI, the net balance payable to AI-SATS as on 31st March 2019 isRs859.1 million (PY:Rs.1,000.5Million) and as per the books of AI-SATS the net balance receivable from AI is Rs892.6 million (PY: Rs 1,000.5million). The difference of Rs 33.5 million is on account of TDS deducted but not remitted by Air India Ltd as on 31.3.2019. C. Transactions with Provident Fund Trusts (Rs in Million) Particulars 2018-19 2017-18 PF Contribution during Outstanding as PF Contribution Outstanding as on the Year on 31.3.19 during the Year 31.3.18 AI PF Trusts Dues 742.9 382.9 666.7 424.8

D. major Transactions with Govt/Govt Related Entities The details of the major transactions of Revenue and Expenditure of the group with Govt Related Entities are given hereunder:

(Rs in Million) No Name of Entity 2018-19 2017-18 Amount of Amount of Transactions Transactions during during the year the year Expenditure i) Airport Authority of India (AAI) 4,959.6 7,560.0 ii) Govt of India (GOI)- Guarantee fee 6,579.1 -

ii) Oil Companies Indian Oil Co Ltd (IOCL) 45,582.5 31,599.5 Hindustan Petroleum Co Ltd (HPCL) 12,177.1 10,144.5 Bharat Petroleum Co Ltd (BPCL) 9,247.7 6,481.8

Revenue i) SESF Flights Revenue 8,824.2 - Govt of India (GOI) 3,700.4 7,554.3 Indian Airforce (IAF) 41.2 - ii) Charter Revenue – Others Govt of India (GOI) 17.4 1,378.4

i) Loan from National Small Savings Fund 26,360.0 - (NSSF) ii) Air India Asset Holding Co Ltd (SPV) - - a) Reimbursement of Interest on AI Loans carved out 13,000.0 - to the SPV

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No Name of Entity 2018-19 2017-18 Amount of Amount of Transactions Transactions during during the year the year b) Advance for expenditure 0.4 - iii) Govt of India a) Equity Infusion from Govt 39,750.0 18,000.0 b) Advance received for 2 SESF Aircraft 4,675.2 30,000.0

Note: a) The above transactions with the Govt/Govt Related entities cover transactions that are significant individually and collectively. The group also entered into other transactions with various other Govt. related entities; however, these transactions are insignificant either individually or collectively and hence not disclosed. b) The above revenue/expenditure figures includes the amounts of Entities Held for Saleas follows:

AAI- Rs 490.1 million, IOCL- Rs. 1,368.2 million, HPCL- Rs. 406.3 million, BPCL-Rs. 257.5 million, GOI-Rs. 1,225.4 million(SESF flight revenue), IAF- RS. 41.2 million, GOI- Rs. 17.4 million (charter revenue others).

E. Subsidiaries and Joint Venture The Group’s Subsidiaries and Joint Venture as at 31st March, 2019 are set out below unless otherwise stated, they have share capital consisting solely of Equity Shares that are directly/ indirectly held by the Group.

No Particulars Country of Percentage (%) of Ownership Incorporation Interest As at 31st As at 31st March March 2019 2018 (A) Subsidiary Companies i) Air India Express Ltd (AIXL) India 100 % 100 % ii) Air India Air Transport Services Ltd (AIATSL) India 100 % 100 % iii) Air India Engineering Services Ltd (AIESL) India 100 % 100 % iv) Airline Allied Services Limited (AASL) India 100% 100% v) Hotel Corporation of India Ltd (HCI) India 80.38 % 80.38 % (B) Joint Venture (JV) i) AI-SATS Airport Services Pvt Ltd India 50 % 50 %

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51. Interest in Joint Venture i) Summarized Financial Information Assets/Liabilities of Joint Venture (100%) (Rs in Millions)

Particulars Air India SATS Airport Services Private Limited As at As at March,31,2019 March,31,2018 Non-Current Assets 4,431.3 4,177.2 Current Assets (excluding Cash and cash equivalents and Bank Balance) 2,886.2 2,369.8 Non-Current Liabilities 1,001.0 655.6 Current Liabilities 2,324.6 2,150.6 Cash and cash equivalents and Bank Balance 433.0 290.8 Current financials Liabilities (Excluding trade payables and provisions) 1,891.2 1,753.3 Non-Current financials Liabilities (Excluding trade payables and 845.7 534.5 provisions)

ii) Summarized Financial Information Revenue/Expenditure of Joint Venture (100%) (Rs. In Million) Particulars Air India SATS Airport Services Private Limited As at March 31,2019 As at March 31,2018 Revenue 7,317.9 6,724.1 Profit or Loss for the year 447.6 509.7 Other Comprehensive Income for the Year (4.9) 4.5 Total Comprehensive Income for the Year 442.7 514.2 The Above Profit/Loss for the year include the following: Depreciation and Amortization 334.8 298.2 Other Income 121.2 137.9 Tax Expense 63.9 24.9

iii) Reconciliation of the above Summarized Financial Information to the carrying amount of the interest in Joint Venture(50%) recognized in the Consolidated Financial Statements (Rs. In Million) Particulars Air India SATS Airport Services Private Limited As at March As at March 31,2019 31,2018 Net Assets of Joint Venture Total Assets 7,750.5 6,837.5 Current Liabilities and Non-Current Liabilities 3,325.6 2,806.2

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Particulars Air India SATS Airport Services Private Limited As at March As at March 31,2019 31,2018 Net Assets of Joint Venture 4,424.9 4,031.3 Proportion of Group’s ownership interest in JV (%) 50% 50% Group’s share in Net Assets of the Joint Venture 50% 50% Carrying Amount of the Group’s Interest in JVs 2,212.4 2,015.7 iv) Over the past few years the dividend declared by AI-SATS has been gradually going down from 10% to 5% to 3% etc. Similarly, Profits of the Joint Venture are also going down simultaneously. In view of this the disposable income of the Joint Venture is also going down since funds available with the Joint Venture are also required for its CAPEX, expansion programmes etc. Accordingly, the declaration of any dividends in the future are quite uncertain, hence, in view of the above, the Holding Company is of the opinion that Deferred Tax Liability need not to be created on the future disposable income/dividend, However, details of the same given are hereunder (Rs. In Million) Particulars 31st March, 2019 31st March, 2018 Undistributed Earnings of Joint Venture AI-SATS 1,780.3 1,579.8 Unrecognized Deferred Tax Liability relating to the 365.9 324.7 above v) Capital Commitments and Contingent Liabilities in respect of Company share (50%) in AI- SATS Joint Venture (Rs in million) No Particulars 31st 31st March, March, 2019 2018 1. Estimated amount of contracts remaining to be executed in respect - 74.6 of PPE and Other Intangible Assets 2. Company's exposure in respect of performance bank guarantee 229.0 590.1 issued to various parties 3. Claims against the Company not acknowledged as debts. - - 4. Taxation matters: (i) Income Tax Appeals being contested by the Company 161.2 55.6 Less: Payment under protest In respect of these Appeals (65.6) (55.6) (ii) Other Income Tax Matters 109.5 109.5 5. Other than Taxation matters Demand against the ESIC 2.7 2.7 Less: Payment under protest In respect of these Demands (2.7) (2.7)

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52. In case of AIATSL, Bangalore airport belongs to HAL and Ground Handling Services were provided by HAL. However Company entered into an arrangement vide agreement dated 29th April 2016 with HAL to provide the expertise of the Company for Ground Handling Services at Bangalore Airport. In terms of such arrangement, the Company will use all infrastructure of HAL to provide the Ground Handling Services at that airport and in terms of the same net profit of HAL, after tax, shall be shared equally between HAL and the Company. Accordingly, 50% share of net profit of HAL for the current year amounting to INR 9.35 Million has been accounted for as other income.

(Rs. in Million) Name of the Joint Working Group (JWG) AI-JWG As at March 31, 2019 As at March 31, 2018 Share of Company / Ownership Interest 50% 50% Income - Company’s Share 24.70 21.60 Expenditure - Company’s Share 6.00 3.40 Profit / (Loss) - Company’s Share 18.80 18.20 Share of income from Joint Working Groups 9.35 9.1 of the Company with HAL: Contingent Liability - -

53. Leases i) Finance Lease a) Aircraft Fleet and Equipment acquired under finance leases are treated as if they had been purchased outright. As required under Ind AS - 17, the cost of these assets taken on lease in the case of AI isRs 185,438.3 million (PY. Rs 182,888.8million). The future lease obligation in respect of the aircraft on finance lease in the case of AI and AIXL is Rs 47,705.3 million as at March 31, 2019 (PY. Rs 65,860.1 million). The Finance leases are guaranteed by the Govt. of India. b) Liability on account of future minimum lease rentals is as under: Particulars As at 31.3.2019 As at 31.3.2018 a) Outstanding balance of Minimum Lease Payments including interest thereon i) Not later than one year and 26,264.3 23,729.9 ii) Later than one year and not later than 23,168.5 44,877.6 five years iii) Later than five years - Total 49,432.8 68,607.5 b) Present Value of (a) above i) Not later than one year 25,132.1 22,259.8 ii) Later than one year and not later than 22,573.2 43,600.3 five years

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Particulars As at 31.3.2019 As at 31.3.2018 iii) Later than five years - Total 47,705.3 65,860.1 c) Finance Charges 1,727.5 2,747.4

ii) Operating Lease: a) The Group has taken 67 Nos. (PY:57Nos) of Aircraft namely 34(PY: 24Nos) of Airbus Family and 33 Nos. (PY: 33Nos) of Boeing Familyas at the end of 31st March 2019 on non-cancellable operating lease.Liability on account of future minimum lease rentals in respect of leases acquired is as under:

No Particulars As at 31 March, 2019 As at 31 March, 2018 i) Not later than one year 36,854.6 30,735.4 ii) Later than one year and not later than 1,38,975.0 1,18,500.7 five years iii) Later than five years 1,08,785.2 1,07,768.4 Total* 2,84,614.7 2,57,004.5

[Note: The above amount includes operating lease in respect of Entities Held for Sale amounting to Rs.27,626.9 million (PY: Rs. 29,751.3 million)]

b) In the case of premature termination of the Lease Agreement by group i.e. lessee is required to pay compensation to the Lessors of the.Aircraft as per the terms of the agreement. However, such compensation may differ from Lessor to Lessor. c) The group has taken various residential/commercial premises under cancellable operating lease/rental basis the amount of which is unascertainable. d) The Group has also taken Vehicles and Office Equipment on operating lease with option to purchase/renew but title may or may not eventually be transferred. These assets are scattered at various stations and cumulatively not significant. Complete details of future obligation in this respect could not be compiled; amount thereof is not material. 54. Re-Delivery Charges Provision for re-delivery charges is made to meet the contractual maintenance and return conditions on aircraft held under operating leases.Such provisions are made based on management estimate of number of hours or cycles each engine will have flown at the return date, the cost of performing the required restoration work at that future dateand discount rates commensurate with the expected obligation maturity schedules.Judgment is exercised by management given the long-term nature of assumptions that go into the determination of the provision. The assumptions made in relation to the current year are consistent with those in the previous year. Expected timing of resulting outflow of economic benefit is FY2020 to 2030.

The movement in provision made is as given below:

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(Rs in Million) Particulars FY 2018-19 FY 2017-18 Opening Balance 5,602.8 3,042.5 Add: Additional Provisions during the year 2,076.5 2,146.7 Add: Interest accretion on Provisions 610.7 420.7 Add/(less) Foreign Exchange Impact (202.1) 41.0 Less: Amount used during the year (294.2) (48.1) Closing balance 7,793.7 5,602.8 [Note: The above amount includes Re-delivery charges in respect of Entities Held for Sale amounting to Rs.164.9 million].

55. Payments to and Provisions for Employees: a) In the case of AI, Liability for wage arrears includes Rs2,076.3 million (Net), (PY Rs. 2,076.3 million Net) arrived on ad-hoc basis towards wage settlement up to period 31st December 2006 pending finalization of actual liability. b) In view of Department of Public Enterprises (DPE) guidelines applicable to PSUs no wage revision can be granted to the employees of loss-making PSUs. The Group has been making losses since 1st January 2007 hence no provision has been made towards wage revision/settlement. c) Revised Basic Pay on the basis of Justice Dharamadhikari Committee Report :Based on Justice Dharamadhikari Committee (JDC) recommendations, the Revised Basic Pay (RBP)had been implemented for all the categories of the employees from different dates. The total provision towards the balances payable to the employees on account of the implementation of the JDC recommendations as on 31st March 2019 is Rs 13,319.1 million (PY: Rs 13,319.1 million). d) In the case of HCI i) The wage agreements with workmen expired on 31.12.2006. The Unions have since submitted their Charters of Demands for the 5 year period ended 31.12.2011. Besides, the wage revision for the 5 year period 1.1.2012 onwards is also pending. As per the Department of Public Enterprises (DPE) guidelines applicable to Public Sector Undertakings (PSUs) no wage revision could be granted to the employees of loss making PSUs. However as per award of CGIT, Chandigarh the reference is answered in favor of the workmen holding that they are entitled to wage revision effective 17.8.2008. This was challenged by the Company in the High Court of Delhi wherein no interim relief/ stay was granted and directed to implement the award. Hence negotiations were held with the unions by the Management for a 10 year period effective 17.8.2008 and the final approval has been received from the Ministry in July 2019.The revision would be implemented in the financial year 2019-20. ii) In view of the above negotiations, provision for wage revison (over and above the adhoc being paid to workmen) for the year has been made in the books of accounts for Rs 14.1 millions and reflected in Profit & Loss account under Staff Cost. The

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arrears of wage revision for the period 17.8.2008 to 31.3.2017 totaling to Rs 82.3 millions has been reflected under Statement of Changes in Equity and for 2017-18 amounting to Rs 17.5 millions has been adjusted under Staff Cost. iii) Similarly, the wage revision relating to the Officers Cadre which was due on 01.01.2007 for a period of 10 years is still pending. The Management had announced an adhoc of Rs 5,000/- per month per employee for officers effective 1.1.2017 which has been accounted for upto 31st March 2019. In view of the proposed union category wage revision, it was also proposed to increase the adhoc amount to officers prospectively effective 1.7.2018. A provision of Rs 1.2 million has been made in the books under "Staff Cost" for 2018-19. 56. Employee Benefits (A) General description of Defined Benefit Plan

i) Gratuity: Gratuity is payable to all eligible employees of the Group on superannuation, death, or permanent disablement, in terms of the provisions of the Payment of Gratuity Act. ii) Post-Retirement Medical Benefits: The Group has a Post-Retirement Medical Benefit Scheme under which medical benefits are provided to retired employees and their spouse. (B) Defined Contribution Plan Employees Provident Fund: The Group has Employees Provident Fund Trusts under the Provident Fund Act 1925, which governs the Provident Fund Plans for eligible employees. The Group as well as the employees contributes 10% of the PF Pay to the Fund out of which Provident Fund is paid to the employees.

(C) Other Long Term Employee Benefits i) Privilege Leave Encashment: Privilege Leave Encashment is payable to all eligible employees at the time of retirement upto a maximum of 300 days. However, in the case of AIXL, which mainly has contractual employees the limit is 84 days. ii) Sick Leave Encashment: Sick Leave encashment is payable to all eligible employees at the time of retirement upto a maximum of 120 days subject to the condition that the employee should have at least 60 days of Sick Leave to his credit. However, the group had decided to freeze the encashment of sick leave standing to the credit of all existing employees as on 01.07.2012. Accordingly, provision for sick leave has also been computed at these frozen sick leave numbers. (D) Defined Benefit Plans – Gratuity & Post-Retirement Medical Benefits (Unfunded) Disclosure as per Ind AS-19

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(Rs in Millions) Particulars Gratuity Gratuity Post Post Retirement Retirement Medical Medical Benefits Benefits As at 31.03.19 As at 31.03.18 As at 31.03.19 As at 31.03.18 (a) Table for Change in Benefit Obligation: Liability at the beginning of the 11,713.4 10,609.8 14,715.8 year 14,709.0 Less: Liability transferred out/ - -25.6 0.0 disinvestment - Net Liability at the beginning of 11,713.4 10,584.1 14,709.0 14,715.8 the year Interest Cost 898.2 734.7 1,141.5 1,096.4

Current service cost 367.9 268.3 158.5 157.5 Past Service Cost (Vested - 155.2 1,796.1 2.7 Benefit) - Benefit paid - 1,821.7 -1,351.4 - 818.3 -1,245.5 Actuarial (gain)/loss on obligations 50.7 -4.1 - 25.1 0.0 Actuarial (gain)/loss on 447.8 -3.7 0.0 obligations-Due to Change in 388.5 Demographic Assumption Actuarial (gain)/loss on 13.1 -465.3 - 8.3 -520.8 obligations-Due to Change in Financial Assumption Actuarial (gain)/loss on 116.1 154.8 501.9 obligations-Due to Experience 121.8 Liability at the end of the year 11,630.6 11,713.4 15,666.6 14,709.0 (b) Table for Fair Value of Plan - 0.0 0.0 Assets: - Value of Plan Assets at beginning - 0.0 0.0 of the year - Expected return on Plan Assets - 0.0 - 0.0 Contributions - 0.0 - 0.0 Benefit paid - -754.6 - 0.0 Actuarial (gain)/loss on Plan - -343.5 - 0.0 Assets (c) Amount Recognized in the - 0.0 0.0 Balance Sheet: - Liability at the end of the year - 11,630.6 -11,713.4 - 15,666.6 -14,709.0 Fair value of Plan Assets at the - 0.0 0.0 end of the year Amount Recognized in the - 11,630.6 -11,713.4 - 15,666.6 -14,709.0 Balance Sheet (d) Expense recognized in the - 0.0 - 0.0 P & L Account: Current service cost 367.9 268.3 157.5 158.5

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Particulars Gratuity Gratuity Post Post Retirement Retirement Medical Medical Benefits Benefits As at 31.03.19 As at 31.03.18 As at 31.03.19 As at 31.03.18 Interest cost 897.6 734.7 1,140.4 1,096.4 Past Service Cost -155.2 1,796.1 2.7 Gains/Loss on curtailment and - 0.0 0.0 settlements Net Effect of changes in Foreign Exchange Rate Expense recognized in the 1,110.3 2,799.0 1,297.9 1,257.6 P & L Account (e) Expense recognized in the - 0.0 0.0 Other Comprehensive Income - (OCI) for Current Period Actuarial (Gains)/Losses on 627.8 -318.4 476.8 -18.9 obligation for the period Return on Plan Assets, Excluding 0.0 0.0 Intrest Income Change in Asset Ceiling 0.0 0.0 NET ( Income ) /Expense For 627.8 -318.4 476.8 -18.9 the period recognized in OCI (f) Balance Sheet Reconciliation: - 0.0 - 0.0 Opening Net Liability 11,713.4 10,584.1 14,715.8 14,709.0 Expense Recognized in 1,110.3 2,799.0 1,297.9 1,257.6 Statement of Profit or Loss Expense Recognized in OCI 627.8 -318.4 476.8 -18.9 Benefit Paid - 1,820.9 -1,351.3 - 817.1 -1,245.5 *Net Liability/(Asset) 11,630.6 11,713.4 15,666.6 14,709.0 Recognized in Balance Sheet

[Note: 1. The above amount includes Rs. 4,493.2 millions for Gratuity Liability and Rs. 3,544.5 millions of Post Retirement Medical Benefits Liability in respect of Entities Held for Sale. Further, the expense recognized in Statement of Profit or Loss in respect of these entities is Rs. 337.5 million for Gratuity and Rs. 292.5 million for Post Retirement Medical Benefits and the expense recognized in Other Comprehensive Income in respect of these entities (Net of Tax) is Rs. 100.7 million for Gratuity and Rs. 113.4 million for Post Retirement Medical Benefits. 2. Assumptions considered for the calculations of Retirement Benefit Plans have not been disclosed since these are not identical for all the subsidiaries.] 57. DEFERRED TAX ASSETS / (LIABILITY) (a) Deferred Tax Assets/Liabilities

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(Rs in Millions) S.No Particulars As at 31st As at 31st March 2019 March 2018 (A) Deferred Tax Liability (i) Related to Fixed Assets 79,656.0 77,661.0 (ii) Related to Foreign Currency Monetary Items 860.8 660.4 (FCMI) Sub-Total (A) 80,516.8 78,321.4 (B) Deferred Tax Assets (i) Unabsorbed Depreciation 108,942.0 106,752.4 (ii) Other Disallowances Sub-Total (B) 108,942.0 106,752.4 Net Deferred Tax Asset/(Liability) 28,425.2 28,431.0

In respect of AIATSL The Company has computed deferred tax on differences using income statement approach as against balance sheet approach in accordance with the requirements of Ind AS – 12 “Income Taxes”. The Company has computed opening cumulative effect (i.e. April 01, 2018) due to this error amounting to Rs.939.4 Million which pertains to one or more prior periods.

It is impracticable to determine the period-specific effects of this error on comparative financial information for reported prior period and hence, the company has given cumulative effect of the error prospectively by restating the opening balances of assets and other equity as at April 01, 2018 and hence, reported financial information of the pervious year is strictly not comparable.

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levels. The Govt of India approved the Revival Plan of the group during the year and a series of measures were approved to improve the operational and financial efficiencies as detailed in Note Nos 28, 29 &60. The group is therefore hopeful of showing improved performance in the future and accordingly, has reasonable certainty thatthe deferred tax assets recognizedwill be realized against future taxable profits. Further, the Deferred Tax Assets have been created against carry forward Depreciationonly which are available to the Group indefinitely as per the provisions of the Income Tax Act. (c) Deferred Tax Effect of Subsequent change in Corporate Tax rates The Govt has made certain amendments in the Income Tax Act 1961 and the Finance (No.2) Act 2019, through Taxation Laws (Amendment) Ordinance 2019, by means of which Corporate Tax Rates have been reduced to 22% from 30% for domestic companies. i) The impact of the revised corporate income tax rates as stated above on the Recognized Deferred tax Liabilities/Assets as on 31st March, 2019 are given hereunder: (Rs in Million)

Particulars As per Income Tax rates as As per Revised Income tax effective on date of Balance Sheet rates announced subsequently Total Deferred Tax Liabilities 80,516.8 59,047.6 Total Deferred Tax Assets 108,942.0 87,472.8 Net Deferred Tax Assets 28,425.2 28,425.2

ii) The impact of the revised corporate income tax rates as stated above on the Unrecognized Deferred tax Assets as on 31st March, 2019 are given hereunder: (Rs in Million)

Particulars As per Income Tax rates as As per Revised Income tax effective on date of Balance Sheet rates announced subsequently Unabsorbed Depreciation 16,883.9 4,802.8 Brought Forward Business Losses 115,484.8 84,688.9 Other Temporary Differences 17,066.6 12,515.8 TOTAL 149,435.3 102,007.5

(d) Reconciliation of Effective Tax Rate Reconciliation of tax expense and the accounting profit / (loss) multiplied by India's domestic tax rate for the year ended 31st March 2019and 31 March 2018: i) Continuing Operations:

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(Rs in Million)

Particulars For the year ended 31st For the year ended 31st March 2019 March 2018 Rate (%) Amount Rate (%) Amount Profit/(Loss) Before Tax - (71,929.9) - (44,205.5) Effective Tax Rate 31.20 22,442.1 30.90 13,659.5 Deferred Tax asset not recognized on - (22,400.1) - (13,659.5) above Tax expense for the year - 42.0 - - ii) Discontinued Operations: (Rs in Million) Particulars For the year ended 31st For the year ended 31st March 2019 March 2018 Rate (%) Amount Rate (%) Amount Profit/(Loss) Before Tax - (15,116.4) - (13,978.5) Effective Tax Rate 31.20 4,716.3 30.90 4,319.4 Inadmissible expenses 132.5 19.5 Short provision for tax of earlier years 186.6 - Tax Rate Difference 47.7 38.9 Deferred Tax asset not recognized on (4,469.3) (3,866.8) above Others 22.2 - Tax expense for the year - 636.0 - 511.0

(e) The Group has not recognized Deferred Tax Liability associated with undistributed earnings of its Subsidiaries as it can control the timing of the reversal of these temporary differences and it is probable that such differences will not reverse in the foreseeable future. The taxable temporary differences relating to the Group share of investment in Subsidiaries with respect to undistributed earnings for which Deferred Tax Liability has not been created: (Rs in million) Particulars 31st March, 2019 31st March, 2018 Undistributed Earnings of AIATSL 2,158.0 580.6 Unrecognized Deferred Tax Liability relating to the above 443.6 119.3

(f) Deferred Tax Assets in respect of Entities Held for Sale amounting to Rs. 1,077.7 million (PY: Rs. 5.8 million) which is in case of Subsidiary company AIATSL. 58. Earnings Per Share (Basic & Diluted) (a) Earnings Per Share from Continuing Operations:

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Particulars As at 31.03.2019 As at 31.3.2018 Profit/(Loss) After Tax for the year (Rs in Million) (71,971.6) (44,205.5) Weighted Average No. of Equity Shares 29,238,360,685 27,108,597,452 EPS (Rs. per Share) (2.46) (1.63)

(b) Earnings Per Share from Discontinuing Operations:

Particulars As at 31.03.2019 As at 31.3.2018 Profit/(Loss) After Tax for the year (Rs in Million) (15,752.4) (14,489.5)

Weighted Average No. of Equity Shares 29,238,360,685 27,108,597,452 EPS (Rs. per Share) (0.54) (0.53)

Particulars As at 31.03.2019 As at 31.3.2018 Profit/(Loss) After Tax for the year (Rs in Million) (87,724.0) (58,695.0) Weighted Average No. of Equity Shares 29,238,360,685 27,108,597,452 EPS (Rs. per Share) (3.00) (2.17)

59. Remuneration to Auditors The details of the audit fees and expenses of the Auditors: -

(Rupees in Million) Particulars 2018-19 2017-18 Audit Fee for the year 14.6* 12.9 Other Expenses 2.8 1.8 Total 17.4 14.7

Note:1. *Includes arrears of previous year Rs.1.5 million 2. The above amount includes Audit fee Rs. 1.6 million (PY: Rs. 1.5 million) and Other Expenses of Rs 0.1 million (PY: 0.2 million) in respect of Entities Held for Sale 60. Going Concern a) Air India Limited The company has received continuous support from the Government of India (GoI) though the implementation of Turnaround Plan/ Financial Restructuring Plan (TAP/FRP) approved in 2012 and then under the Revival Plan in FY 2018-19 which has helped the company to improve its operating and financial parameters. Under the newly approved Revival Plan for Air India Ltd the GoI has during FY 2018-19 infused Equity to the tune of Rs 39,750.0 million. Accordingly, as on 31st March 2019, the 403 CFS

total Equity Infusion received by the company from the Govt under TAP/FRP and the Revival Plan aggregated to Rs 305,202.1million. Further, as part of the disinvestment process the AISAM has approved the transfer of debts of AI amounting to Rs 294,640.0 million to the SPV-AIAHL. The interest on these loans from 1st October 2018 will be met by AIAHL for which Rs 13,000.0 million was provided in the Budget and the same has been reimbursed to AI by the SPV. The various steps taken by the Govt as also AIAHL towards improving the operational and financial efficiencies of Air India have been discussed in detail in Note No 28 and 29 above. In view of the above and the financial support from the Govt of India and various measures taken by the company to improve its operational efficiencies, various revenue enhancing measures, cost control measures undertaken etc.the company expects a substantial improvement in its operational and financial performance, in the near future and hence, the Accounts have been prepared on the ‘Going Concern’ basis. b) Air India Express Limited The Financial Statement for the year has been prepared on a Going Concern basis, though the Net Worth of the Company is negative, due to following factors/reasons The Company has recorded a net profit of Rs. 1,656.95 Million during the FY 2018-19. The Company had achieved a net profit of Rs. 2,195.79 Million during the previous year FY 2017-18.  With the finalization of Accounts for FY 2018-19, the Company has recorded Cash profit of Rs. 4,292.78 Million and Operating profit of Rs. 4,326.67 Million during the year. The Company has budgeted to achieve net profit of Rs. 2,565.00 Million in FY 2018-19 which will make way for the consistent net profit trend for four years in a row.  As a result of the much improved financial performance over the past four years, the Company’s Net worth is fast approaching to positive figure. It is projected that the Company would be net worth positive by the end of FY 2020-21.  The Company is also in the process of developing the Medium to Long term fleet and network vision in order to be able to capitalize on the Market opportunities.  The Company has also surpassed the Operating Revenue by 17.7 % compared to the previous year. The Company has achieved Pan-India footprint by launching operations on many new routes from Northern parts of India. The results achieved on these routes have been promising.  The Company has increased the network base in India by adding CNN and STV which is adding the domestic network online stations to 21.  The Company has obtained the Credit rating through the External Agency and the Company is graded as “A3”. The Company with the increased credential is likely to obtain the rating as A 2 + would help the Company to reduce the interest cost on the WCDL substantially.  The Company has also achieved the distinction of IOSA certification which serves as

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a global industry benchmarks for safety and quality of services.  As part of the conscious strategy to achieve self-reliance in key operational areas such as Operations, Flight safety, Training and Engineering.  The Company has paid the dues towards the Aircraft loan for 7 aircrafts during the fiscal 18-19 and out of the balance 10 aircraft, 2 aircraft have been cleared of debt during the period upto 30th July 2019. It is projected that all the 17 Aircraft would be free from debt effective FY 2021-22.  The Board vide its 217th meeting has approved the plan for inducting 11 more aircraft through Dry lease which would be taken up during the year 2019-20 which would help us to explore new / additional international and domestic network.  The Airline was awarded with “Management Excellence for Turnaround performance” by the ASSOCHAM. c) Hotel Corporation of India Limited Inspite of the negative Net Worth of the Company as at the balance sheet date, considering the continuous support of the Holding Company and the Government, the Company is and will continue to be able to meet its financial obligations as they fall due. Accordingly the Company has prepared its accounts on a "Going Concern" basis .Various initiatives have also been taken by the management for improving the operational performance of the company and increasing the revenues in view of the following: (i) Due to the renovation of 80 guest rooms and other allied works at Centaur Delhi in view of the equity infusion of Rs 27 crores by Government of India, the revenue of the Company increased from Rs. 551.3 millions in 2017-18 to Rs 672.8 millions during the year 2018-19. This was due to increased business from Air India and its subsidiaries. (ii) The Holding company and Government of India is continuously supporting to the Company by way of financial assistance in form of equity infusion and providing financial assistance as and when required and committed to provide in future also. (iii) As per Notes to Account of Financial Statements of HCI, the property of Delhi needs to be handed over to AAI by 31.12.2019 for which the Company is in the process of negotiating the terms of handing over wherein the Company may be given alternate land or compensation in lieu thereof. This will assist the Company in meeting its long term goals of increasing its business. d) Airline Allied Services Limited Air India Limited had formulated a Turn Around Plan (TAP) applicable to its group companies in order to improve their operational and financial 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. In adherence to TAP, induction continued with the addition of 04 new ATR-72-600 aircraft in 2018-19. The fleet at year end comprised 20 aircrafts (02 ATR-42 320 and 18 ATR-72 600).

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AASL is contemplating a further induction of 15 aircrafts, out of which 02 is for replacement of ATR-42 320. The two replacement Aircraft are of ATR-72 600 and has been approved by AASL Board. As a corollary, necessary approvals and processes are being undertaken for induction of at least 06 Aircraft in the first phase and FY 2020-21. The induction is required to meet the increasing RCS route commitments allotted to AASL. AASL carried 1.60 million passengers during 2018-19 as against 1.28 million passengers during 2017-18. The year 2018-19 witnessed a growth of 25% in passenger carriage. Similarly, network also expanded from 48 destinations to 55 destinations, 100 departures to 109 departures per day and 542 flights per week to 607 flights per week. The aircraft utilization has increased to 51758 block hours from 38252 block hours at a growth of 35% in 2018-19 as compared to 2017-18. Alliance Air has projected a revenue of around Rs. 1200 crores in 2019-20 as compared to the actual revenue of Rs. 836 crores in 2018-19. This is principally due to increase in effective utilization of ATR72-600 aircraft from the average 8.78 hours to 9.53 hours per day apart from increase in ASKM. The Revenue per Kilometer (RPK) have shown upward trend with a growth of 19% from 570.335 million in 2017-18 compared to 679.873 million for 2018-19 and is on par or higher than industry standard. 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, MHA and Diu Administration under Viability Gap Funding (VGF) arrangements. These routes are operationally profitable. 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 one of the largest players with its young ATR 72-600 fleet suitable for serving these smaller airports. The company has strategized itself to invest major resources in Government of India’s UDAN scheme. The performance of the airline under UDAN has been excellent wherein the company has been operationally positive. The company was operating 29 UDAN routes as on 31st March 2019, which at present has risen to 39 routes. The airline is further poised to launch more routes under UDAN scheme in the next 2-3 months. In 2018-19, AASL operated 19% UDAN routes as against 17% during the previous year, i.e. 2017-18. Currently, AASL is operating around 32% UDAN routes at a growth of 68% from the year 2018-19. Alliance Air by deploying more resources on UDAN sectors is moving towards profitability. The company is also continuously evaluating routes, which are loss making and have consciously shifted the operations from these routes to potentially higher revenue earning routes. It is pertinent to mention that company has participated in UDAN round 3 and 3.1 and resultantly been allotted 52 more routes. The total entitlement of the company on such routes now stands at 95. The airline is consciously increasing the yield and as at year end the average yield stood at Rs. 4179 per passenger, which is about 8% higher than the previous year (2017-18). 406 CFS

Further the company has implemented cost saving measures for reduction of cost. 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 financial activities, it is expected that the financial position of the company would improve in future. Alliance Air is in the threshold of turnaround and poised to lead the regional connectivity in India in the next decade and be a leading regional carrier of Asia. Alliance Air plans to reverse the trend of adverse financial parameters in this financial year 2019-20 and thereafter further consolidate the gains. 61. Impairment of Assets The respective companies have carried out an assessment of the impairment of itsnon- financial assets as on the Balance Sheet date in accordance with IndAS 36. For the purpose of such impairment testing, all assets of the company has been considered as a single Cash Generating Unit (CGU) and the value in use has been determined based on the future projections/forecast having regard to the Revival Plan for Operational & Financial Efficiency of the respective companies as described in detail in Note No.28, 29 and 60. Based on such assessment, there is no impairment in the carrying value of the assets to be recognized at this stage 62. In respect of the AIXL’s claim for expenditure incurred in respect of an accident to the Aircraft VT-AYB operating flight IX-452 from Abu Dhabi to Cochin on 05-09-2017, the Company had incurred an expenditure of Rs. 231.90 Million, based on which the provisional claim was made with the Insurance Company for Rs. 183.32 Million after adjusting the “deductibles”. During the current year, the Company has incurred further expenditure of Rs.544.39 Million in respect of the said Aircraft. As against the total claim of Rs.727.71 Million, in respect of the said Aircraft, the Company has received Rs. 501.52 Million as upto 31-03-2019, leaving outstanding net balance recoverable of Rs. 226.19 Million.

During the current year, there are two more incidents of accident to the Company’s aircrafts viz VT AYD and VT AXI and there is one incident of damage to the engine CFM56-ESN 894732 (engine) during the repair work on the test bench. In respect of the said Aircrafts and the Engine, the Company has incurred an aggregate amount of Rs. 400.45 Million towards repair against which the amount of Rs. 322.39 Million net of deductibles is recoverable from the Insurance Company as on 31-03-2019. The Company has charged Rs. Rs. 79.06 Million as loss under the head of “Other Expenses” in the statement of profit and loss for the year. Since then, the Company has received from the Insurance Company full payment towards the claim to the Engine.

The Company has been accounting the insurance claims recoverable from the Insurance Company on the basis of claims lodged (net of deductibles) upon being reasonably certain of receiving the same as against the stated Accounting policy for accounting of claim receivable on the acceptance by the insurance company.

63. In case of AIXL, Cargo Revenue, Flight Interruption Manifest (FIM) and Code-share Revenue have been accounted based on information received from Air India Limited (Holding Company).

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Similarly, the Excess Baggage collection at few stations are controlled and monitored by the Holding Company on behalf of the Company and the same has been accounted based on information provided by the Holding Company. The Company is of the view that Cargo Revenue, Flight Interruption Manifest (FIM) and Code-share Revenue are “Interline Transections” and hence GST is not applicable on the said transections.

64. 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 financial year ended 31 March 2019, no significant changes were made inthe objectives, policies or processes relating to the management of the Group’s capital structure. Debt-Equity Ratio: (Rs in Million) Particulars As at 31 March As at 31 March 2019 2018 Long term Borrowings 84,777.6 3,04,222.3 Short term borrowings 289,391.6 2,33,055.7 Current maturity of Long-term Borrowings 200,666.7 13,290.3 Current maturities of finance lease obligations 25,633.9 22,759.2

Total Debt (A) 600,469.8 5,73,277.5 Equity Share Capital 326,652.1 2,86,902.1 Other Equity (684,027.3) (5,96,231.5) Total Equity (B) (357,375.2) (3,09,329.4) Debt Equity Ratio (A/B) (1.68) (1.85)

Note: The group is highly leveraged due to negative Net Worth and the nature of the business due to which the Debt Equity Ratio is negative. 65. 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 financial assets and financial liabilities, including their levels in the fair value hierarchy.

408 CFS i) As on 31 March 2019

Particulars Note Carrying Value Fair value measurement Reference using FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost Financial Assets Non-Current a) Investments 1,094.50 1,094.5 422.8 630.1 41.6 b) Trade Receivables* 0.0 0.0 c) Loans 3,478.20 3,478.2 3,478.2 d) Others Financial 614.2 614.2 Assets Current a) Trade Receivables* 20,303.3 20,303.3 b) Cash and Cash 3,204.5 3,204.5 Equivalents* c) Bank Balance other 6,198.8 6,198.8 than (b) above* d) Loans * 174.3 174.3 e) Others Financial 3,515.2 3,515.2 Assets Total 1,094.5 37,488.5 38,583.0 Financial liabilities 0.0 Non-Current 0.0 i) Borrowings# 84,777.6 84,777.6 84,777.6 ii) Others* 53.1 53.1 Current 0.0 i) Borrowings# 289,391.6 289,391.6 289,391.6 ii) Trade Payables* 91,043.0 91,043.0 iii) Others* 287,733.2 287,733.2 Total 752,998.5 752,998.5 ii) As on 31 March 2018

Particulars Note Carrying Value Fair value measurement Reference using FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost Financial Assets Non-Current a) Investments 1,046.0 1,046.0 418.2 584.5 2,059.0 b) Trade Receivables* 0.0 0.0 - - - c) Loans 3,197.7 3,197.7 - - 3,197.7 d)Others Financial 1,534.2 1,534.2 - - - Assets

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Particulars Note Carrying Value Fair value measurement Reference using FVTPL FVTOCI Amortized Total Level 1 Level 2 Level 3 Cost Current 0.0 a) Trade Receivables* 21,325.2 21,325.2 - - - b)Cash and Cash 3,206.4 3,206.4 - - - Equivalents* c) Bank Balance other 5,818.4 5,818.4 - - - than (b) above* d) Loans * 229.3 229.3 - - - e) Others Financial 3,226.1 3,226.1 - - - Assets Total 1,046.0 38,537.3 39,583.3 Financial liabilities Non-Current i) Borrowings# 304,222.3 304,222.3 - - 304,222.3 ii) Others* 111.8 111.8 - - - Current 0.0 i) Borrowings# 233,055.7 233,055.7 - - 233,055.7 ii) Trade Payables* 93,390.7 93,390.7 - - - iii) Others* 93,843.7 93,843.7 - - - Total 724,624.2 724,624.2 Notes: (#) The companies’ borrowings and loans to subsidiaries have been contracted at market rate of interest, which resets at regular intervals. Accordingly, the carrying value of such borrowings (including interest accrued) approximates fair value.

- There have been no transfers between level 1, level 2 and level 3 for the year ended 31st March 2019 and 31st March 2018. b) Valuation Technique used to determine Fair Value: Specific valuation techniques used to value financial instruments include:

The use of NAV for unquoted Equity Shares The Fair Value of remaining financial instruments is determined using Discounted Cash Flow method. 410 CFS

66. Financial Risk Management Objective and Policies The group has exposure to following risks arising from its business and financial instruments:

a) Credit Risk b) Liquidity Risk c) Market Risk – (i) Foreign Currency and (ii) Interest Rate The Group operates to 43 international destinations in multi-currency, dynamic and challenging environment The Group’s principal financial liabilities comprise of loan and borrowings, trade and other payables. The Long term borrowing for the aircraft purchase is mainly dollar related. A part of the borrowings for the working capital are dollar denominated. Nearly 70% of the Group’s expenses are related to the dollar. The main purpose of these financial liabilities is to finance aircraft acquisition, receivable, and cash and cash equivalents that derive directly from its operations.

The Group is exposed to credit risk, liquidity risk, market risk and Commodity risk. The Group’s senior management oversees the management of these risks. The Group’s senior management is supported by a treasury team. The Treasury Team provides assurance to the Group’s senior management that the group’s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objective. All hedging activities for fuel risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Group’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: a) Credit Risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligation.

The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The maximum exposure to the credit at the reporting date is primarily from trade receivables. Trade receivables are mostly from travel agents, Government Parties and Credit Card Companies which are typically unsecured as no coverage is held by the Group and are derived from revenue earned from customers. Trade Receivables includes receivables from IATA Agency Dues, General Sales Agents, Credit Card Companies which are realizable within a period of 30 working days. General Sales Agents dues are recovered by Bank Guarantees by Airline and Agency Dues are covered by BG/Insurance cover held by IATA. Similarly, for Cargo Agents, dues are covered by BG/Advance Payments and GSA Dues are covered by BG. Mail Dues are GoI Dues. The Group does monitor the economic environment in which it operates. The Group manages its credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of agents to which the Group brands credit terms in the normal course of the business. 411 CFS

The group sells majority of its passenger/cargo services against credit worthiness and financial guarantees made by agents (customers) to IATA though individual guarantees are also taken in certain cases. The Group also extends credit to the Government on flights operated and which are realized over a period of time depending on budgetary provisions made by the Govt to the respective departments

On adoption of IND-AS 109, the group uses expected credit loss model to assess the impairment loss or gain. The Group uses a provision matrix to compute the expected credit loss allowance for trade receivable. The provision matrix considers available internal credit risk factors such as the Group’s historical experience for customers. Based on the business environment in which the group 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.

The Group’s exposure to credit risk for trade receivablesis as follows:

(Rs in Million) Particulars As at 31/03/2019 As at 31/03/2018 Gross Carrying Loss Allowance Gross Carrying Loss Allowance Amount Amount Debts not due (*) 24,655.7 - 21,325.2 Debts over due (**) 11,569.3 11,569.3 10,435.1 10,435.1

Note: (*) The amount includes Rs 4,352.4 million in respect of Entities Held for Sale (**) The amount includes Rs 780.0 million in respect of Entities Held for Sale. Movement in the allowance for impairment in respect of the above Trade Receivables:

(Rs in Million) Particulars For the year ended For the year ended 31st March 2019 31st March 2018 Balance at the beginning of the Year (10,435.1) (10,904.6) Movement during the year (*) (1,134.2) 469.5 Balance at the end of the Year (**) (11,569.3) (10,435.1) Note: (*) The amount includes Rs 768.5 million in respect of Entities Held for Sale (**) The balance amount includes Rs 780.0 million in respect of Entities Held for Sale.

In respect of AIATSL The Company has not provided for impairments of financial assets (Trade and Other Contractual Receivables) using provision matrix in accordance with the requirements of Ind AS – 109 “Financial Instruments”. During the year, the Company has computed cumulative effect of Expected Credit Loss as on March 31, 2019 applying simplified approach for trade and other contractual receivables from the parties other than the group companies amounting to Rs. 436.3 million. The Company has considered Rs. NIL towards expected credit loss in respect of 412 CFS

receivable from the group companies.

It is impracticable to determine the period-specific effects of this omission on comparative financial information and hence, the company has given cumulative effect prospectively from the financial year ended on March 31, 2019 and hence, reported financial information of the previous year is strictly not comparable. b) Liquidity Risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligation associated with its Financial Liabilities that are settled by delivering cash or another Financial Assets.

The Group’s approach to manage Liquidity is to have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group has been experiencing liquidity problems due to delayed equity infusion by the Govt and the high debt burden

The Group believes that its liquidity position, including total cash and cash equivalent and bank balances other than cash and cash equivalent of Rs.9,403.3million as at 31stMarch 2019 (PY: Rs. 9040.0 million) anticipated future internally generated funds from operations, and its fully available, revolving undrawn credit facility will enable it to meet its future known obligation in the ordinary course of business provided there is equity infusion and assistance from the Government. However, if liquidity needs were to arise, the group believes it has access to financing arrangement, value of unencumbered assets, which should enable it to meet its ongoing capital, operating, and liquidity requirement. The Group will continue to consider various borrowing or leasing options to maximize liquidity and supplement cash requirement as necessary. However, the Group relies on Government support to conserve its liquidity position.

The Group’s liquidity management process as monitored by management includes the following:-

a) Day to day funding, managed by monitoring future cash flows to ensure that requirement can be met. b) Maintaining rolling forecast of the Group’s liquidity position on the basis of expected cash flows. c) Maintaining diversified credit lines. Exposure to Liquidity Risk The following are the remaining contractual maturities of financial liabilities at the reporting data. The contractual cash flow amount are gross and undiscounted, and includes interest accrued

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As at 31st Carrying Contractual Cash Out Flows (Rs in Millions) Discontinued March 2019 Amount Upto 1 1-2 2-3 3-4 4-5 Years More Total Operations year Years Years Years than 5 years Borrowings a) Non 81,950.0 - - - - 55,000.0 136,950.0 Convertible 136,950.0 Debentures (Note - 13) b) Long Term Borrowings (Note - 13) - From Banks 109,952.5 - - - - - 109,952.5 (Secured) 109,952.5 - From Banks 16,349.4 8,751.5 2,822.5 4,775.4 - - - 16,349.4 (Unsecured) - From Other 121.0 12.7 10.0 10.0 10.0 10.0 68.3 121.0 Parties c) Short Term Borrowings (Note - 18) - From Banks - - - - - 113,992.6 (Secured) 113,992.6 113,992.6 - From Banks - - - - - (Unsecured) 149,039.0 149,039.0 149,039.0 - From Other 26,360.0 26,360.0 - - - - - 26,360.0 Parties (Unsecured) d) Long Term 47,705.3 25,131.3 16,552.0 5,528.0 494.0 - - 47,705.3 Maturities of Finance Lease Obligation (Note - 13) Trade Payables (Note - 14) a) Trade 91,043.0 91,043.0 - - - - - 91,043.0 4,019.4 Payables Other Financial Liabilities (Note - 15) a) Interest 6,579.6 6,579.6 - - - - - 6,579.6 Accrued but not due on borrowings b) Interest 1,981.1 1,981.1 - - - - - 1,981.1 Accrued and due on borrowings c) Other 52,925.0 52,871.9 - - - - 53.1 52,925.0 3,316.7 Liabilities d) Bank ------Overdraft Totals 752,998.5 667,665.2 19,384.5 10,313.4 504.0 10.0 55,121.4 752,998.5 7,336.1

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As at 31st March 2018 Carrying Contractual Cash Out Flows (Rs in Millions) Amount Upto 1 1-2 2-3 3-4 4-5 Years More than Total year Years Years Years 5 years Borrowings a) Non Convertible 136,950.0 7,950.0 129,000.0 136,950.0 Debentures (Note - 13) b) Long Term Borrowings - (Note - 13) - From Banks (Secured) 115,434.3 3,517.7 11,400.5 25,651.2 25,651.2 15,200.7 34,013.0 115,434.3 - From Banks (Unsecured) 21,807.6 7,104.0 7,337.7 2,606.7 4,759.3 21,807.6 - From Other Parties 219.8 10.3 10.3 10.3 10.3 10.3 168.3 219.8 c) Short Term Borrowings - (Note - 18) - From Banks (Secured) 110,915.7 110,915.7 110,915.7 - From Banks (Unsecured) 122,140.0 122,140.0 122,140.0 - From Other Parties - - - (Unsecured) c) Long Term Maturities of 65,860.1 22,259.8 22,334.6 15,590.3 5,209.5 466.0 65,860.1 Finance Lease Obligation (Note - 13) Trade Payables (Note - 14) - a) Trade Payables 93,390.7 93,390.7 - 93,390.7 Other Financial Liabilities (Note - 15) a) Interest Accrued but not 6,393.4 6,393.4 - 6,393.4 due on borrowings b) Interest Accrued and due 3,196.9 3,196.9 - 3,196.9 on borrowings c) Other Liabilities 48,297.5 48,297.5 - 48,297.5 d) Bank Overdraft 18.2 18.2 18.2 Totals 724,624.2 417,244.2 49,033.1 43,858.4 35,630.2 15,677.0 163,181.3 724,624.2 c) market risk Market risk is that the fair value and future cash flows of financial instrument will fluctuate 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.

i) Interest Rate Risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s borrowings with floating interest rates. The Group’s interest rate risk arises majorly from the foreign currency term loan and finance lease carrying floating rate of interest which is linked to LIBOR. These obligations expose the group to cash flow interest rate risk. The exposure the group’s borrowings to interest rate changes as reported to the management at the end of the reporting period are as follows:

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(Rs in Million) Variable-rate instruments As at 31st March As at 31 March 2019 2018 Long Term Borrowings from Bank (Secured & 20,378.3 44,235.1 Unsecured, including current maturities) Short term borrowings 23,769.7 79,127.7 Finance lease obligation(including current maturities) 45,410.9 61,337.1 Total 89,558.9 1,84,699.9

Interest Rate Sensitivity Analysis A reasonably possible change of 0.50 % in interest rates at the reporting date would have affected the profit or loss by the amounts shown below. This analysis assumes that all other variables, in particulars foreign currency exchange rates, remains constant. (Rs in Million) Increase / (decrease) in the interest on foreign Statement of Profit and losses. currency term loans-from others and on finance lease obligation. Increase by 0.50 % Decrease by 0.50 % - For the year ended 31 March 2019 587.2 (587.2) - For the year ended 31 March 2018 1,050.5 (1,050.5)

ii) Currency Risk Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to multi currencies on its operations and hence is exposed to the effects of fluctuation in the prevailing foreign currency rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuation between the functional currency and other currencies from the group’s operating, investing and financing activities.Nearly 70% of the Group’s expenses are dollar denominated. Exposure to Foreign Currency Risk The summary of quantitative data about the Group’s exposure to currency risk, as expressed in Indian Rupees, as at 31 March 2019, 31 March 2018 are as below: a) As at 31st March 2019 (Rs in Million)

Particulars USD EUR GBP AED OMR SGD THB CHF QAR AUD OTHERS Financial Assets

Trade Receivables 7,179.3 1,086 1096 616.7 259.1 64.9 64.1 29.5 105.6 160.6 2335.6 Cash and Cash equivalents 568.9 563.6 34.1 9.5 0.04 36.2 48.8 1.02 0 32.3 538.7 Bank Balances other than above 786.1 0 0 0 0 0 0 0 0 51.9 420.6 Loans 5,856.2 58.3 3.4 13.9 0 6.5 1.1 0.1 0.4 0.2 45.3

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Particulars USD EUR GBP AED OMR SGD THB CHF QAR AUD OTHERS Other Financial Assets 3,652.1 20.1 11.2 9.6 0.8 3.2 0.9 1.5 0 14.2 34.5 Total Financial Assets 18,042.6 1,727.9 1,144.7 649.7 260 110.8 114.9 32.1 106 259.2 3374.7

Financial Liabilities Borrowings 147,007.2 0 0 0 0 0 0 0 0 0 0 Other Financial Liabilities 2,290.6 45.4 72.8 16.8 3.1 3.3 0.9 0 1.03 9.9 13.9 Trade Payables 11,010.4 465.3 661.3 573.5 39.8 256.5 124.7 0 3.5 264.8 975.7 Total Financial Liabilities 160,308.3 510.7 734.1 590.3 42.9 259.8 125.6 0 4.5 274.7 989.7 b) As at 31st March 2018

Particulars USD EUR GBP AED OMR SGD THB CHF QAR AUD OTHERS Financial Assets Trade Receivables 6,216.1 1,077.1 1,167.1 618.6 146.1 107.0 59.8 61.6 14.2 88.6 1,689.8 Cash and Cash equivalents 365.8 421.2 5.8 7.8 - 27.9 20.3 7.6 - 137.4 346.9 Bank Balances other than above 732.0 - 523.1 ------52.1 33.1 Loans 5,272.7 59.1 3.5 13.1 - 5.8 1.1 0.1 0.4 0.2 47.4 Other Financial Assets 5,270.9 9.7 15.1 - - - 0.6 - - 6.7 25.3 Total Financial Assets 17,857.5 1,567.1 1,714.6 639.5 146.1 140.7 81.8 69.3 14.6 285.0 3,958.4

Financial Liabilities Borrowings 1,68,440.0 - 161.6 ------Other Financial Liabilities 3,342.8 58.6 17.3 22.3 2.2 4.2 0.8 8.0 1.0 9.9 61.3 Trade Payables 6,407.4 765.2 642.1 572.3 75.7 289.5 30.6 - - 190.4 1,062.0 Total Financial Liabilities 1,78,190.2 823.8 821.0 594.6 77.9 293.7 31.4 8.0 1.0 200.3 1,123.3

Foreign Currency Sensitivity Analysis A reasonably possible strengthening (weakening) of the Indian Rupee against below currencies at 31 March 2019 and 31 March 2018 would have affected the measurement of financial instruments denominated in foreign currency and affected Statement of Profit and Loss by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. (Rs in Million) 0.5% Depreciation / Appreciation Statement of Profit and Loss for the Statement of Profit and Loss for the in Indian Rupees against following year ended 31 March 2019 year ended 31 March 2018 foreign currencies: Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Appreciation Depreciation Appreciation Depreciation USD 718.7 (718.7) (801.7) 801.7 EUR (6.1) 6.1 3.7 (3.7) GBP (20.5) 20.5 4.5 (4.5) AED (0.3) 0.3 0.2 (0.2)

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0.5% Depreciation / Appreciation Statement of Profit and Loss for the Statement of Profit and Loss for the in Indian Rupees against following year ended 31 March 2019 year ended 31 March 2018 foreign currencies: Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Gain/ (loss) on Appreciation Depreciation Appreciation Depreciation OMR (1.1) 1.1 0.3 (0.3) SGD 0.7 (0.7) (0.8) 0.8 THB 0.1 (0.1) 0.3 (0.3) CHF (0.2) 0.2 0.3 (0.3) QAR (0.5) 0.5 0.1 (0.1) AUD 0.1 (0.1) 0.4 (0.4) Other (11.9) 11.9 14.2 (14.2)

Note: USD: United States Dollar, GBP: Great British Pound, AED: Arab Emirates Dirhams, OMR: Omani Riyal, THB: Thai Baht, CHF: Swiss Franc, SGD: Singapore Dollar, EUR: Euro, AUD: Australian Dollar, QAR: Qatari Riyal. 67. IND AS 115: Remaining Performance Obligations a) In the case of AI, The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of reporting period and an explanation as to when the group expects to recognize these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by the several factors, including terminations of contract, changes in scope of contracts etc. The aggregate value of performance obligations that are completely or partially unsatisfied as at 31st March, 2019, is Rs. 25,306.1 million and on account of absorption of IND AS 115, forward sale of which performance obligation are completely unsatisfied as at the end of reporting period is Rs. 24,477.4 millionwhich has been classified as “Forward Sale under Current Liabilities”, as detailed in table given below:

Contractual Liabilities Forward Sales (Rs in Million) Opening Balance 22,445.3 Add: Additions 225,309.7 Less: Revenue Recognized 223,277.6 Closing Balance 24,477.4 There is no significant impact on the financial results on adoption of IndAS 115. b) In respect of AASL, The Company adopted Ind AS 115 using the cumulative effect method and therefore the comparatives have not been restated and continue to be reported as per Ind AS 18. On account of adoption of Ind AS 115, no cumulative adjustment was required as at 1 April 2018. Further, no financial statement line items are affected in the current year as a result of applying Ind AS 115 as compared to Ind AS 18. i) The company has not disclosed information about remaining performance obligations that have original expected duration of one year or less.

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ii) The Company does not expect to have any contracts for which revenue is recognized during the year where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company has not adjusted the transaction prices for the time value of money. 68. An instance of fraud involving payment to a third party was reported in New York office amounting to USD 300,250 (Rs 19.4million) during previous year. The matter is under investigation group has initiated action for recovery; however as a matter of prudence full provision has been made towards the same.

69. The Accounting Policies of the Holding Company and the Subsidiary Companies are identical in all respects except for the matters given below:

a) In the case of AIESL, depreciation on addition to assets is provided for the full year in the year of acquisition, however no depreciation is provided in the year of disposal.

b) In the case of AIESL, Inventory is valued at weighted average cost basis as against the Group policy of valuing inventory at lower of Cost and Net realizable Value (NRV). However, the impact of the same is not material.

c) In the case of AIATSL, Assets of small value not exceeding Rs. 5,000 are being fully provided and charged off instead of providing depreciation as per schedule II of the Companies Act, 2013. However, since the value of such items is negligible, the impact of such difference in treatment is not material.

Since the impact of the above is not material, no effect has been given in the Consolidated Financial Statements.

d) In case of AIXL,Under IndAs 8, “Accounting Policy -Changes in Accounting Estimates and Errors”has been corrected by retrospective restatement Of Prior period items amounting to Rs. 527.4 million (Net), which is recognized in the year 2018-19 has been restated as at 01st April 2018.This restatement has resulted into decrease in Retained Earnings with the corresponding increase in Asset/Liability by Rs. 527.4 million.

e) Under Ind AS 8, “Accounting Policy -Changes in Accounting Estimates and Errors”, has been corrected by retrospective restatement of Prior period items amounting to Rs. 187.2 million (Net) in the case of HCI, Rs. 78.4 million (Net) in the case of AASL and Rs 177.0 million (Net) in the case of AIATSL, which is recognized in the year 2018-19 has been restated as at 01st April 2018.This restatement has resulted into decrease in Retained Earnings with a corresponding increase in Asset/ Liability by Rs. 442.6 million.

70. The following notes on Subsidiary Company’s although not material but Qualification/ Emphasis of Matter/Other Matter on the same has been drawn upon the component Auditors are reproduced below:

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Emphasis of Matter i) Air India Express Limited a) Due to system transition as stated above, the Company ascertained the differences between the balances of inventories between the two systems as on 31st March, 2019, which resulted into short booking of consumption to the extent of Rs. 69.19 Millions which has been appropriately accounted in the financial statements.

b) Post Transition as stated above, the RAMCO Systems provided information as regards the segregation of inventories based on usage thereof between the group companies and the Holding Company. On the basis of the said information, the Company has passed the necessary entries to reducing the inventories by Rs 984.2 million and debited to Holding Company current account by similar amount.

c) Government of India (The Government), on behalf of the Company had provided Guarantees aggregating to USD 678.79 Millions in favour of lessors of financial lease for acquiring 18 B737-800 Aircrafts. The Government has also guaranteed the repayment of debentures issued by the Company amounting to Rs. 950.00 Millions due for repayment on 26th March 2020. The Company has provided the guarantee fees payable to the Government at the rate of 0.5% on the amount of the respective liabilities as outstanding at the end of every financial year. The said guarantee fees provided by the Company had not been paid in accordance with the terms of the Guarantees, for which the Company is liable to pay penal interest. However, since the company has paid the entire amount of Guarantee Fee payable since the year end and since it has represented to the Govt for waiver of the Penal Interest amounting to Rs 832.5 million and the company has not received any claim from the Govt of India for penal interest as aforesaid, no provision for the same has been made in the financial statements. Qualified Opinion ii) Airline Allied Services Limited RAMCO is a comprehensive Maintenance, Repair and Overhaul system for all engineering items. This system was primarily meant for the MRO operations and therefore as per original design system was configured in such way that all transactions will be booked and accounted in a single Operating Unit (OU) viz Air India Engineering Services Ltd. But, after the implementation of this system, Management decided to book all the inventory and related transactions in the respective Airlines. It was therefore a challenge to segregate the transactions that took place in one single OU - AIESL in respective airlines. As required, manual segregation of the transactions which were booked in AIESL for transfer to respective Airlines was initiated. This was the starting point of airline wise mismatch of transactions. As transactions are carried out in one single OU and then manually separated reconciliation at global level at the end of every year to match the system balances with book balance is required to be carried out. To avoid the above mismatch, Ramco has come out with on behalf functionality so that transactions will get booked correctly in the respective airlines. Further, for this purpose all

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the inventory items required for respective internal Airlines have been identified and moved to respective airlines in Ramco system. This functionality was implemented during 2018- 19 and all the required changes were done by the Ramco to implement the same. Due to changes carried out by Ramco during the year to reconfigure the system, there are some differences in values appearing in Ramco system viz-a-viz SAP. During the year, long pending interface between Ramco and SAP was also implemented so all the transactions which were taking place in Ramco will now flow directly to SAP. There are some discrepancies in the inventory and other accounts which have arisen over the years since implementation of Ramco due to single OU design and non-interface with SAP. Such discrepancies are proposed to be resolved during 2019-20. Impact of such discrepancies is not ascertainable at this stage. 71. The disclosures in these consolidated notes has been compiled from the notes to accounts of Subsidiaries/Joint Venture companies to the extent data/information is available in the audited standalone financial statements of the respective Subsidiaries/Joint enture.V

72. Additional Information as required under Schedule III of the Companies Act 2013 of enterprises consolidated as Subsidiary/Associates/Joint Ventures. (Rs in Millions) Name of Entity in the Group Net Assets i.e. Total Share in Profit or Loss Share in Other Compre- Share in Total Compre- Assets minus Total Li- hensive Income hensive Income abilities As % of Amount As % of Amount As % of Amount As % of Amount Consoli- Con- Con- Total Com- dated Net solidated solidated prehensive Assets Profit/ Other Income Loss Compre- hensive Income Air India Ltd

2018-19 87.0 (311,079.4) 96.6 (84,748.0) 75.6 (815.6) 96.4 (85,563.6) 2017-18 85.8 (265,352.8) 90.9 (53,377.4) (27.0) (104.3) 91.7 (53,481.7) Sub Cos

a) AIXL 2018-19 2.4 (8,486.5) (1.9) 1,643.8 2.6 (28.0) (1.8) 1,615.8 2017-18 3.3 (10,087.5) (3.7) 2,182.9 3.3 12.9 (3.8) 2,195.8 Discontinued Operations

a) AASL 2018-19 5.6 (20,005.2) 3.4 (2,966.5) (0.1) 0.7 3.3 (2,965.8) 2017-18 5.5 (17,038.7) 4.6 (2,713.6) 1.1 4.1 4.6 (2,709.5) b) AIATSL 2018-19 (1.0) 3,489.3 (0.7) 638.1 (3.1) 33.6 (0.8) 671.7 2017-18 (0.6) 1,878.3 (0.9) 538.5 (22.4) (86.5) (0.8) 452.0 c) AIESL 2018-19 5.5 (19,831.4) 2.1 (1,808.8) 22.3 (240.6) 2.3 (2,049.4) 2017-18 5.7 (17,782.0) 8.4 (4,956.8) 132.7 512.2 7.6 (4,444.6)

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d) HCI 2018-19 1.0 (3,674.5) 0.8 (686.2) 2.4 (25.8) 0.8 (712.0) 2017-18 1.0 (2,962.4) 1.0 (603.2) 11.8 45.5 1.0 (557.7)

Non-Controlling Interest in all ------Sub Cos JV (Investment as per Equity ------Method) a) AI-SATS 2018-19 (0.6) 2,212.4 (0.2) 223.6 0.2 (2.5) (0.2) 201.1 2017-18 (0.7) 2,015.7 (0.4) 234.6 0.6 2.2 (0.4) 236.8 Total

2018-19 100.0 (357,375.2) 100.0 (87,724.0) 100.0 (1,078.2) 100.0 (88,802.2) 2017-18 100.0 (309,329.4) 100.0 (58,695.0) 100.0 386.1 100.0 (58,308.9)

73. Previous Years figures have been re-casted/regrouped/re-arranged, wherever necessary. Signatures to the Schedules forming part of the Consolidated Financial Statements and to the above notes.

For and on Behalf of For and on Behalf of For and on behalf of the Board Sd/- Khandelwal Jain & Co. Varma and Varma (Ashwani Lohani) Chartered Accountants Chartered Accountants Chairman & Managing Director FRN : 105049W FRN : 004532S DI No.01023747 Sd/- Sd/- Sd/- (Narendra Jain) (P.R. Prasanna Varma) (V.S. Hejmadi) Partner Partner Director-Finance M.No. 048725 M.No. 025854 DI No.07346490 For and on Behalf of Sd/- Jagdish Chand & Co. (Kalpana Rao) Chartered Accountants Company Secretary FRN : 000129N M.No.ACS8194 Sd/- (Praveen Kumar Jain) Partner M.No. 085629 Place : New Delhi Place : Chennai Place : New Delhi Date : 22 October 2019 Date : 22 October 2019 Date : 22 October 2019

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Statement of Slient Features of the Financial Statement of subsidiaries. Jvs and Associates (Form AOC-I) Part A: Subsidiaries (Rupees in Million) Sr. Name of subsidiary AASL AIATSL AIEL AIESL HCI No 1 Reporting Currency INR INR INR INR INR 2 Exchange Rate 3 Closing as on 31.03.2019 4 Average Rate 2018-19 5 Share Capital 4,022.50 1,384.24 7,800.00 1,666.67 1,376.00 6 Reserve & Surplus (24,027.71) 2,105.13 (16,286.47) (21,498.07) (5,050.40) 7 Liabilities 23,555.91 4,748.83 45,807.46 38,868.28 4,896.70 8 Total Liabilities 3,550.70 8,238.20 37,320.99 19,036.88 1,222.30 9 Total Assets 3,550.70 8,238.20 37,320.99 19,036.88 1,222.30 10 Investements 11 Turnover 8,362.78 7,071.64 42,015.29 12,064.00 672.80 12 Profit Before Taxation (2,966.38) 1,274.18 1,685.89 (1,808.77) (686.30) 13 Provision for Taxation 636.07 14 Profit After Taxation (2,966.38) 638.11 1,643.89 (1,808.77) (686.30) 15 Proposed Dividend 16 Percentage of share- 100% 100% 100% 100% 80.38% holding

Sd/- Sd/- Sd/- (Ashwani Lohani) (V.S. Hejmadi) (Kalpana Rao) Chairman & Managing Director Director - Finance Company Secretary DI No. 01023747 DI. No. 07346490 m. No. ACS8194

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Part B: Statement of Sailent Features of the Financial Statement of Jointly Controlled

Entities and Associates (Form AOC-I) (Rupees in Million) Sr. No Name of Associates and Joint Ventures AI_SATS 1 Reporting Currency INR 2 Latest Audited Balane Sheet Date 3/31/2019 3 Share of Associates/Joint ventures held by the company on the year end i) NO. 40,424,975.00 ii) Amount of Investment in Associates/Joint Venture 436.2 iii) Extent of Holding % 50% 4 Description of how there is significant influence Joint Control 5 Reason why the associate/joint venture in not consolidated Consolidated 6 Networth attributable to Shareholding as per latest audited Balance 4424.9 Sheet Profit/(Loss) for the year 442.7 i) Considered in Consolidtion 221.4 ii) Not Considered in Consolidation -

Sd/- Sd/- Sd/- (Ashwani Lohani) (V.S. Hejmadi) (Kalpana Rao) Chairman & Managing Director Director - Finance Company Secretary DI No. 01023747 DI. No. 07346490 m. No. ACS8194

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