airline allied services limited - airindia.in
TRANSCRIPT
AIRLINE ALLIED SERVICES LIMITED
AASL
CONTENTS
Page No.
1. Board of Directors 1
2. Chairman’s Message 2
3. Directors’ Report 5
4. Comments of the Comptroller & Auditor General of India 37
5. Independent Auditors’ Report 41
6. Balance Sheet as at 31 March 2017 68
7. Statement of Prot & Loss for the year ended 31 March 2017 69
8. Cash Flow Statement 70
9. Notes forming part of the Financial Statements for the year ended 31 March 2017 71
AASL
BOARD OF DIRECTORS (as on 17 NOVEMBER 2017)
Shri Rajiv Bansal Chairman
Shri Pankaj Srivastava Director
Shri Vinod Hejmadi Director
Shri S.S. Uberoi Director
Capt A.K. Govil Director
Shri Angshumali Rastogi Director
Shri K.V. Unnikrishnan Director
Chief Executive Officer
Shri C.S. Subbiah
Auditors
M/s. Chandra Gupta & Associates
Chartered Accountant
E-103, Palm Court Apartments
Plot No.-3, Sector-19-B, Dwarka
New Delhi-110 075.
Company Secretary
Smt. Manjiree M. Vaze
Registered Office
Alliance Bhawan
Domestic Terminal 1
I.G.I. Airport,
New Delhi-110 037
1
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CHAIRMAN'S SPEECH
Dear Shareholders,
It gives me great pleasure to present to you the Thirty Fourth Annual Report of the Company for the year 2016-17.
Airline Allied Services Ltd. is one of the leading airlines in the country providing connectivity to Tier II & Tier III cities in India as well a feeder to its parent company, Air India Limited and its subsidiary, Air India Express Limited. It is in the process of expanding its operations on Pan India basis by inducting more aircraft in its eet. These aircraft will serve shorter routes within the country.
NEW CIVIL AVIATION POLICY – REGIONAL CONNECTIVITY SCHEME
The new Regional Connectivity Scheme "Ude Desh ka Aam Nagrik" (UDAN) introduced by the Government, which will run for 10 years, will work to revive existing airstrips and airports. Under this scheme, Government has awarded 128 regional routes to ve airlines — Airline Allied Services Limited (Alliance Air), SpiceJet, Turbo Megha, Air Odisha and Air Deccan.
Under the Regional Connectivity Scheme (RCS), the Government has proposed at least half the seats on every ight be available under a fare cap of Rs.2,500 per seat per hour of ying.
With the introduction of RCS, a number of new routes to unserved and underserved airports have opened up for Alliance Air and it has been awarded 15 routes in the rst round of bidding process. As operation to unserved and underserved airports has been incentivized by the Government it will stimulate trafc on regional routes connecting Tier-II/III cities. Alliance Air, with its existing eet of ATR aircraft, supplemented by an early induction of more ATR aircraft can take a position of dominance in the regional market. It, therefore, plans to participate aggressively in the subsequent rounds of RCS bidding as well.
PERFORMANCE OF THE COMPANY DURING THE YEAR
During the year, the Company incurred a net loss of Rs. 2827.22 Million (Rs. 1987.51 Million). Although the total revenue has increased by Rs.1019.56 Million, the loss increased by 839.71 Million due to increase in expenditure by Rs. 1859.27 Million. The increase in losses can be attributed to the following reasons:
l Lease charges increased by Rs. 349.98 Million due to induction of 3 new Aircraft in the year 2016-17 (Rs. 1525.08 Million from Rs. 1175.10 Million).
l The maintenance charges increased by Rs.277.52 Million (Rs. 1234.64 Million from Rs. 957.13 Million) due to induction of three new aircraft and increase in the expenditure on repair of aircraft and cost of material consumed.
l There was upward increase in landing and navigation expenses due to increase in operations, RNFC rate increase effective December 2016, change in eet composition and increase in stage length of the route pattern, increase on account of re-computation of redelivery cost of Aircraft, buyout of CRJ aircraft and induction of new aircraft in eet, increase in Financial cost towards interest on outstanding amount to be payable to the parent company.
l There was increase in ATF cost also due to increase in quantity uplifted and increase in average ATF rate.
Although the passenger revenue increased by Rs.1004.62 Million due to increase in operations and passengers carriage but there was a decline in passenger yield by Rs. 256/- per passenger.
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Sundry Receipts/other Income increased by Rs.46 Million(approx) due to the receipt of application money for recruitment of pilots, cabin crew and engineers, additional interest income as more SBLCs have been opened due to induction of aircraft during the year and increase in the Interest cost apportioned to AIESL by AASL.
FUTURE PLANS
The passenger aviation market in India has been growing steadily due to induction of capacity by all airlines and also fares becoming more affordable. The growth in Tier II & III cities is still largely untapped, as larger airlines have focused on trunk routes and operate larger capacity aircraft which are not suitable for serving in smaller airports.
Alliance Air has the advantage of operating ATR type of aircraft since January 2003. It intends to build on this experience of over a decade of serving to Tier II & III cities. The Company has a eet of 2 ATR 42-320 and 8 ATR 72-600 aircraft. 10 New ATR 72-600 aircraft were likely to be inducted in FY 2016-17, but owing to delays in the leasing process, deliveries have begun in June 2017 and are expected to be completed by the end of the nancial year 2017-18. The existing eet is deployed to operate about 50 ights every day over a network of 35 stations. The 10 new aircraft being inducted will be utilized to increase frequency on present routes as well as deployment on new routes. The Company plans to expand its network and reach to neighbouring countries. It further plans to increase the eet to 40 aircraft by FY 2021.It plans to reverse the trend of adverse nancial parameters and improve the nancial position of the Company as well. We hope to do much better in the year 2017-18 and condent of an operating prot by increasing our revenues, cutting down on expenses and loss making routes.
ACKNOWLEDGEMENT
I take this opportunity to thank Air India Limited and Ministry of Civil Aviation for their unstinted support. I also acknowledge the support extended by all other authorities including banks and regulatory agencies and assure that we will continue our growth trajectory, taking Airline Allied Services Limited to greater heights. I would like to thank my colleagues on the Board for their valuable guidance.
I would like to thank all employees of Airline Allied Services Limited for their contribution and support to transform Alliance Air as the First choice of the travelling Public.
On behalf of the Board, I seek your continued support, as always.
Sd/- (Ashwani Lohani)
ChairmanPlace : New DelhiDate : 22 August 2017
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VISION:
To be a Leading Regional airline providing connectivity to Tier II and III cities and a feeder airline to the network & in complete synergy with Air India.
MISSION & OBJECTIVES :
Prominent domestic airline
Customer
l Provide safe, reliable and on-time services
l Take effective steps to provide high level of customer satisfaction
l Explore new passenger base for airline market
l Provide one-stop connectivity to metros and beyond for seamless travel to main domestic and international destinations.
Processes
l Continuously improve standards of safety and efciency
l Operate and maintain a young and modern eet
l Provide the best and most efcient network in conjunction with main network of Air India
l Create economic value
l Enhance its competitive market standing and image as a Regional short haul airline.
Route – Network
l Compete with high density train trafc
l Meet regional aspirations of swift connection to metros and beyond
l Provide connectivity to cities so far not air connected.
People
l Build a highly motivated and professional team
l Maintain highest degree of transparency and ethics
l Be a responsible corporate citizen
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DIRECTORS’ REPORT
To,The Members,Airline Allied Services Ltd.
The Directors of your company have pleasure in presenting the Thirty Fourth Annual Report together with audited Statement of Accounts of Airline Allied Services Ltd. for the year ended 31 March 2017.
FINANCIAL AND PHYSICAL PERFORMANCE
The Financial and Physical performance for the year under review vis-a-vis the previous year was as under:
Financial Performance
(Rs. in Million)
2016-17 2015-16
Operating Revenue 3661.91 2682.02 Schedule Revenue 3091.72 2091.29 Non schedule revenue 559.46 586.46 Incidental Revenue 10.73 4.30 Other Income 96.23 56.55
Total Revenue 3758.14 2738.58
Total Expenses 6684.78 4762.51 Net Prot/(Loss) for the year Before Tax (2827.22) (1987.51) Net Prot/(Loss) for the year After Tax (2827.22) (1987.51) Share Capital 4022.50 4022.50
Physical Performance
2016-17 2015-16
ASKMs (in Millions) 470.589 342.639 RPKMs (in Millions) 323.771 227.984 Passengers Carried (in Millions) 0.625 0.400 Seat Factor (%) 68.8 66.5 Load Factor (%) 76.85 61.7
SHARE CAPITAL
As on 31 March 2017, the Authorized Share Capital of the Company was Rs.500 crores divided into Five Crores Equity Shares of Rs.100 each and Issued, Subscribed and Paid up Share Capital of Company was Rs. 402.25 crores divided into Four Crores Two Lakhs Twenty Five Thousand Equity Shares of Rs.100 each.
CHANGES IN THE SHARE CAPITAL, IF ANY
During the year there was no change in the paid up share capital of the Company.
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HUMAN RESOURCES
The staff strength of the company at the close of the year was 533 (455) contractual employees excluding 16(14) employees on deputation from the parent Company, Air India. All the employees of the Company are on xed term contract basis. Out of the 533 contractual employees, 197 (36.97%) were female employees. Cadre-wise, as on 31 March, 2017, there were 116 Pilots, 142 cabin crew and remaining 275 were other categories of employees. The Company has been supplementing cabin crew and other manpower as required by Air India. 41 Employees deputed from AIESL to AASL as on 31 March 2017.
AASL had deployed 147 staff (31 cabin crew, 35 Operations, 52 Ground & Other Commercial & 29 Security Attendants) till 31 March 2017 on deputation to Air India.
Therefore, Company effectively had 443 (386+16+41) employees at close of the year for its own operations.
Since the Company could not develop in-house expertise in the eld, it had recruited 13 employees on contract who had superannuated from AIL, by virtue of their knowledge and long experience to handle the work and to satisfy/meet the regulatory requirements.
As on 31 March 2017, there were total 23 expatriate pilots for ATR42 & ATR72 eet. The company's endeavor is to keep the number of expatriate pilots to bare minimum to maintain minimum mandatory strength of commander vis-à-vis aircraft eet.
IMPLEMENTATION OF RESERVATION POLICY :
The Reservation Policy has been implemented as per the Presidential Directives issued in the year 1975, along with the revised Directives effective 1991 and 1996.
SC/ST/OBC – Number of employees as on 31 March 2017
Total No. Total No. % of SC Total No. % of ST Total No. % of OBC of employees of SC employees of ST employees of OBC employees employees employees employees
533 47 8.82 17 3.19 78 14.63
USE OF HINDI
To fulll the objectives of the Ofcial Language policy of the Government, the Company played its role in promoting the usage of Hindi at all levels. Staff ofcials were encouraged to work in Hindi. To promote Hindi, a Hindi Pakhwara is conducted every year, wherein employees participate in various competition categories like essay writing, poem reciting etc. Prizes and awards are distributed during the function.
During the year 2016-17, the Company has carried out the following activities to promote Hindi:
l Purchase of books for Hindi library
l Nomination of 2 staff for Hindi Typing
l Conducting training programmes of Hindi Announcements in the aircraft for Pilots & Cabin Crew of the Company
l Hindi Translation of Annual Report for the FY 2015-16 of the Company
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l Departmental Inspection of usage of Hindi
l Narakas competition Special Appreciation Prize
CONTRIBUTION TO EXCHEQUER
The Company has contributed Rs.30.60 million (Rs. 21.8 million) to Government exchequer by way of Sales Tax and other levies on Aviation Turbine Fuel.
COMPLIANCE WITH RTI ACT, 2005
The Company being a public sector enterprise has successfully ensured compliance with the provisions of Right to Information Act for providing information to the citizens.
The Company has a CPIO (Central Public Information Ofcer) and Appellate Authority for timely disposal of applications and appeals.
During 2016-17, 15 Requests / Appeals are received and 15 have been disposed off.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDERSSAL) ACT, 2013
The details of sexual harassment cases reported in the Company during the nancial year, are as under:-
1) No complaint of sexual harassment was received during the relevant year.
2) Number of cases pending for more than ninety days are Nil.
3) Number of workshops or awareness programmes carried out in connection with sexual harassment:
General awareness programmes is normally conducted periodically. Besides this, posters on sexual harassment are being displayed at work places.
4) Remedial measures taken by the Company :
A Committee is being formed to deal with the complaints and also spread awareness in the organization.
CHANGE IN THE NATURE OF BUSINESS
The Company has not commenced any new business or discontinued any of its existing business during the year.
DIVIDEND
In view of the losses suffered in the year 2016-17, the Directors are not recommending any dividend.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.
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AMOUNT, WHICH THE BOARD PROPOSES TO CARRY TO ANY RESERVES
The Board of the Company has decided/proposed to carry “Nil” amount to its reserves.
DISCLOSURE RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Company does not have any Subsidiary, Joint venture or Associate Company.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATES AND THE DATE OF THE REPORT.
No such material changes or commitments made affecting the nancial position of the Company during the year 2016-17.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the Financial Year 2016-17, the Company held ve meetings (including adjourned & re-adjourned meetings) of the Board of Directors as per Section 173 of Companies Act, 2013 which is summarized below:
S No. Date of Meeting Board Strength No. of Directors Present
1 11.04.2016 7 5
2 07.06.2016 6 4
3 21.09.2016 6 3
4 21.12.2016 6 4
5 21.03.2017 6 5
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors of the Company conrm that:-
(a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
(b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the nancial year and of the prot and loss of the company for that period;
(c) The Directors have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) The Directors have prepared the Annual Accounts on a going concern basis;
(e) Company being unlisted sub clause (e) of section 134(3) is not applicable.
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(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDIT COMMITTEE
According to Section 177 of the Companies Act, 2013 the Audit Committee comprised of 4 directors. The Board has accepted the recommendations of the Audit Committee. The table sets out the composition of the Committee:
Name of the Director Position held in the Committee Category of the Director
Dr Shefali Juneja Chairperson Government Director
Smt Puja Jindal * Member Government Director (ceased wef 8.04.2016)
Shri Vinod Hejmadi Member Nominee Director – AI
Shri Ashwani Lohani Permanent Invitee Chairman (Nominee of AI)
*Ms Puja Jindal ceased to be the member of the Committee w.e.f. 8 April 2016 in her ex-ofcio capacity.
AUDITORS
The Comptroller & Auditor General of India (CAG), has appointed M/s. Chandra Gupta & Associates, Chartered Accountants as Statutory Auditors of the Company for FY 2016-17.
Qualications or adverse remarks in the Auditors' Report which require any clarication/ explanation along with reply of management thereto are attached herewith in the Report.
The Notes on nancial statements are self-explanatory and needs no further explanation.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Particulars of loans, guarantees and investment have been disclosed in the nancial statement. There were no guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the provisions of section 186 are not applicable to the Company.
SECRETARIAL AUDIT REPORT
The company appointed Mr. Jiwan Parkash Saini, Practicing Company Secretary, as Secretarial Auditor to conduct the Secretarial Audit for FY 2016-17. The Secretarial Audit Report (Form No. MR.3) is attached in the Report.
The explanations or comments by the Board on every qualication, reservation or adverse remark or disclaimer made by the auditor in his report are also attached.
The Management Comments on Secretarial Auditors' observations are as under:
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COMPLIANCE WITH SECRETARIAL STANDARDS
The Secretarial Standards issued by ICSI under Section 118(10) of Companies Act, 2013 have been complied with by the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
(A) The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 in respect of conservation of energy and technology absorption have not been furnished considering the nature of activities undertaken by the company during the year under review.
Secretarial Auditor's Observation Management's Reply
There were few instance of delay in ling of e-forms under the Companies Act, 2013 ('the Act') and the rules made thereunder, but they were regularised by payment of additional fees under the Act.
Company has not appointed Independent Directors pursuant to sub-section 4 of section 149 of Companies Act, 2013 , hence no meeting of independent directors could be held during the period under audit. Since, the company has not appointed Independent Directors , the company has not complied with the provisions of section 177(2) and 178 of Companies Act, 2013 read with Rule 6 of Companies( Meetings of Board and its Power) Rules, 2014 as regard the appointment of Independent Directors in composition of the Audit Committee.
Company has not constituted Remuneration and Nomination Committee of the Board pursuant to 178 of Companies Act, 2013 read with Rule 6 of Companies( Meetings of Board and its Power) Rules, 2014 as it meets the prescribed criteria as mentioned in Rule 6.
Statement of Fact.
Some of the forms got delayed for ling, which were led with additional/late ling fee. The provisions of Act were thus complied with.
In terms of the provisions of Articles of Association, the appointment of Independent Directors will be done by Holding Company/Administrative Ministry.
As per the provisions of Section 177(2) of the Companies Act, Audit Committee shall consist of a minimum of three Directors with Independent Directors forming a majority. AASL, however, has constituted Audit Committee consisting of three members, with Govt Nominee Directors forming a majority, pending the appointment of Independent Directors.
As there was no Independent Director on the Board of AASL, the matter was taken up with the Ministry of Civil Aviation by Air India Limited.
The Audit Committee shall be reconstituted upon appointment of Independent Directors.
As required under section 178, the Nomination and Remuneration Committee should consist of 3 or more Non Executive Directors out of which not less than one half should be Independent Directors.
As presently there is no Independent Director on the Board of AASL, Nomination and Remuneration Committee has not been constituted. However, the matter has been taken up with the Ministry of Civil Aviation by Air India Limited.
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(B) FOREIGN EXCHANGE EARNINGS AND OUTGO
CURRENT PREVIOUS YEAR YEAR 2016-17 2015-16 (Rs. In Million) (Rs.In Million)
A. Expenditure on Imports (CIF) during the year ended 31st March 2017
- Aircraft Spares Parts & Tools 44.47 110.23 - Capital Items-Ground Support Equipment NIL NIL
B. Expenditure on Consumption during the year ended 31st March 2017.
- Imported Spares & Components 81.77 40.64
- Indigenous Spares NIL NIL
C. Earnings in Foreign Currency
- Interline Revenue NIL NIL
D. Expenditure in Foreign Currency
- Aircraft Lease & Maintenance Charges 1857.77 1541.18
- Purchase of Stores & Equipment 44.47 110.23
- Technical Literature 1.46 2.17
- Training & Travelling 92.58 29.98
- Legal charges 0.086 2.65
DISCLOSURE PERTAINING TO CORPORATE SOCIAL RESPONSIBILITY
Provisions of Section 135 of Companies Act, 2013 relating to Corporate Social Responsibility is not applicable to the Company as the Company has not earned any prots during the year.
CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance with the exception of appointment of Independent Directors on the Board. This matter is being pursued by the Holding company with the Administrative Ministry.
A detailed Corporate Governance Report forms part of this Annual Report separately.
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EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return in form MGT 9 is annexed.
PARTICULARS OF EMPLOYEES
As per Ministry of Corporate Affairs Notication 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, 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, is 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.
AASL being a Government Company, its Directors are appointed / nominated by the Government of India as per the Government / DPE Guidelines which also include xation of pay criteria for determining qualications and other matters.
DETAILS OF DEPOSITS
The Company has not accepted any public deposits during the year ended 31 March 2017 as covered under the provisions of Section 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
BOARD EVALUATION
Vide Notication No. G.S.R.463(E) Dated 5 June 2015, the provisions of section 134(3)(p) relating to Board Evaluation are not applicable to AASL, being a Government Company since the Directors are evaluated by the Ministry of Civil Aviation.
APPOINTMENT OF INDEPENDENT DIRECTORS & DECLARATION
AASL is a wholly owned Subsidiary of Air India Limited. As per the provisions of Article 22 of the Articles of Association of the Company, the number of Directors of the Company shall not be less than three and not more than twelve all of whom shall be appointed by Air India Limited, who in turn can do so subject to the directions of the Government of India.
Accordingly, the matter regarding appointment of Independent Directors on the Board of AASL has been taken up by Air India Limited with the Ministry of Civil Aviation, Government of India.
NOMINATION, REMUNERATION AND STAKEHOLDERS RELATIONSHIP COMMITTEE
As required under Section 178 of the Companies Act, 2013 the Nomination & Remuneration Committee should consist of 3 or more Non-Executive Directors out of which not less than one half should be Independent Directors.
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As presently there is no Independent Director on the Board of the Company, Nomination & Remuneration Committee has not been constituted. However, the matter has been taken up with the Ministry of Civil Aviation by Air India Limited.
Further, AASL is a Government Company and as per Ministry of Corporate Affairs Circular dated 5 June 2015, exemption has been given to Government Companies from the applicability of Section 178 (2) (3) (4) pertaining to Directors.
REMUNERATION POLICY
REMUNERATION TO EXECUTIVE DIRECTORS AND NON-EXECUTIVE DIRECTORS
Provisions of Section 197 of the Companies Act, 2013 in respect of remuneration to Directors of the Company are not applicable to Government Companies vide Notication No.G.S.R.463(E) dated 5 June 2015.
RISK MANAGEMENT
Since the revenue of AASL is tied up through its parent company Air India and the parent company is having adequate risk management policy in case of sales through Agents, credit cards, etc. by establishing a Capping monitoring policy, Bank Guarantee policy, Risk monitoring through Risk engine attached to web portal, AASL being 100 percent subsidiary is not prone to high business risk. Moreover the IFCR for AASL for 2016-17 is being done for which AASL is taking necessary steps as recommended in the report. Therefore the Company does not have any Risk Management Policy yet as the element of risk threatening the Company's existence is very minimal.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
The following changes have occurred in the constitution of Directors and KMP of the company during the FY 2016-17.
S.No Name Designation Date of Date of appointment cessation
1. Capt Arvind Kathpalia Director 30.9.2015 3.03.2017
2. Capt. A.K. Govil Director 3.03.2017 -
3. Shri Sunil Dua Chief Financial Ofcer 24.06.2015 31.10.2016
4. Shri Kamal Roul Chief Financial Ofcer 1.11.2016 -
5. Smt Puja Jindal Director 21.03.2013 8.04.2016
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the nancial year were on an arm's length basis and were in the ordinary course of business. There are no materially signicant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conict with the interest of the Company at large and Approval of the Board of Directors was obtained wherever required.
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Company does not have any details of transactions entered with the related parties which are required to be attached in Form No. AOC-2.
INTERNAL FINANCIAL CONTROLS
AASL appointed M/s MGC & KNAV, Global Risk Advisors LLP to conduct a Risk management assessment for the purpose of Internal Financial Control on various process and activities for the year 2016-17 and submitted a fair report with various suggestion and recommendation to be implemented in 2017-18. The report was shared with statutory auditors of the Company for their comments thereon.
DISCLOSURE REGARDING FRAUDS
There are no frauds reported by the Auditor to the Audit Committee or to the Board.
MATERIAL ORDERS OF REGULATORS
No signicant and material orders have been passed by the regulators or courts or Tribunals impacting the going concern status and Company's operation in future during the year.
DETAILS OF SICKNESS OF THE COMPANY
The Company is not a sick company. Hence details not applicable.
COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA
The comments of Comptroller and Auditor General of India (C&AG) as required under Section 143(6)(b) of the Companies Act, 2013 on the accounts of the Company for the year ended 31March 2017 are attached.
ACKNOWLEDGEMENTS
Board sincerely acknowledges the support and guidance received from the Ministry of Civil Aviation, Comptroller and Auditor General of India, Ministry of Corporate Affairs and other agencies.
For and on behalf of the Board
Sd/-(Ashwani Lohani)
Chairman
Place : New DelhiDate : 22 August 2017
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MANAGEMENT DISCUSSION & ANALYSIS REPORT
ANALYSIS OF FINANCIAL PERFORMANCE
Revenue
v Total revenue earned during the year was Rs.3758.14 Million as against Rs. 2738.60 Million during 2015-16.
Expenditure
v The total expenditure incurred during the year was Rs.6684.78 Million as compared to the previous year's gure of Rs.4762.51 Million.
HUMAN RESOURCES
Staff Strength
As on 31 March 2017, AASL had 533 employees on Fixed Term Employment Agreement basis. In addition, there were 16 employees on deputation from Air India Limited and 41 employees on deputation from AIESL.
GOING CONCERN
The Company has a eet of 2 ATR 42-320 and 8 ATR 72-600 aircraft. 10 New ATR 72-600 aircraft were likely to be inducted in FY 2016-17, but owing to delays in the leasing process, deliveries have begun in June 2017 and are expected to complete by October 2017. The existing eet is deployed to operate about 50 ights every day over a network of 35 stations. The 10 new aircraft being inducted will be utilized to increase frequency on present routes as well as deployment on new routes. The Company plans to expand its network and reach to neighbouring countries. It further plans to increase the eet to 40 aircraft by FY 2021.
RISK MITIGATION STRATEGIES
The Company continuously monitors the risk perceptions and takes preventive action for mitigation of risks on various fronts.
INTERNAL CONTROL SYSTEMS
The Company had appointed M/s Vijay Mukesh & Co. as Internal auditors for the year 2016-17 to carry out various internal audit assignments such as Tax compliance, Risk assessment & mitigation, Strengthening Internal control process, etc.
FLEET POSITION
As on 31 March 2017 the eet of the Company comprised 10 leased aircraft as under:-
Aircraft Type No. of Aircraft Owner ATR 42-320 02 Leased from M/s Abric Leasing Ltd, Ireland
ATR 72-600 08 Leased from different overseas lessors
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TECHNICAL RELIABILITY
Aircraft-wise Technical Reliability during the year 2016-17 was as under:
a) ATR 72-212A (600) 9 9.04%
b) ATR 42-320 9 9.46%
c) CRJ-700 9 8.73% (Apr'16 to Dec'16)
AIRCRAFT UTILIZATION
Aircraft utilization during the year 2016-17 was as under:
a) ATR 72-600 1 6134:21 BH b) ATR 42-320 5 162:36 BH
c) CRJ-700 2179:51 BH
NETWORK/ NEW LINKS
As at the year end, the network of the Company consisted of 33 domestic stations and the Alliance Air operated around (ATR-72-600:220, ATR-42:46, CRJ:26) 266 ights per week.
The Company introduced services on the following new routes/additional ights during the year 2016-17:-
New Flights / Links
ATR-72 Aircraft
l Kolkata/Agartala/Kolkata – 5 freq/week w.e.f. 01st April 2016
l Bangalore/Vijayawada/Bangalore – 5 freq/week w.e.f. 01st April 2016
l Delhi/Jammu/Delhi – 5 freq/week w.e.f. 07th April 2016
l Mumbai/Bhavnagar/Mumbai - 4 freq/week w.e.f. 21st April 2016
l Delhi/Bhopal/Delhi – Daily w.e.f. 23rd May 2016
l Bhopal/Jabalpur/Hyderabad & v.v. – 4 freq/week w.e.f. 23rd May 2016
l Bhopal/Raipur/Pune & v.v. – 3 freq/week w.e.f. 23rd May 2016
l Bangalore/Hubballi/Bangalore - 4 freq/week w.e.f. 20th July 2016
l Delhi/Jaipur/Delhi - 3 freq/week w.e.f. 26th July 2016
l Delhi/Kanpur/Delhi – 3 freq/week w.e.f. 10th December 2016
l Delhi/Bathinda/Delhi – 3 freq/week w.e.f. 11th December 2016
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ATR-42 Aircraft
l Kolkata/Ranchi/Kolkata – 5 freq/week w.e.f. 30th October 2016
l Kolkata/Guwahati/Tezpur & v.v. – 3 freq/week w.e.f. 30th October 2016
North East Operations
Alliance Air continued with its ight operations under a MoU with North Eastern Council (NEC) during the year 2016-17 with VGF support :
a. Kolkata/Silchar/Tezpur & v.v. - 3 freq/week with ATR42 aircraft restructured to operate as Kolkata/Guwahati/Tezpur & v.v. 3 freq/week w.e.f. 30th October 2016 as Kolkata/Silchar/Kolkata sectors upgraded and to operate with Air India's A320 family aircraft.
b. Kolkata/Guwahati/Lilabari & v.v. - 4 freq/week with ATR-42 aircraft
c. Kolkata/Shillong/Kolkata - 6 freq/week with ATR-42 aircraft
Operation of ights with VGF support:
1. Kochi/Agatti/Kochi – 6 times per week with ATR-42 aircraft under VGF support from Lakshadweep Administration.
2. Mumbai/Diu/Mumbai – 4 times per week with ATR72 aircraft w.e.f. 25th October 2015. Flights are being operated under VGF support from Diu Administration.
3. Delhi/Bathinda/Delhi – 3 times per week with ATR72 aircraft under VGF support from Punjab Government.
ATR-42-320/ATR-72-600 AIRCRAFT
Air India Engineering Services Ltd. (AIESL), a wholly owned subsidiary of our parent Company, Air India undertakes maintenance of all our aircraft. Its hangar in Kolkata is the main engineering base for maintenance activities on ATR 42-320 aircraft. The Scheduled Line Maintenance and Major Maintenance activities upto '4C' Check (20000 FH) and 8 yearly Inspection are being carried out by AIESL including special inspections, snag rectications as per trouble shooting / maintenance manuals for continued airworthiness of the aircraft.
AIESL Delhi, is the main engineering base for maintenance activities of ATR72-212A having capability to carry out upto 9A and 2 yearly Inspection. Also, Kolkata, Mumbai and Hyderabad base have the capability to carry out maintenance up to '1A'. MRO AIESL, Hyderabad is in the process of developing its facilities to have capability to carry out 'C' check on ATR 72-212A aircraft. TECHNICAL TRAINING
Aircraft related Engineering training is being managed by AIESL. For PPC and CAMO functions all the recently inducted 35 Assistant Engineers and 8 Technical Assistants are being trained in-house, including the mandatory regulatory requirements training such as Human factor, SMS etc.
CIF value of Imports (New Purchases & not repaired items) during 01.04.2016 to 31.03.2017 in respect of (a) components & spares (b) inventory control (c) capital items
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AASL is handling only exchange of Spares/Components and new purchases, if any, is currently being handled by MMD, AIL through RAMCO.
DISPOSAL / RETURN OF AIRCRAFT AND SPARES AND OTHER SURPLUS / OBSOLETE ASSETS, IF ANY
All CRJ aircraft have been returned and the inventory currently lying with AASL which was procured on account of operation of CRJ aircraft is Rs.4.6 Crores, MMD, AIL is exploring the best way to dispose off this inventory.
MEASURES TO SAVE THE COST OF COMPONENTS
l Initially for component support of ATR72-600 eet, Interim Maintenance Service agreement was entered with M/s ATR. Subsequently, after extension of the Global Maintenance Contract for ATR 42 with OEM M/s ATR to include ATR72-600 also, the same has resulted into a cost saving of approx. USD 4800/Aircraft/Month.
l Efforts are being made to centralise PPC and MMD Divisions at Delhi so as to have effective control on procurement as well as to ensure availability of components and to enhance reliability further.
FUTURE PERSPECTIVE
Three new ATR-72-600 aircraft were inducted during the year 2016-17 taking the eet to 8 ATR72 aircraft. Two more ATR72 aircraft have been inducted till 31 July 2017 making it a eet of 10 ATR72 aircraft. 8 more ATR72 aircraft are planned to be inducted on dry lease during the year 2017-18. These aircraft are proposed to be deployed on Tier II & III cities to improve regional connectivity as proposed in the new National Civil Aviation Policy as envisaged by Ministry of Civil Aviation. Aligned with the induction of aircraft proportionally the new stations are being added, after due diligence of route economics.
EXPANSION OF AIRCRAFT WORKSHOP FACILITIES
l Overhaul facility of PW127M Engines tted on ATR-72 Aircraft is being planned at JEOC, Delhi.
l Discussion with OEM M/s ATR is under progress to sign MoU for development of component maintenance support feasibility/facility at the existing approved shops of AIESL.
l AIESL, Hyderabad base is building up its capabilities to include C-Check on ATR-72 Aircraft and also in process of obtaining requisite approvals from DGCA for the same and subsequently, to obtain EASA/FAA certication.
FLIGHT SAFETY
The Company has an independent Flight Safety Department which functions as per the DGCA requirements in proactive manner. Flight Safety Department carries out preventive and investigative functions for the Airline. The preventive functions include, the cockpit voice recorder monitoring, ight data recorder monitoring and Internal Safety Audits of the base station and safety inspections of the line stations being operated by an Airline which includes Aireld Inspection, Spot Checks, Ramp Inspection and Cockpit/Cabin surveillance checks at regular interval.
All 21 reported incidents for FY 2016-17 were investigated by the Permanent Investigation Board (PIB) of the Company and the recommendations of PIB were included in the operation procedures and policy to prevent recurrences. The investigations of incidents were carried out along with DGCA representatives and no PIB cases of the nancial year 2016-17 were pending.
During the Financial Year 2016-17, Alliance Air had no occurrence, classied as serious incident on CRJ-700 aircraft, ATR-42-320 and ATR-72-600 aircraft.
04 Bird hit reported in the Financial Year 2016-17 and Nil damage reported to the aircraft.
To ensure safety of aircraft, following measures were taken up by Flight Safety Department:-
l The procurement of FOQA system for new ATR 72-600 aircraft eet in the year 2016-17.
l The ight occurrences which were classied as incidents by the regulatory norms were investigated by the Investigation Board of the Airline in coordination with the Air Safety Directorate of the DGCA.
l The recommendations of Investigation Board were circulated to the respective departments for their compliance.
l Internal Safety Audit was conducted for safety evaluations of the Airline and the ndings were reported to the concerned.
l Load and Trim Sheet of ATR-72-600, CRJ 700 & ATR 42-320 aircraft eet were being monitored on monthly basis.
l Ramp Inspection/Spot Check of Base Stations/ Line Stations was carried out randomly.
l Safety inspection of Line stations were being carried out as per direction of DGCA.
TRAINING
Alliance Air has upgraded 2 ATR Pilots as Commander during this year and 1 ATR Pilot would be under PIC upgrade training during the year 2016-17.
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REPORT ON CORPORATE GOVERNANCE
1. BOARD OF DIRECTORS
As per the Articles of Association of the Company, the number of Directors shall not be less than three and not more than twelve.
BOARD OF DIRECTORS AS ON 31 MARCH 2017
Shri Ashwani Lohani CMD- Air India Ltd. Chairman
Dr Shefali Juneja Director, Ministry of Civil Aviation
Shri Vinod Hejmadi Director (Finance), Air India Ltd.
During the year, all meetings of the Board were chaired by the Chairman .The Board met ve times during the year to periodically review the performance of the Company and to discuss important issues which inter alia included Induction of 10 new ATR 72 aircraft, Redelivery Program of CRJ aircraft, Authorisation for registration under GST, Execution of Novation agreement for ATR 72-212A, Low cost PSS for AASL, etc.
2. BOARD PROCEDURE
The meetings of the Board of Directors are generally held at Air India's Headquarters in New Delhi. The meetings are scheduled well in advance. In case of exigencies or urgency, resolutions are passed by circulation. The Board meets at least once a quarter to review the operating performance of the Company. The agenda for the meetings is prepared by the ofcials of the concerned departments and approved by the CEO & the Chairman. The Board papers are circulated to the Directors in advance. The members of the Board have access to all information and are free to recommend inclusion of any matter in the agenda for discussion. Senior executives are invited to attend the Board meetings and provide clarication as and when required. Action Taken Reports are put up to the Board periodically. To enable better and more focused attention on the affairs of the Company, the Board delegates certain matters to Committees of the Board set up for the purpose.
Details regarding the Board Meetings, Annual General Meeting, Directors' attendance there at, Directorships and Committee positions held by the Directors are as under:
Board Meetings :
Board Meetings were held during the nancial year 2016-17 on the following dates:
nd11 April 2016 (142 Meeting)
rd7 June 2016 (143 Meeting)
th21 September 2016 (144 Meeting)th
21 December 2016 (145 Meeting)th
21 March 2017 (146 Meeting)
Particulars of Directors including their attendance at the Board/Shareholders' Meetings during the nancial year 2016-17 :
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Name of the Director
Shri Ashwani LohaniCMD – Air India Ltd.
Chairman
Shri Vinod Hejmadi
Director – FinanceAir India Ltd.
Academic Qualications
Mechanical Engineer and Fellow of Chartered Institute of Logistic and Transport
B.Com, ACA
Attendance out of 5 Board
Meetings
5
4
Details of Directorships held in other Companies
Chairman & Managing DirectorAir India Limited(AIL)Part-Time ChairmanAir India Air Transport Services Ltd(AIATSL)Air India Engineering Services Ltd(AIESL)Air India Express Ltd(AI Exp Ltd)Hotel Corporation of India Ltd.(HCI)
DirectorAir Mauritius LimitedAir Mauritius Holdings LimitedAir India SATS Airport Services Pvt. Ltd.
DirectorAir India LtdAir India Air Transport Services LtdAir India Engineering Services LtdAir India Express LtdHotel Corporation of India LtdAir India SATS Airport Services Pvt Ltd
Memberships held in Committees
Permanent InviteeAudit Committee,AASLAILChairmanFinance, HR, Strategic CommitteeMemberCorporate Social Responsibility Committee/ Nomination & Remuneration CommitteeAIATSL ChairmanCorporate Social Responsibility CommitteeMemberAudit CommitteeAIESLMemberAudit CommitteeAI Exp LtdMemberAudit & Corporate Social Responsibility CommitteeHCIMemberAudit Committee
MemberAudit CommitteeAIL MemberFinance, Strategic CommitteeAIATSL MemberAudit CommitteeAIESL MemberAudit CommitteeAI Exp LtdChairmanCorporate Social Responsibility CommitteeMemberAudit CommitteeHCI MemberAudit Committee
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22
Name of the Director
Dr Shefali JunejaDirector, Ministry of Civil Aviation
Academic Qualications
M.A M(Phil) Phd.
Attendance out of 5 Board
Meetings
5
Details of Directorships held in other Companies
DirectorAir India Express Ltd
Memberships held in Committees
ChairmanAudit Committee, AASL and AI Exp Ltd
Smt Puja JindalDirector, Ministry of Civil Aviation(Ceased as a Director eff 8.4.16)
Shri Pankaj Srivastava, Director –Commercial, Air India Limited
Smt Meenakshi Dua, ED-Northern Region, Air India Limited
Shri Arvind KathapaliaED-Operations, Air India Limited
Post Graduate
MBA
BSC Hons, Masters in Social Work, DIP IR & PM
BA (Eco) Hons.
NIL
3
2
2
DirectorAir India Express LtdPawan Hans Helicopters Limited
DirectorAir India Limited
-
-
MemberAudit Committee, AASL and AI Exp Ltd
Air India LimitedCo-Opted MemberStrategic Committee
-
-
3. AUDIT COMMITTEE
As part of the Corporate Governance process and in compliance with the provisions of the Companies Act, 2013 and DPE Guidelines, the Audit Committee of the Board has been constituted.
As on 31 March 2017 the following were the members of the Audit Committee :
Dr Shefali Juneja Chairperson
Shri Vinod Hejmadi Member
Shri Ashwani Lohani P ermanent Invitee
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The Terms of Reference of the Audit Committee are:
l To recommend for appointment, remuneration and terms of appointment of auditors of the company;
l To review and monitor the auditor's independence and performance, and effectiveness of audit process;
l To review the Internal Audit program & ensure co-ordination between the Internal & External Auditors as well as determine whether the Internal Audit function is commensurate with the size and nature of the Company's Business;
l To discuss with the Auditor before the audit commences the nature & scope of the audit;
§ To examine the nancial 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 ;
l Approval or any subsequent modication of transactions of the company with related parties;
l Scrutiny of inter-corporate loans and investments;
l Valuation of undertakings or assets of the company, wherever it is necessary;
l Evaluation of internal nancial controls and risk management systems;
l Monitoring the end use of funds raised through public offers and related matters.
l To consider any other matter as desired by the Board;
The Audit Committee met four 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:
th11 April 2016 (4 Meeting)
th7 June 2016 (5 Meeting)
th 21 December 2016 (6 Meeting)
th 21 March 2017 (7 Meeting)
Attendance at the Audit Committee Meetings
Name of the Member No. of Meetings Attended
Dr Shefali Juneja 4
Shri Vinod Hejmadi 4
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4. ANNUAL GENERAL MEETINGS DURING THE LAST THREE YEARS
The details of these meetings are given below :
Date and time of the Meeting Venue
st 31 Annual General 29 December 2014 At 1600 hrs Board Room, Meeting Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
nd 32 Annual General 28 December 2015 At 1615 hrs Board Room, Meeting Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
rd 33 Annual General 30 December 2016 At 1715 hrs Board Room, Meeting Airlines House, 113, Gurudwara Rakabganj Road, New Delhi - 110 001
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SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2017
(Pursuant to Section 204 (1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)
To,The Members,Airline Allied Services LimitedAlliance Bhawan, Domestic Terminal-1,IGI Airport, New Delhi -110037
I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Airline Allied Services Limited (CIN:U51101DL1983GOI016518) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing my opinion thereon.
Based on my verication of the Airline Allied Services Limited's books, papers, minute books, forms and returns led and other records maintained by the company and also the information provided by the company, its ofcers, agents and authorised representatives during the conduct of secretarial audit and as per the explanations given to me and the representations made by the Management, I hereby report that in my opinion, the Company has, during the audit period covering the Financial Year ended on 31st March, 2017 generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
A. I have examined the books, papers, minute books, forms and returns led and other records made available to me and maintained by the company for the Financial Year ended on 31st March, 2017 according to the applicable provisions of:
i. The Companies Act, 2013 ('the Act') and the rules made there under;
During the period under review the Company has complied with the provisions of Companies Act, 2013 ('the Act') and the rules made thereunder, as applicable, subject to the following observations:
a) There were few instance of delay in ling of e-forms under the Companies Act, 2013 ('the Act') and the rules made thereunder, but they were regularised by payment of additional fees under the Act.
b) Company has not appointed Independent Directors pursuant to sub-section 4 of section 149 of Companies Act, 2013 , hence no meeting of Independent Directors could be held during the period under audit. Since, the company has not appointed Independent Directors, the company has not complied with the provisions of section 177(2) and 178 of Companies Act, 2013 read with Rule 6 of Companies( Meetings of Board and its Power) Rules, 2014 as regard the appointment of Independent Directors in composition of the Audit Committee.
c) Company has not constituted Remuneration and Nomination Committee of the Board pursuant to 178 of Companies Act, 2013 read with Rule 6 of Companies (Meetings of Board and its Power) Rules, 2014 as it meets the prescribe criteria as mentioned in Rule 6.
Queries raised by Statutory Auditors of the company in Audit Observations in relation to compliance of Companies Act, 2013 which has been replied by the Management in Directors Report have not been reproduced here.
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ii. The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder ,The Depositories Act, 1996 and the Regulations and Bye-lawsframed thereunder, Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act') as prescribed under Form MR-3 are not applicable to the company.
iii. have also examined compliance with the applicable clauses of the following:
Secretarial Standards issued by The Institute of Company Secretaries of India.
Being unlisted company , company was not require to enter into any listing agreements with Stock Exchange(s) .
During the period under review and as per the explanations and clarications given to me and there presentations made by the Management, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above subject to the observation made therein.
B) (i) I have examined the framework, processes and procedures of compliance with respect to following laws applicable to the company on test basis.
Apprentices Act, 1961; Employees State Insurance Act, 1948; Payment of Wages Act,1948; Minimum Wages Act, 1948; Industrial Disputes Act, 1947; Payment of Bonus Act, 1965; Payment of Gratuity Act, 1972; Contract Labour (Regulation and Abolition) Act, 1970; Maternity Benet Act, 1961; The Child Labour (Prohibition&Regulation) Act, 1986; Equal Remuneration Act,1976; The Employment Exchange (Compulsory Notication of Vacancies) Act,1956,
Company has created separate Trusts to administer Provident Fund Contributions named Airline Allied Services Employees Provident Fund Trust Regulations, 1996 .
Sexual Harassment of Women at Workplace( Prevention, Prohibition and Regulation ) Act, 2013: The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.
In connection with aforesaid laws, adequate systems and processes are in place to monitor and ensure compliance with such laws.
During the audit , it is observed that the Compliance Management System needs to be further
strengthen by taking the following actions:
a) To establish Corporate Compliance Committee and designate a Chief Compliance ofcer and maintain centralised mechanism to ensure compliance with all applicable laws;
b) To establish and maintain effective co-ordination of functional units and the compliance department under the overall supervision of the Board;
c) To establish mechanisms to prevent, detect, report and to respond to non-compliances;
d) To present Quarterly compliance Report to the Board;
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e) Identication and classication of various compliance risks;
f) Organisation of compliance Check list, Audit, feed back, remedies.
(ii) In aviation sector, following laws are specically applicable to the Company:
l Aircraft Act, 1934
l Carriage by Air Act, 1972
l Tokyo Convention Act, 1975
l Anti-Hijacking Act, 1982
l Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982
l Civil Aviation Requirements issued by DGCA
Director General of Civil Aviation vide circular dated 21.12.2011 in connection with regulatory audit policy and programme under which regulatory audit are being carried out with an aim to carry out to ascertain the internal control of a organisation in its activities and to ensure compliance of regulatory requirements. It is explained by the company that the Regulatory audit of the company is done by the audit team of DGCA as per the audit programme and audit procedure as prescribed under regulatory audit policy of DGCA .
The Regulatory Audit Program (RAP) has been developed to promote conformance with the aviation regulations and standards that collectively prescribe an acceptable level of aviation safety. It also ensures that Civil Aviation audit policies and procedures are applied uniformly.
Regulatory Audits are conducted for the grant of approvals for Initial Certication, Additional Approval, Routine Conformance and Special Purpose Audit pursuant to the Aircraft Act 1934. The Director General of Civil Aviation or any other ofcer specially empowered in his behalf by the Central Government shall perform the safety oversight functions in respect of matters specied in this Act or the Rules made there under.
The Joint Director General Civil Aviation nominated by the Director General is responsible for all regulatory audits and inspections and is normally the Convening Authority.
The type of audits are Initial Certication Audit , Additional Approval Audit, Routine Conformance Audit and Special-Purpose Audit and is determined by the circumstances under which the audit is convened.
Regulatory audit includes Check Lists for of Airworthiness Audit policy and procedures and Operations audit policy and procedures .
DGCA has issued Civil Aviation Requirements ( CAR ) under section 4 of Aircraft Act, 1934 read with Rule 133A of Aircraft Rules, 1937 and the company is required to comply such requirements under DGCA check systems . While the broad principles of law are contained in the Aircraft Rules, 1937, Civil Aviation Requirements are issued to specify the detailed requirements and compliance procedures.
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I further report, that the company is generally regular in compliance of aforesaid aviation laws and the compliance by the Company of such aviation laws have not been reviewed in this Audit which have been subject to review by DGCA and other designated professionals/authorities.
I further report, that the compliance by the Company of applicable nancial laws, like direct and indirect tax laws, has not been reviewed in this Audit since the same have been subject to review by statutory nancial audit and other designated professionals.
I further report that:
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors except Independent Directors as cited in observation clause A (i) (b) above. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all Directors to schedule the Board Meetings at least seven days in advance and where the Board meetings are called at shorter notice ,presence of at least one Nominee Director is ensured, agenda and detailed notes on agenda were sent and a system exists for seeking and obtaining further information and clarications on the agenda items before the meeting and for meaningful participation at the meeting
Decisions at the Board Meetings, as represented by the management, were taken unanimously.
I further report that as per the explanations given to me and the representations made by the Management and relied upon by me there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. It is informed that the Company has responded to notices for demands, claims, penalties etc. levied by various statutory / regulatory authorities and initiated actions for corrective measures, wherever necessary.
I further report that during the audit period, there were no specic events/actions having a major bearing on the company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above
Sd/-(Jiwan Parkash Saini)
Company Secretary in practice
August18, 2017FCS No: 3671 CP No: 2100
Note-1: Specic non compliances / observations / audit qualication, reservation or adverse remarks has been reported in respect of the above at appropriate place .
Note-2: This Report is to be read with my letter of even date which is annexed as Annexure A and forms an integral part of this report.
'Annexure A'
To,The Members,Airline Allied Services LimitedAlliance Bhawan, Domestic Terminal-1,IGI Airport, New Delhi -110037
I report of even date is to be read along with this letter.
1. Maintenance of Secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.
2. I have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verication was done on test basis to ensure that correct facts are reected in Secretarial records. I believe that the process and practices, we followed provide a reasonable basis for my opinion.
3. I have not veried the correctness and appropriateness of nancial records and Books of Accounts of the Company.
4. Where ever required, I have obtained the Management representation about the Compliance of laws, rules and regulations and happening of events etc.
5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verication of procedure on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efcacy or effectiveness with which the management has conducted the affairs of the Company.
Sd/-(Jiwan Parkash Saini)
Company Secretary in practice
August 18, 2017FCS No: 3671 CP No: 2100
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Annexure to Directors' Report for the year 2016-17 Annexure-I
FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN
As on financial year ended 31.03.2017 Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management & Administration) Rules, 2014.
I. REGISTRATION & OTHER DETAILS:
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated) -
1. CIN U51101DL1983GOI016518
2. Registration Date 13/09/1983
3. Name of the Company AIRLINE ALLIED SERVICES LIMITED (AASL)
4. Category/Sub-category of the Company
Government Company
5. Address of the Registered ofce & contact details
OLD LUFTHANSA HANGER BUILDING, (ADJECENT TO ED-NR OFFICE), IGI AIRPORT, T-1, NEW DELHI- 110037
6 Whether listed company No
7. Name, Address & contact details of the Registrar & Transfer Agent, if any.
N.A.
Sr No
Name and Description of main products / services NIC Code
of the Product/
service
% to total turnover of
the company
1
To establish, maintain and operate international and domestic air transport services, scheduled and non scheduled, in all the countries of the world for the carriage of passengers, meals and freight and for
any other purposes.
621 100
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANY:
Sr. No.
Name and Address of the Company
CIN/GIN
Holding / Subsidiary / Associate
% of Shares
Applicable Section
1 Air India Limited 113, Airlines House, Gurudwara Rakabganj Road, New Delhi, 110 001.
U62200DL2007GOI161431
Holding
100%
2 (46)
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IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) : Category-wise Share Holding
Category of Shareholders
No. of Shares held at the beginning of the year
[As on 01-04-2016]
No. of Shares held at the end of the year [As on 31-03-2017] %
Change during
the year
Demat
Physical
During the year
% of Total
Shares Demat Physical Total
% of Total
Shares
A. Promoters
(1) Indian
a) Individual/ HUF - - - - - - - - -
b) Central Govt - - - - - - - - -
c) State Govt(s) - - - - - - - - -
d) Bodies Corp. - 40,225,000 - 100 - 40,225,000 40,225,000 100 0.00
e) Banks / FI - - - - - - - - -
f) Any other - - - - - - - - -
Total shareholding of Promoter (A)
- 40,225,000 100 - 40,225,000 40,225,000 100 0.00
B. Public Shareholding Not Applicable
1. Institutions
a) Mutual Funds/UTI - - - - - - - - -
b) Banks / FI - - - - - - - - -
c) Central Govt. - - - - - - - - -
d) State Govt.(s) - - - - - - - - -
e) Venture Capital Funds
- - - - - - - - -
f) Insurance Companies
- - - - - - - - -
g) FIIs - - - - - - - - -
h) Foreign Venture Capital Funds
- - - - - - - - -
i) Others (specify) Foreign Banks
- - - - - - - - -
Sub-total (B)(1):- - - - - - - - - -
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Category of Shareholders
No. of Shares held at the beginning of the year [As on 01-04-2016]
No. of Shares held at the end of the year [As on 31-03-2017]
% Change during
the year
Demat
Physical
Total
% of Total
Shares
Demat
Physical
Total
% of Total
Shares
2. Non-Institutions Not Applicable
a) Bodies Corp.
(Market Maker +
LLP)
i) I Indian - - - - - - - - - ii) Overseas - - - - - - - - - b)
Individuals
i)
Individual
shareholders
holding nominal
share capital upto
Rs. 1 lakh
-
-
-
-
-
-
-
-
-
ii)
Individual
shareholders
holding nominal
share capital in
excess of Rs.
1 lakh
-
-
-
-
-
-
-
-
-
c)
Others (specify)
i)
Non Resident
Indians
-
-
-
-
-
-
-
-
-
ii)
Non Resident
Indians -
Non
Repatriable
-
-
-
-
-
-
-
-
-
iii)
Ofce Bearers
-
-
-
-
-
-
-
-
-
iv)
Directors
-
-
-
-
-
-
-
-
-
v)
HUF
-
-
-
-
-
-
-
-
-
vi)
Overseas
Corporate Bodies
-
-
-
-
-
-
-
-
-
vii)
Foreign Nationals
-
-
-
-
-
-
-
-
-
viii)
Clearing
Members
-
-
-
-
-
-
-
-
-
ix)
Trusts
-
-
-
-
-
-
-
-
-
x)
Foreign Bodies -
D R
-
-
-
-
-
-
-
-
-
Sub-total (B)(2):-
-
-
-
-
-
-
-
-
-
Total Public Shareholding (B) = (B)(1)+ (B)(2)
-
-
-
-
-
-
-
-
-
C.
Shares held by
Custodian for
GDRs & ADRs
-
-
-
-
-
-
-
-
-
Grand Total (A+B+C)
40,225,000 40,225,000
100
-
40,225,000
40,225,000
100
0.00
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B) Shareholding of Promoter-
C) Change in Promoters' Shareholding (please specify, if there is no change)
Sr No.
Particulars Shareholding at the beginning of the year
Cumulative Shareholding at end of the year
No. of shares
% of total shares of the
company
No. of shares
% of total shares of the
company
At the beginning of the year
Air India Limited 40,225,000 100% 40,225,000 100% At the end of the year
Air India Limited 40,225,000 100% 40,225,000 100%
D) Shareholding Pattern of top ten Shareholders: (Other than Directors, Promoters and Holders of GDRs and ADRs):
Sr. No.
Shareholder's Name
Shareholding at the beginning of the year
Shareholding at the end of the year % change
In Share- holding during
the year
No. of Shares
% of total Shares of the
company
% of Shares
Pledged / Encum- bered to
total shares
No. of Shares
% of total Shares of the
company
% of Shares
Pledged / Encum- bered
to total shares
1 Air India Limited
along with its
nominees
40,225,000
100
NIL
40,225,000
100
NIL
0.00
Sr No
For Each of the Top 10 Shareholders
Shareholding at the beginning of the year
Cumulative Share-holding at end of the year
No. of shares
% of total shares of
the company
No. of shares
% of total shares of
the company
1 NOT APPLICABLE
2
3
4 5
6
7
8
9
10
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E) Shareholding of Directors and Key Managerial Personnel:
S. No.
Shareholding of each Directors and each Key Managerial Personnel
Shareholding at the beginning of the year
Cumulative Shareholding at the end of year
No. of shares
% of total shares of
the company
No. of shares
% of total shares of
the company
Total 4 0 4 0
V. INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accrued but not due for payment.
(Rs. in Crore)
Secured Loans
excluding deposits
Unsecured Loans
Deposits Total
Indebtedness
Indebtedness at the beginning of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
Change in Indebtedness during the financial year
* Addition
* Reduction
Net Change
Indebtedness at the end of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
- 10,584,577,250 - 10,584,577,250
- - - -
- - - -
- 10,584,577,250 - 10,584,577,250
2,932,948,427 -
- -
2,932,948,427 -
- 13,517,525,677 - 13,517,525,677
- - - -
- - - -
- 13,517,525,677 - 13,517,525,677
1 Shri Ashwani Lohani (as nominee of Air India Ltd) 1 0 1 0
2 Shri Vinod Hejmadi (as nominee of Air India Ltd) 1 0 1 0
3 Shri Pankaj Shrivastva (as nominee of Air India Ltd) 1 0 1 0
4 Capt. Arvind Kathpalia (as nominee of Air India Ltd) 1 0 1 0
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VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
(In gures)
Sr No
Particulars of Remuneration Name of MD/WTD/ Manager Total
Amount
1 Gross salary - - - - - -
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 - - - - - -
(b)Value of perquisites u/s 17(2) Income-tax Act, 1961 - - - - - -
(c)Prots in lieu of salary under section 17(3) Income- tax Act, 1961 - - - - - -
2 Stock Option - - - - - -
3 Sweat Equity - - - - - -
4 Commission as % of prot others, specify. - - - - - -
5 Others : (PF, DCS, House Perks tax etc) - - - - - -
Total (A) - - - - - -
Ceiling as per the Act - - - - - -
There are no Managing, Whole Time Directors in the Company.
B. Remuneration to other directors
Sr No.
Particulars of Remuneration Name of Directors Total
Amount
1 Independent Directors - - - - - -
Fee for attending board committee meetings
- - - - - -
Commission - - - - - - Others, please specify (Fees for attending Board Sub Committee Meetings)
- - - - - -
Total(1) - - - - - - 2 Other Non-Executive Directors - - - - - -
Fee for attending board committee meetings
- - - - - -
Commission - - - - - - Others, please specify - - - - - -
Total (2) - - - - - Total (B)=(1+2) - - - - - - Total Managerial Remuneration - - - - - -
Overall Ceiling as per the Act - - - - - -
- - - - - -
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VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type
Section of the
Companies Act
Brief Description
Details of Penalty /
Punishment/ Compounding fees imposed
Authority [RD / NCLT/
COURT]
Appeal made, if
any (give Details)
A. COMPANY
Penalty - - - - -
Punishment - - - - -
Compounding - - - - - B. DIRECTORS
Penalty - - - - -
Punishment - - - - -
Compounding - - - - -
C. OTHER OFFICERS IN DEFAULT
Penalty - - - - -
Punishment - - - - -
Compounding - - - - -
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
* Not applicable to Government Companies. Only CFO and CS are KMPs. ** The Company Secretary is holding the position in addition to his responsibilities as Manager-Corporate Affairs, Air India Ltd.
( gures in Rs)
Sr. No.
Particulars of Remuneration Key Managerial Personnel
CEO CS CFO Total
1 Gross salary *Not
Applicable ** -
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
- - - -
(b) Value of perquisites u/s 17(2)
Income-tax Act, 1961 - - - -
(c) Prots in lieu of salary under section
17(3) Income-tax Act, 1961 - - - -
2 Stock Option - - - -
3 Sweat Equity - - - -
4 Commission - - - -
- as % of prot - - - -
Others, specify. - - - -
5 Others: (PF, DCS, House Perks tax etc) - - - -
Total -
-
-
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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF THE AIRLINES ALLIED SERVICES LIMITED FOR THE YEAR ENDED 31 MARCH 2017
The preparation of nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2017 in accordance with the nancial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act is responsible for expressing opinion on the nancial statements under Section 143 of the Act based on independent audit in accordance with standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 22 August 2017.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) of the Act of the nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2017. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records. Based on my supplementary audit. I would like to highlight the following signicant matters under section 143(6)(b) of the Act which have come to my attention and which in my view are necessary for enabling a better understanding of the nancial statements and the related audit report.
Comments on Disclosure
1. Cash Flow Statement
The above was decient to the extent that it did not disclose the values for Sub-Heads for the Year 2016-2017.
2. Trade receivables (Note No.13 of Notes on Accounts)
The above Note is decient to the extent that the value of Trade Receivables outstanding for a period exceeding six months from the date they were due for payment i.e. Rs.91.22 crore has been interchanged with the value for Other trade receivables i.e. Rs.14.47 crore.
3. Note No.26 to 53 of Notes on Accounts
The title given at the beginning of the Notes No.26 to 53 of the Notes on Accounts reads as ‘Provisional Notes Forming Part of Consolidated Financial Statements for the year 2016-17 of Airline Allied Services Ltd.’ instead of ‘Notes Forming Part of Financial Statements for the year 2016-17 of Airline Allied Services Ltd.’
4. Note No.49 of Notes on Accounts
The above Note discloses that the Company has registered charges of Rs.343.71 crore (Rs.343.71 crore) on the Company’s assets towards dues against leased aircrafts. The above disclosure was misleading as there were no charges on the company’s assets towards dues against leased aircraft.
5. The Cabinet Committee on Economic Affairs (CCEA), Government of India, in its meeting held on 28 June 2017, under the Chairmanship of the Prime Minister of India, had given its approval to the recommendations of NITI Aayog on strategic disinvestment of Air India and ve of its subsidiaries. The above decision will impact the Airline Allied Services Limited, being one of the ve subsidiaries of Air India, however, this fact was not disclosed in the Notes on Accounts though the accounts of AASL, were approved much later i.e. on 22 August 2017.
For and on the behalf of the Comptroller & Auditor General of India
Sd/-Place : New Delhi (Neelesh Kumar Sah)Dated : 08 November 2017 Principal Director of Commercial Audit
& Ex-officio Member, Audit Board-I, New Delhi.
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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 STATEMENT OF THE AIRLINE ALLIED SERVICES LIMITED FOR THE YEAR ENDED 31 MARCH 2017
This is a statement of fact. Omission/error occurred inadvertently due to typographical error.
This is a statement of fact. Omission/error occurred inadvertently due to typographical error.
The preparation of nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2017 in accordance with the nancial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act is responsible for expressing opinion on the nancial statements under Section 143 of the Act based on independent audit in accordance with standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 22 August 2017.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) of the Act of the nancial statements of AIRLINE ALLIED SERVICES LIMITED for the year ended 31 March 2017. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records. Based on my supplementary audit. I would like to highlight the following signicant matters under section 143(6)(b) of the Act which have come to my attention and which in my view are necessary for enabling a better understanding of the nancial statements and the related audit report.
Comments on Disclosure
1. Cash Flow Statement
The above was decient to the extent that it did not disclose the values for Sub-Heads for the Year 2016-2017.
2. Trade receivables (Note No.13 of Notes on Accounts)
The above Note is decient to the extent that the value of Trade Receivables outstanding for a period exceeding six months from the date they were due for payment i.e. Rs.91.22 crore has been interchanged with the value for Other trade receivables i.e. Rs.14.47 crore.
AASL
39
AASL
40
3. Note No.26 to 53 of Notes on Accounts
The title given at the beginning of the Notes No.26 to 53 of the Notes on Accounts reads as ‘Provisional Notes Forming Part of Consolidated Financial Statements for the year 2016-17 of Airline Allied Services Ltd.’ instead of ‘Notes Forming Part of Financial Statements for the year 2016-17 of Airline Allied Services Ltd.’
4. Note No.49 of Notes on Accounts
The above Note discloses that the Company has registered charges of Rs.343.71 crore (Rs.343.71 crore) on the Company’s assets towards dues against leased aircrafts. The above disclosure was misleading as there were no charges on the company’s assets towards dues against leased aircraft.
5. The Cabinet Committee on Economic Affairs (CCEA), Government of India, in its meeting held on 28 June 2017, under the Chairmanship of the Prime Minister of India, had given its approval to the recommendations of NITI Aayog on strategic disinvestment of Air India and ve of its subsidiaries. The above decision will impact the Airline Allied Services Limited, being one of the ve subsidiaries of Air India, however, this fact was not disclosed in the Notes on Accounts though the accounts of AASL, were approved much later i.e. on 22 August 2017.
This is a statement of fact. Omission/error occurred inadvertently due to typographical error.
This is a statement of fact. The disclosure in the Notes to the Accounts has been made since the said charges are registered with the Registrar of Companies. The company is in process of getting the said charges satised by following the involved procedure.
This charge is not towards any Fixed Asset of the company. The amount was disclosed with the intention of additional disclosure as a matter of prudence and materiality.
This is statement of act. However, the full details of disinvestment of AASL were not available as a matter of nal conclusion at the time of nalization of Annual Financial Statement of the company, hence, does not stand disclosed in the Notes to Accounts.
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41
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AIRLINE ALLIED SERVICES LIMITED
Report on the Financial Statements
We have audited the accompanying nancial statements of M/s Airline Allied Services Limited, (the “Company”), which comprises the Balance Sheet as at March 31, 2017, the Statement of Prot and Loss and Cash Flow Statement for the year then ended, and a summary of signicant accounting policies and other explanatory information.
Management's Responsibility for the 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 nancial statements that give a true and fair view of the nancial position, nancial performance and cash ows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specied under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal nancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specied under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal nancial control relevant to the Company's preparation of the nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion on the nancial statements.
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42
Basis for Qualied Opinion
(i) The nancial statements of the Company under report are drawn up on a 'Going concern basis'. Being a Government Company, the Government of India has all the intention to revive it along with parent company. In order to improve its Operational & Financial performance, parent company Air India has formulated a TAP (Turn Around Plan) & other measures for improving its operational and nancial position of company would improve in future. The company has informed vide Board
stMeeting dated 21 March 2017, the Revenue and Capital Budget Estimates for the year 2017-18. The Assumptions are made on the budget estimates of 2017-18 though not satisfactory yet the contention of the company is accepted since the company is a major player in Government of India's vision, under the Regional Connectivity scheme (RCS) of Ministry of Civil Aviation – “UDAN”.
(ii) Statement of Prot and Loss includes Trafc Revenue of `3087.07Million of current year, accounted for on the basis of ledger account of Air India Limited based on the Revenue Accounting Software maintained by Accelya Kale and expenditure on Service charges of `24.99 Million and Other Operating and Administration expenses of `1359.72 Million are accounted for only on the basis of credit and debit notes raised by Air India Limited. The basic records of these items are with Air India Limited and audit of, the said revenue and expenditure is restricted to that extent.
(iii) System of Inventory Accounting followed by the company is not proper/complete. In this respect, our observations are as below -
a) In respect of ATR / CRJ aircraft inventories, procurement is made by Air India Limited and later transferred to the company without any invoice and charging of applicable sales tax (VAT) - amount and its impact on accounts is unascertainable. Moreover, sufcient control does not exist to ensure that all inventory transactions are authorized, processed and accounted completely.
b) Custom Duty and Freight on aircraft spare parts which form part of aircraft inventories, comprise of freight, duties, incidentals etc. on aircraft inventories owned by the company as well as those taken on lease from the manufacturers and also include freight, incidentals etc. on aircraft components and spares exported for repairs. In the absence of its item wise segregation and loading, the balance of custom duty and freight on aircraft spares amounting to ` 44.36 Million lying at the end of the year under Current Assets and ` 7.86 Million charged to material consumed during the year remained unveried and hence correctness of these amounts and their impact on nancials could not be commented upon.
c) The company is not maintaining any record of Inventories at its stores in Delhi, Hyderabad and Kolkata and the nancial gures are incorporated in its books at the yearend on the basis of abstract received from Air India Limited showing the values of different categories of inventories. In absence of details, correctness of Inventory could not be veried and its impact on accounts could not be commented upon. Further in absence of complete details, adequacy of obsolesce provision for aircraft stores and spares cannot be commented upon.
d) The consumption of inventory is booked at the yearend on the basis of balance arrived at from opening stock plus purchases made during the year less closing stock (advised by Air India Limited) at the end of the year instead of accounting on the basis of actual consumption
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43
and disclosing the shortages or excesses, if any, separately. Thus, it is not in accordance with the accepted inventory accounting practices and AS-2 (revised) on valuation norms issued by the ICAI. Hence, the consumption of inventory amounting to ̀ 84.86 Million could not be veried and impact on accounts for variance, if any, cannot be commented.
e) Non-compliance of Accounting Standard AS-2 (Revised) on "Valuation of Inventories"-
(i) Inventories have been valued without complete identication and allocation of freight, duties, incidentals etc. with respect to individual items (also refer sub-para (b) above).
(ii) Further, inventories have been valued at cost as against lower of cost and net realizable value.
Impact of the above on the accounts remained unascertained.
(iv) The accounts with the Airport Authority of India Ltd.and Air India Engineers Services Limited (AIESL) are unconrmed and unreconciled which may impact elements of expenditure/income as
stwell. In absence of conrmation and reconciliation as on 31 March 2017, we are unable to comment on the impact thereon.
(v) Accounting policy of the company with respect to accounting of prepaid and accrued expenses up to ` 10,000/- for Individual items(refer Accounting Policy disclosed in Note No. 14 of Accounting policies in the year of receipt / payment is not in accordance with accrual method of accounting prescribed under the Act and Accounting Standards AS-1 Issued by the ICAI. Amount and impact on accounts is unascertained by the Company.
(vi) Non-conrmation of balances in respect of Other Long-Term Liabilities, Trade Payables, Other Current Liabilities, Long Term. Loans & Advances, Other Noncurrent Assets, Trade Receivables, Short Term Loans & Advances and Other Current Assets. We are unable to comment on the impact of adjustments arising out of non-conrmation of such balances on the nancial statements.
(vii) The company has shown contingent liability amounting to ̀ 3361.25 Millions in respect of income
tax demands and `6.26 Million towards unsettled legal claims, for which no provision has been made as these demands are said to be disputed by the company in appeals (refer Note No. 26(ii)), In view of pending appeals and legal opinion obtained by the company, we are unable to comment upon the liability of the company and its impact on accounts currently is not ascertainable. Further, based on information available there is an additionalliability of tax, interest& penalty on account of TDS ̀ 12.53 Million.
(viii) Debtors include ̀ 294.03 Million recoverable from M/s Gati Limited outstanding since Feb'2009 for aircrafts operated by the Company. Air India Limited had invoked their bank guarantee and recovered `300.00 Million which was transferred to the Company and the same has been kept by the Company in a separate account of “Security Deposit-Gati” under 'Other Long Term Liabilities'. The matter is stated to be in dispute between Air India Limited and M/s Gati Ltd. wherein the Arbitral Tribunal has given award of ` 267.29 Million (including interest etc.) against Air India Limited. An appeal has been led by Air India Limited before the Hon'ble Delhi High Court against the arbitral award which had also upheld the decision of Arbitral Tribunal. An appeal has been led
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44
in Delhi High court (double bench) against the order, AIL has deposited `220.00 Million with Hon'ble High Court as deposit money on 17.11.2015 and same has been recovered by Air India Limited. Accordingly, we are unable to express our opinion on the impact on the company's accounts for non-recoverability of outstanding dues or amount to be refunded for guarantee invoked or payment of awarded amount.
(ix) Company is not accounting for TDS on expenses accounted for on provisional basis. The same is accounted for at the time of providing of actual expenses. The tax and interest liability on the same have not been accounted for in the books. The company is also not accounting for TDS on interest paid to Air India Limited.
We are unable to comment on the impact on the nancial statements referred to in this report for paras stated in 'Basis for Qualied Opinion' herein above for the reasons given in each paragraph.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis for Qualied Opinion paragraph, the aforesaid nancial statements read together with the signicant accounting policies and notes thereon give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
sta) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March'2017;
b) in the case of the Statement of Prot and Loss, of the “Loss” of the Company for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash ows for the year ended on that date,
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 term of section 143(11) of the Act, we give in the Annexure “A” a statement on the matters specied in paragraph 3 and 4 of the order.
2. We are enclosing our report in terms of Section 143(5) of the Companies Act, 2013, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the Annexure “B”on the directions/ sub-directions issued by the Comptroller and Auditor- General of India.
3. As required by Section 143 (3) of the Act we report that
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.
b. Except for the effects/possible effects of matters described in the “Basis for qualied opinion” paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, Statement of Prot and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.
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45
d. In our opinion, except for the effects/possible effects of matters described in the “Basis for qualied opinion” paragraph, the aforesaid Standalone nancial statements comply with the Accounting Standards specied under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. As informed by the Company, Section 164(2) of the Companies Act, 2013 is not applicable to a th
Government Company, vide Notication F No 1/2/2014-CL.V. Dated 5 June, 2015.
f. With respect to the adequacy of the internal nancial controls over nancial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C”. Our report expresses qualied opinion on the adequacy and operating effectiveness of the Company's internal nancial controls over nancial reporting.
g. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2017 on its nancial position as per Note 26 & Note 45 in its nancial statement.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.
iv. The Company had provided requisite disclosures in its nancial statements as to holding as th th
well as dealing in Specied Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the management – Refer Note 47.
For and on behalf ofChandra Gupta & Associates
Chartered Accountants(Firm Reg No: -000259N)
Sd/-(Gunjan Aggarwal)
PartnerM. No. 061893
Place : New DelhiDate : 22 August 2017
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“Annexure A” to the Auditors' Report
Referred to paragraph 1 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year
stended 31 March 2017).
I) In respect of its xed assets:
(a) The records maintained by the Company in respect of its xed assets are not considered to be proper in so far as these do not give full particulars of quantitative assets identication numbers and situation of Fixed Assets.
(b) Based on physical asset report along with scrap note, the shortages have been dealt with. Assets (obsolete/unserviceable/untraceable) amounting Rs. 19 million was written off from the books of accounts during 2016-17, with the approval of Board of directors.
The total Accumulated Depreciation on these assets amounts to Rs. 17.78 million. After charging off accumulated depreciation against gross value of the assets, the Loss/Gain on scrapping of Assets amounts to Rs. 1.22 million.
(c) According to the information and explanation given by the management, there is no title/lease deeds for lease hold or freehold with the Company and accordingly the same is not applicable.
ii) In respect of inventories:
(a) According to the information and explanation given to us, physical verication of inventories has been conducted at Kolkata by the Company during the year. But no verication had done for location Delhi & Hyderabad. Accordingly, we are of the opinion that the frequency of verication is not reasonable.
(b) In view of sub-para (a) above, we are unable to comment on the reasonableness and adequacy of procedures of verication followed by the management in relation to the size of the company and the nature of its business. As reported, valuation is taken as book value.
(c) As explained to us, inventories for ATR/CRJ aircrafts are procured by Air India Ltd. and records relating to receipts, issues and closing stock are maintained by Air India Ltd. Further accounting entries by the Company are made for receipt on the basis of advice from Air India Ltd., which is delayed in almost all cases and accounting entries for issue is done at the year-end only. Accordingly, we are unable to comment whether the company has maintained proper records of inventory.
iii) As explained to us, the company had not granted any loans, secured or unsecured, to any companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(b) & 3(c) of the said order are not applicable to the Company.
iv) In our opinion & according to information & explanations given to us, the company has not given any loans, investments guarantee, and securities granted in respect of provision of section 185 and 186 of the Companies Act 2013.
v) According to the information and explanations given to us, the company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other provisions of the Companies Act, 2013 and the rules framed there under are not applicable.
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vi) We are informed that since no manufacturing activities were carried out, maintenance of cost records were not required by the company prescribed by the Central Government under clause (d) of sub section (1) of section 148 of the Companies Act, 2013. As provisions of the section are not applicable to the company.
vii) In respect of Statutory dues:
(a) According to the information and explanations given to us and according to the books and records produced before us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, custom duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities except as stated below:
i. The company has generally delayed in depositing the Service Tax & TDS.
ii. The Company is yet to be implemented a process of reconciliation of Service tax recoverable and Service Tax payable.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they become payable, except as stated in points mentioned above vii(a).
(c) According to the information and explanations given to us and as per our verication of the records of the company, there are no disputed statutory dues against the company in income tax/ sales tax/ wealth tax/ service tax/ custom duty / excise duty / value added tax/ Cess Department except as stated below:
S No Name of Status Amount Nature of Year Forum where Outstanding Dues dispute is pending (` in Millions)
1 Finance Act, 1994 14.04 Income Tax 1997-98 ITAT
2 Finance Act, 1994 17.43 Income Tax 2000-01 ITAT
3 Finance Act, 1994 3.20 Income Tax 2004-05 CIT(A)
4 Finance Act, 1994 1485.15 Income Tax 2008-09 ITAT
5 Finance Act, 1994 1729.33 Income Tax 2010-11 ITAT
6 Finance Act, 1994 112.10 Income Tax 2011-12 CIT(A)
viii) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion, the company has not defaulted in repayment of dues to a nancial institution, bank, Government or dues to debenture holders.
ix) The company has not raised moneys by way of initial public offer or further public offer (including debt instrument) or term loans and hence reporting under clause (ix) of paragraph 3 of the order is not applicable.
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x) To the best of our knowledge and belief and according to information and explanations given to us, no fraud by the company or any fraud on the company by its ofcers or employees has been noticed or reported during the year.
xi) As informed, the provisions of section 197 relating to managerial remuneration are not applicable to the th
Company, being a Government Company, in terms of MCA Notication no. G.S.R. 463(E) dated 5 June 2015.
xii) The company is not a Nidhi Company. Therefore, the provision of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
xiii) Based upon the audit procedures performed and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial statements etc. as required by the applicable accounting standards.
xiv) According to the information and explanations given to us and an overall examination of the balance sheet, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirement under clause 3(xiv) are not applicable to the company and, not commented upon.
xv) The company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.
xvi) According to the information and explanation given to us, the provision of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For and on behalf ofChandra Gupta & Associates
Chartered Accountants(Firm Reg No: -000259N)
Sd/-(Gunjan Aggarwal)
PartnerM. No. 061893
Place : New DelhiDate : 22 August 2017
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ANNEXURE “B” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF AIRLINE ALLIED SERVICES LIMITED
Referred to paragraph 2 under “Report on Other Legal and Regulatory Requirements” section our report of even date to the members of M/s Airline Allied Services Limited on the accounts of the company for the year
stended 31 March 2017.
Based on the verication of records of the Company and according to information and explanation given to us, we give below a report on the directions issued by the Comptroller and Auditor-General of India in terms of Section 143(5) of the act in respect of M/s Airline Allied Services Limited:
The same is not applicable as no freehold/ leasehold land is with Airline Allied Services Limited.
There is no case where any of waiver/write off debts/loans/ interest etc. taken place during the year.
Inventories for ATR/CRJ aircrafts are procured by Air India Ltd. and records relating to receipts, issues and closing stock are maintained by Air India Ltd. Further accounting entries by the Company are made for receipt on the basis of advice from Air India Ltd., which is delayed in almost all cases and accounting entries for issue is done at the year-end only. Accordingly, we are unable to comment whether the company has maintained proper records of inventory
Further, no assets was received as gift/ grant from the Govt. during the year 2015-16.
1 Whether the company has clear title/lease deeds for freehold and leasehold land respectively? If not please state, the area of freehold and leasehold land for which title/lease deeds are not available.
2 Whether there are any cases of waiver/ write off debts/loans/interest etc., if yes, the reasons there for and the amount involved.
3 Whether proper records are maintained for inventories lying with third parties & assets received as gift/grant(s) from Government or other authorities.
S.No. Areas to be examined Observation/Findings
For and on behalf ofChandra Gupta & Associates
Chartered Accountants(Firm Reg No:-000259N)
Sd/-(Gunjan Aggarwal)
PartnerM. No. 061893
Place : New DelhiDate : 22 August 2017
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ANNEXURE “C” TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF AIRLINE ALLIED SERVICES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal nancial controls over nancial reporting of AIRLINE ALLIED SERVICES LIMITED (“the Company”) as of March 31, 2017 in conjunction with our audit of the nancial 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 nancial controls based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal nancial controls that were operating effectively for ensuring the orderly and efcient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable nancial information, as required under the Companies Act, 2013.
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal nancial controls over nancial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal nancial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal nancial controls over nancial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal nancial controls system over nancial reporting and their operating effectiveness.
Our audit of internal nancial controls over nancial reporting included obtaining an understanding of internal nancial controls over nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualied audit opinion on the Company's internal nancial controls system over nancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal nancial control over nancial reporting is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external purposes in accordance with generally accepted accounting principles. A company's internal nancial control over nancial reporting includes those policies and procedures that
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1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the nancial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal nancial controls over nancial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal nancial controls over nancial reporting to future periods are subject to the risk that the internal nancial control over nancial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Basis for Qualied Opinion
In our opinion, according to the information and explanations given to us and based on our audit, the following material weaknesses have been identied as at March 31, 2016. The Company did not have appropriate internal nancial controls in under mentioned processes:
(i) The Company did not have an interface between various functional software relating to Sales/Revenue and Inventory Management with the accounting software resulting in accounting entries made manually.
(ii) The Company did not have an appropriate internal control system for reconciliation of Control Accounts in relation to the Sales/Revenue.
(iii) The Company did not have an appropriate internal control system for deduction, deposits and reconciliation of statutory dues.
(iv) The Company did not have an appropriate internal audit control system for obtaining conrmation of balances on a periodic basis and reconciliation of unmatched Receivables and Payables.
(v) The Company did not have an effective Information system audit to evaluate and test the IT general controls, which may affect the completeness, accuracy and reliability of the reports generated from IT System.
(vi) The Company did not have an appropriate internal control towards user access right to create & modify master data and modication in accounting entries.
(vii) The Company does not have proper internal control for procuring goods and process of invoice/expenses.
(viii) The Company does not have proper internal control/process of segregation of duties and following maker checker concept.
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A 'material weakness' is a deciency, or a combination of deciencies, in internal nancial control over nancial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim nancial statements will not be prevented or detected on a timely basis.
Qualified opinion
In our opinion, except for the effects of material weaknesses described in “basis of qualied opinion” paragraph above, the Company has, in all material respects, an adequate internal nancial controls system over nancial reporting and such internal nancial controls over nancial reporting were operating effectively as at March 31, 2017, based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identied and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2017 standalone nancial statements of the Company, and these material weaknesses have affected our opinion on the nancial statements of the Company we have issued a qualied opinion on the nancial statements.
For and on behalf ofChandra Gupta & Associates
Chartered Accountants(Firm Reg No: -000259N)
Sd/-(Gunjan Aggarwal)
PartnerM. No. 061893
Place : New DelhiDate : 22 August 2017
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MANAGEMENT REPLIES TO THE INDEPENDENT AUDITOR'S REPORT OF THE STATUTORY AUDITORS FOR THE FINANCIAL YEAR 2016-17
The Company is a wholly owned subsidiary of Air India Ltd (AIL). The parent Company, AIL has been supporting the operations of Alliance Air to full extent in terms of infrastructure, manpower and funds since its operationalisation.
The Turn Round Plan (TAP) approved by the Govt. of India which entails both operational & nancial turnaround, covers AIL & its subsidiaries including AASL covering 10 years period from 2011 to 2020.
According to the TAP, the Govt. of India has already approved infusion of additional equity over the years and nancial restructuring of AIL in improving its net worth/liquidity, which would also have impact on continued nancial support to the subsidiaries including AASL. In the year 2017-18 `5000 Millions due to Air India Ltd. will be converted into equity capital.
In view of the foregoing & the continued support of the GOI to AIL and assurance for operational / nancial support from the parent company, accounts are being prepared on going concern basis.
The company has taken major expansion plans and Budgets for the last two years have been raised on the planned induction of the new aircraft. These budgets have been drawn keeping in view the growth in the airline industry in the country and thrust being given by the Government of India on the regional connectivity. Thus, the management is keen to keep the company running and thus drawn the accounts on going concern.
Currently Alliance Air is operating passenger services with 10 leased aircraft (2 ATR42-320 Turboprop 48 seater and 8 ATR-72 600 Turboprop 70 seater) to 36 stations on Category II & III routes offering 2600 seats and carrying 2300 passengers per day.
It targets to become a dominant airline of India in its class, providing connectivity to Tier 2 and 3 cities as well as a feeder to its parent company - Air India Limited and subsidiary Air India Express (AICL).
(i) The nancial statements of the Company under report are drawn up on a 'Going concern basis'. Being a Government Company, the Government of India has all the intention to revive it along with parent company. In order to improve its Operational & Financial per-formance, parent company Air India has formulated a TAP (Turn Around Plan) & other measures for improving its operational and nancial position of company would improve in future. The company has informed vide Board
stMeeting dated 21 March 2017, the Revenue and Capital Budget Estimates for the year 2017-18. The Assumptions are made on the budget estimates of 2017-18 though not satisfactory yet the contention of the company is accepted since the company is a major player in Government of India's vision, under the Regional Connectivity scheme (RCS) of Ministry of Civil Aviation – “UDAAN”.
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(ii) Statement of Prot and Loss includes Trafc Revenue of `3087.07Million of current year, accounted for on the basis of ledger account of Air India Limited based on the Revenue Accounting Software maintained by Accelya Kale and expenditure on service charges of `24.99 Million and Other Operating and Administration expenses of `1359.72 Million accounted for only on the basis of credit and debit notes raised by Air India Limited. The basic record of these items are with Air India Limited and audit of, the said revenue and expenditure is restricted to that extent.
In line with the above and Government of India's vision, under the Regional Connectivity scheme (RCS) of Ministry of Civil Aviation – “UDAAN”,
stAlliance Air participated in 1 phase of the scheme and has been allotted 15 routes.
Alliance Air has signed Term Sheet / LOI for an additional 10 ATR 72-600 aircraft to be delivered by September 2017. With the fresh induction, Alliance Air plans to expand its network and reach to neighboring countries. Further, it plans to increase the eet to 40 aircraft by March 2021.
From the above, it is clear that 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 2017-18 and thereafter further consolidate the gains.
In terms of the MOU between Air India and AASL, Air India provides sales, marketing, booking facilities and other support services for the AASL operations.
Further, as explained in detail during audit, the computerized revenue accounting system intro-duced by AIL for its and AASL ights, the revenue for passengers own, excess baggage and cargo carried on AASL ights are segregated ight-wise for AASL ights based on ight coupons, EBTs & AWBs. The revenue earnings for passenger revenue, excess baggage & freight are therefore segregated and credited by AIL to AASL on the basis of ight wise monthly revenue reports generated on said elaborate computerized revenue accounting system.
Further, revenue earnings of AASL ights accounted as per Para 1.5 of Note 1 (Accounting Policy), are supported by monthly revenue reports. As per terms of MoU between AIL & AASL, AASL ights are captured on the said elaborate common revenue accounting system with segregated detailed reports for AASL ights, thus avoiding parallel system.
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Sl.No. Audit Observation Management Comments
(iii) System of Inventory Accounting followed by the company is not proper/complete. In this respect, our observations are as below -
a) In respect of ATR / CRJ aircraft inventories, procurement is made by Air India Limited and later transferred to the company without any invoice and charging of applicable sales tax (VAT) - amount and its impact on accounts is unascertainable. Moreover, sufcient control does not exist to ensure that all inventory transactions are authorized, processed and accounted completely.
Service Charges (Commission to agents on sales) of Rs. 24.99 Millions are reimbursed to Air India as revenue system is maintained by AI, for which relevant records are maintained by AI.
Out of the amount pertaining to “Other Operating and Administrative expenses”, the amount of Rs.1353.64 million has been debited towards interest charged by AI. For the debited amount of Rs. 6355.98 Million, the supporting documents and relevant details are available with AASL for verication. Also Rs. 59.62 Millions has been credited by AI towards excess interest which is accounted as prior period and supporting is available.
However, only for Rs. 112.79 Million the supporting documents are maintained by AI, which is accessible to AASL. Further AI is also subject to three tier audit, thereby maintaining audit trail and 100% accuracy in the Dr./Cr. Of these transactions.
Air India provides administrative support in procurement & stocking of the aircraft inventory in terms of MoU. However, the payments to the vendors are mostly made by AASL itself, hence, no sale is involved. Suitable disclosure made in Notes No. 35 (I)
Monthly computerized statements of inventory showing opening stock, closing stock and consumptions i.r.o. AASL eet are received from AIL, as reected in RAMCO system, which are used for accounting of inventory and consumption.
AIL systems have elaborate and adequate control and internal check procedures for procurement, issue, stocking, segregation etc. for all inventory which is subject to physical checks by internal audit and stock verication. Such controls are applied on AASL inventory also.
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Sl.No. Audit Observation Management Comments
b) Custom Duty and Freight on aircraft spare parts which form part of aircraft inventories, comprise of freight, duties, incidentals etc. on aircraft inventories owned by the company as well as those taken on lease from the manufacturers and also include freight, incidentals etc. on aircraft components and spares exported for repairs. In the absence of its item wise segregation and loading, the balance of custom duty and freight on aircraft spares amounting to ̀ Rs.44.36 Million lying at the end of the year under Current Assets and ` Rs.7.86 Million charged to material consumed during the year remained unveried and hence correct-ness of these amounts and their impact on nancials could not be commented upon.
c) The company is not maintaining any record of Inventories at its stores in Delhi, Hyderabad and Kolkata and the nancial gures are incorporated in its books at the year end on the basis of abstract received from Air India Limited showing the values of different categories of inventories. In absence of details, correctness of Inventory could not be veried and its impact on accounts could not be commented upon. Further in absence of complete details, adequacy of obsolesce provision for aircraft stores and spares cannot be commented upon.
d) The consumption of inventory is booked at the year end on the basis of balance arrived at from opening stock plus purchases made during the year less closing stock (advised by Air India Limited) at the end of the year instead of accounting on the basis of actual consumption and disclosing the shortages or excesses, if any, separately. Thus, it is not in accordance with the accepted
Custom Duty, Freight and incidentals have been allocated on pro-rata basis on year end values of closing stock of aircraft spares, rotables and on their consumption. FDI cannot be segregated item wise as Freight and incidental expenses are incurred on a group of items and not item wise. Therefore, these have to be allocated on pro-rata basis. The same policy is also being followed in the Holding company, AIL.
Suitable disclosures have been made in Notes No. 35 (iii) and reference may also be made to reply to para (a) above.
Since, AASL inventory is procured and managed by AIL, suitable records are maintained for AASL inventory at all the inventory locations
The company is maintaining adequate records of the inventories at Delhi, Hyderabad and Kolkata and based on the records claims, exchanges / storage were identied at Kolkata and appropriate provision for write off amount has been made in the book of 2016-17.
However, the details of monthly closing inventory which have been received from AIL are available in AASL.
Suitable disclosure made in Notes No. 35 (i) and reference may also be made to reply to para (a) above.
The consumption of inventory is booked on monthly basis, based on RAMCO generated monthly inventory reports received from AIL. Suitable disclosure has been made in Notes No. No. 35 (I).
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Sl.No. Audit Observation Management Comments
inventory accounting practices and AS-2 (revised) on valuation norms issued by the ICAI. Hence, the con-sumption of inventory amounting to ` Rs.84.86 Million could not be veried and impact on accounts for variance, if any, cannot be commented.
e) Non-compliance of Accounting Standard AS-2 (Revised) on "Valuation of Inventories"-
(I) Inventories have been valued without complete identication and allocation of freight, duties, incidentals etc. with respect to individual items (also refer sub-para (b) above).
(ii) Further, inventories have been valued at cost as against lower of cost and net realizable value.
Impact of the above on the accounts remained unascertained.
(iv) The accounts with the Airport Authority of India Ltd. and Air India Engineers Services Limited (AIESL) are unconrmed and unreconciled which may impact elements of expenditure/ income as well. In absence of conrmation and
streconciliation as on 31 March 2017, we are unable to comment on the impact thereon.
(v) Accounting policy of the company with respect to accounting of prepaid and accrued expenses upto Rs. 10,000/- for Individual items(refer Accounting Policy disclosed in Note No. 14 of Accounting policies in the year of receipt / payment is not in accordance with accrual method of accounting prescribed under the Act and Accounting Standards AS-1 Issued by the ICAI. Amount and impact on accounts is unascertained by the Company.
As per the policy of the company which is also being followed in AIL, inventories are valued at weighted average cost, as disclosed in the Notes No. 1.3.
Suitable disclosure has also been made in Notes No. 35 (iii).
Reconciliation is an ongoing process with regular parties like AAI.
AIESL is also a subsidiary company of AIL. AASL is following up with AIESL to get the balance conrmation.
Further, Suitable disclosures have been also been made in Notes No. 38(g).
The Pre-paid expenses have been accounted for as per Note No 1.14 of its Accounting policy which has consistently been followed in the company over the years, which is same as being followed in AIL.
The Prior Period expenses have been accounted for as per Note No 1.15 of its Accounting policy which is as per Accounting Standard no. 5.
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Sl.No. Audit Observation Management Comments
(vi) Non-conrmation of balances in respect of Other Long-Term Liabilities, Trade Payables, Other Current Liabilities, Long Term. Loans & Advances, Other Noncurrent Assets, Trade Receivables, Short Term Loans & Advances and Other Current Assets. We are unable to comment on the impact of adjustments arising out of non-conrmation of such balances on the nancial statements.
The company has shown contingent liability amounting to Rs. 3361.25 Millions in respect of income tax demands and Rs.6.26 Million towards unsettled legal claims, for which no provision has been made as these demands are said to be disputed by the company in appeals (refer Note No. 26(ii)), In view of pending appeals and legal opinion obtained by the company, we are unable to comment upon the liability of the company and its impact on accounts currently is not ascertainable. Further, based on information available there is an additional liability of tax, interest & penalty on account of TDS Rs.12.53 Million.
(vii) Debtors include ̀ Rs.294.03 Million recoverable from M/s Gati Limited outstanding since Feb'2009 for aircrafts operated by the Company. Air India Limited had invoked their bank guarantee and recovered Rs.300.00 Million which was transferred to the Company and the same has been kept by the Company in a separate account of “Security Deposit - Gati” under 'Other Long Term Liabilities'. The matter is stated to be in dispute between Air India Limited and M/s Gati Ltd. wherein the Arbitral Tribunal has given award of Rs.267.29 Million (including interest etc.) against Air India Limited. An appeal has been led by Air India Limited before the Hon'ble Delhi High Court against the arbitral award which had also upheld the decision of Arbitral Tribunal. An appeal has been led in Delhi High court (double bench) against the order, AIL has deposited Rs.220.00 Million with Hon'ble High Court as deposit money on 17.11.2015 and same has been recovered by Air India Limited. Accordingly, we are unable to
The reconciliation is a continuous process. The reconciliation with Holding company, AIL is completed upto 31st March 2017. Reconciliation with all the Oil companies, DIAL, MIAL, AIATSL, AISATS has been completed upto 31st March 2017. Concerted efforts are being made to reconcile account with all such parties. There is signicant improvement in reconciliation of all the vendors except AAI which will be completed in 17-18.
Disclosed as Contingent liability in Notes No 26. The income tax demands amounting to Rs. 3331.25 lakhs has been contested by the company, out of this amount Rs. 300 lakhs has been deposited with Income Tax Department during the year 2016-17.
Further, the proceedings are being held at various departments of Income Tax and company hopes to get favourable decision. Regarding the remaining claim of Rs. 6.26 million towards unsettled legal claim, it is also likely to get decision in the favour of the company.
Appropriately disclosed in Note No. 45.
This agreement was between Air India & GATI and the matter is subjudice.
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Sl.No. Audit Observation Management Comments
express our opinion on the impact on the company's accounts for non-recoverability of outstanding dues or amount to be refunded for guarantee invoked or payment of awarded amount.
(viii) Company is not accounting for TDS on expenses accounted for on provisional basis. The same is accounted for at the time of providing of actual expenses. The tax and interest liability on the same have not been accounted for in the books. The company is also not accounting for TDS on interest paid to Air India Limited.
Airline Allied Services Ltd. (AASL) is having centralized accounting at Delhi having operations all over India. There is time gap between receipts of actual bills at Delhi. At the time of closing of the books of accounts, the bills for various expenditure like Landing, Parking, RNFC, TNLC, Catering, Hotel Accommodation and certain aircraft repairs bills not received. To adhere with Matching Concept wherein “Expenses are recognized in the same accounting period as the related revenue are recognized”, it is required to account for these expenses. For this, ad-hoc provisions for these expenses are made through following journal entry :
Dr. Expense HeadCr. Provision Account
As actual bills are not available and provision is based on estimated, the correlation between party name and expense head is not ascertain-able, thus, deduction of TDS on these provisions is not feasible as individual PAN for these expense cannot be ascertained.
It is further stated that at the time of computation of income for ling of Income Tax Return, these provisions are added back. It means that expenditure booked through pro-visions has not been claimed as expense in Income Tax Return.
Further, provision account is also affected due to ad-hoc provisions made for redelivery of aircraft, provisions for obsolescence of stores and spares, provision for gratuity liability, provision for bonus wherein there is not TDS liability. The expenses booked through these provisions are also added back in prot for the year to calculate taxable income for the relevant year.
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Sl.No. Audit Observation Management Comments
The TDS on interest paid to AIL has not been deducted as opinion from Independent Chartered Accountant has been obtained by AASL in this regard. Also this practice is followed by the Parent Company AIL.
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“ANNEXURE - A” MANAGEMENT REPLIES TO THE INDEPENDENT AUDITOR'S REPORT OF THE STATUTORY AUDITORS FOR THE FINANCIAL YEAR 2016-17
Noted. The complete detail of asset with location and proper coding is available in SAP. However, following the suggestion, the Management will ensure completion of manual records too.
The physical verication of assets has been conducted during the year 2016-17 for Kolkata station. The Management has taken necessary action for discrepancies noticed on the Physical verication report with the approval of the competent authority.
Statement of facts.
Noted. The physical verication at Kolkata was done as it was control centre for all the inventories. Now with this new ATR-72 series and AIESL setup at Delhi all the inventories are likely to be relocated and centralized at Delhi. The inventory at Hyderabad is very minimal. The complete inventory verications at all locations will be again conducted in 2017-18.
The physical verication of inventory has been outsourced to independent Chartered Accountant Firm to ensure accuracy.
i) In respect of its xed assets:
(a) The records maintained by the Company in respect of its xed assets are not considered to be proper in so far as these do not give full particulars of quantitative assets identication numbers and situation of Fixed Assets.
(b) Based on physical asset report along with scrap note, the shortages have been dealt with. Assets (obsolete/unserviceable/untraceable) amounting Rs.19 million were written off from the books of accounts during 2016-17, with the approval of Board of directors.
The total Accumulated Depreciation on these assets amounts to Rs.17.78 million. After charging off accumulated depreciation against gross value of the assets, the Loss/ Gain on scrapping of Assets amounts to Rs.1.22 million.
(c) According to the information and explanation given by the management, there is no title/lease deeds for lease hold or freehold with the Company and accordingly the same is not applicable.
ii) In respect of inventories:
(a) According to the information and explanation given to us, physical verication of inventories has been conducted at Kolkata by the Company during the year. But no verication done for location Delhi & Hyderabad. Accordingly, we are of the opinion that the frequency of verication is not reasonable.
(b) In view of sub-para (a) above, we are unable to comment on the reasonableness and adequacy of procedures of verication followed by the management in relation to the size of the company and the nature of its business. As reported, valuation are taken as book value.
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(c) As explained to us, inventories for ATR/CRJ aircrafts are procured by Air India Ltd. and records relating to receipts, issues and closing stock are maintained by Air India Ltd. Further accounting entries by the Company are made for receipt on the basis of advice from Air India Ltd., which is delayed in almost all cases and accounting entries for issue is done at the year-end only. Accordingly, we are unable to comment whether the company has maintained proper records of inventory.
iii) As explained to us, the company had not granted any loans, secured or unsecured, to any companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(b) & 3(c) of the said order are not applicable to the Company.
iv) In our opinion & according to information & explanations given to us, the company has not given any loans, investments guarantee, and securities granted in respect of provision of section 185 and 186 of the Companies Act 2013.
v) According to the information and explanations given to us, the company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other provisions of the Companies Act, 2013 and the rules framed there under are not applicable.
vi) We are informed that since no manufacturing activities were carried out, maintenance of cost records were not required by the company prescribed by the Central Government under clause (d) of sub section (1) of section 148 of the Companies Act, 2013. As provisions of the section are not applicable to the company.
vii) In respect of statutory dues:
(a) According to the information and explanations given to us and according to the books and records produced before us, the company is generally regular in depositing with appropriate
The stock is maintained in independent inventory system named RAMCO for its parent company as well as for all the subsidiaries.
The suitable disclosure with regard to valuation and accounting of inventory is made in Note to Accounts no. 35.
Statement of facts.
Statement of facts.
Statement of facts.
Statement of facts.
Concrete efforts have been made in the current year 2016-17 to ensure timely deposit of service tax and monthly reconciliation of service tax and TDS.
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Sl.No. Audit Observation Management Comments
authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, custom duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities except as stated below:
i. The company has generally delayed in depositing the Service Tax & TDS.
ii. The Company is yet to be implement a process of reconciliation of Service Tax recoverable and Service Tax payable.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they become payable, except as stated in points mentioned above vii(a).
(c) According to the information and explanations given to us and as per our verication of the records of the company, there are no disputed statutory dues against the company in income tax/ sales tax/ wealth tax/ service tax/ custom duty / excise duty / value added tax/ Cess Department except as stated below:
S. Name of Status Amount Nature Year Forum No. Outstanding of where (` in Dues dispute Millions) is pending
1 Finance Act, 14.04 Income 1997 ITAT 1994 Tax -98
2 Finance Act, 17.43 Income 2000 ITAT 1994 Tax -01
3 Finance Act, 3.20 Income 2004 CIT(A) 1994 Tax -05
4 Finance Act, 1485.15 Income 2008 ITAT 1994 Tax -09
5 Finance Act, 1729.33 Income 2010 ITAT 1994 Tax -11
6 Finance Act, 112.10 Income 2011 CIT(A) 1994 Tax -12
Statement of facts.
The suitable disclosure with regard to pending Income Tax cases has been made in Notes to Accounts Point No. 26 A and B.
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Sl.No. Audit Observation Management Comments
viii) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion, the company has not defaulted in repayment of dues to a nancial institution, bank, Government or dues to debenture holders.
ix) The company has not raised moneys by way of initial public offer or further public offer (including debt instrument) or term loans and hence reporting under clause (ix) of paragraph 3 of the order is not applicable.
x) To the best of our knowledge and belief and according to information and explanations given to us, no fraud by the company or any fraud on the company by its ofcers or employees has been noticed or reported during the year.
xi) As informed, the provisions of section 197 relating to managerial remuneration are not applicable to the Company, being a Government Company, in terms of
thMCA Notication no. G.S.R. 463(E) dated 5 June 2015.
xii) The company is not a Nidhi Company. Therefore, the provision of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
xiii) Based upon the audit procedures performed and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial statements etc. as required by the applicable accounting standards.
xiv) According to the information and explanations given to us and an overall examination of the balance sheet, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirement under clause 3(xiv) are not applicable to the company and, not commented upon.
Statement of facts.
Statement of facts.
Statement of facts.
Statement of facts.
Statement of facts.
Statement of facts.
Statement of facts.
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Sl.No. Audit Observation Management Comments
xv) The company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.
xvi) According to the information and explanation given to us, the provision of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Statement of facts.
Statement of facts.
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“ANNEXURE - C” MANAGEMENT REPLIES TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF AIRLINE ALLIED SERVICES LIMITED
Ever since Airline Allied Services Ltd. got into existence as a wholly owned subsidiary of its parent company Air India Ltd., revenue including sales is being directly controlled and maintained through Air India Ltd.'s inventory i.e. the stock. The sectors own by Alliance Air is congured as an add on network to the main network of its parent company Air India Ltd., hence, the accounting of sales / revenue and inventory management is being done in the parent company, which is outsourced to M/s Accelya Kale. The sales/revenue and inventory manage-ment is being handled manually based on the periodic reports generated and veried by the concerned competent authority of AASL.
The company does have an internal control system for reconciliation of control accounts in relation to sales and revenue, which is based on the periodic reports from the processing company of AIL as well as AASL. The reports are periodically matched with the SAP control account before nalising the Trial.
Accounting entries for all the statutory deductions based on the invoices received from various vendors including payroll are duly accounted through SAP system of accounting under various tax slabs. The monthly statements are down-loaded, cross checked with the invoices and paid to respective authorities on due dates and accordingly returns are led periodically as per due dates, which are audited by Internal Auditors, Statutory Auditors and Govt. Auditors.
To have effective internal control system for obtaining conrmation of balances on periodic basis, the balance conrmation letters are supposed to have been generated from SAP. The company is in the process of completion of the module (in-use) accounting software (SAP) and will adhere to in the current year. The company generates age-wise debtors outstand-ing statements in the year end, which are reconciled and provisions are made in the nal accounts.
(I) The Company did not have an interface between various functional software relating to Sales/ Revenue and Inventory Management with the accounting software resulting in accounting entries made manually.
(ii) The Company did not have an appropriate internal control system for reconciliation of Control Accounts in relation to the Sales/ Revenue.
(iii) The Company did not have an appropriate internal control system for deduction, deposits and reconciliation of statutory dues.
(iv) The Company did not have an appropriate internal audit control system for obtaining conrmation of balances on a periodic basis and reconciliation of unmatched Receivables and Payables.
Sl.No. Audit Observation Management Comments
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Sl.No. Audit Observation Management Comments
The SAP has been installed and all the accounts were migrated in 2013-14. Since the SAP is a tested and proven software all over the world and it has been almost more than 4 years of its operation in AASL, the controls are well tested and no irregularities are detected in the System so far.
The SAP module for expenditure system is internally located at Mumbai and controlled by specic authorised team. Any creation or modication of master data as per the require-ment of the company is being sent to them after authorisation by the competent authority for necessary modications as desired.
Since the procurement module in SAP is only enabled in the parent company, AIL through which AASL is also procuring the goods and services as per the requirement. The invoices are generated from SAP system is debited by AIL to AASL.
While, the major goods and services are procured from the parent company, all other small expenses are being approved by competent authority by adhering to MMD procedure. The company has proper internal control for procurement of goods.
The implementation of maker –checker in SAP will be taken in 2017-18.
(v) The Company did not have an effective Inform-ation system audit to evaluate and test the IT general controls, which may affect the complete-ness, accuracy and reliability of the reports generated from IT System.
(vi) The Company did not have an appropriate internal control towards user access right to create & modify master data and modication in accounting entries.
(vii) The Company does not have proper internal control for procuring goods and process of invoice/ expenses.
(viii) The Company does not have proper internal control/process of segregation of duties and following maker checker concept.
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BALANCE SHEET AS AT 31ST MARCH 2017 (Amount in Rupees)
Particulars Note No As at March 31, 2017 As at March 31, 2016
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds (a) Share Capital 2 4,022,500,000 4,022,500,000 (b) Reserves and Surplus 3 (17,458,455,502) (14,631,234,348) (2) Share application money pending allotment - - (3) Non-Current Liabilities (a) Long-term borrowings - - (b) Other Long term liabilities 4 320,051,490 322,882,214 (c) Long term provisions 5 57,423,899 47,750,926
(4) Current Liabilities (a) Short-term borrowings 6 13,517,525,677 10,584,577,250 (b) Trade payables 7 1,757,232,330 1,690,132,679 (c) Other current liabilities 8 830,888,218 914,831,138 (d) Short-term provisions 9 2,694,420 2,375,442
TOTAL 3,049,860,532 2,953,815,301
II. ASSETS
(1) Non-current assets (a) Fixed assets (i) Tangible assets 10 5,054,174 4,911,899 (ii) Intangible assets - - (b) Non-current investments - - (c) Long term loans and advances 11 133,652,019 126,641,590 (2) Current assets (a) Current investments - - (b) Inventories 12 157,035,649 169,339,628 (c) Trade receivables 13 1,054,170,868 1,279,796,982 (d) Cash and cash equivalents 14 576,141,940 441,697,015 (e) Short-term loans and advances 15 535,484,949 568,128,639 (f) Other current assets 16 588,320,933 363,299,548
TOTAL 3,049,860,532 2,953,815,301
Signicant Accounting Policies in Note no. 1 and notes refered to above form an integral part of these Financial Statements.
As per our report of even date attached
For and on behalf of For and on behalf of the Board
Chandra Gupta & Associates Sd/- Sd/- Sd/- Chartered Accountants (Ashwani Lohani) (Vinod Hejmadi) (C.S. Subbiah)FRN No 000259N Chairman Director Chief Executive Ofcer Sd/- Sd/- Sd/-Gunjan Aggarwal (Manjiree M. Vaze) (Kamal Roul)Partner Company Secretary Chief Financial Ofcer Membership No. : 061893
Place: New Delhi Date: 22 August 2017
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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2017(Amount in Rupees)
Particulars Note No 2016-2017 2015-2016
Signicant Accounting Policies in Note no. 1 and notes refered to above form an integral part of these Financial Statements.
As per our report of even date attached
For and on behalf of For and on behalf of the Board
Chandra Gupta & Associates Sd/- Sd/- Sd/- Chartered Accountants (Ashwani Lohani) (Vinod Hejmadi) (C.S. Subbiah)FRN No 000259N Chairman Director Chief Executive Ofcer Sd/- Sd/- Sd/-Gunjan Aggarwal (Manjiree M. Vaze) (Kamal Roul)Partner Company Secretary Chief Financial Ofcer Membership No. : 061893
Place: New Delhi Date: 22 August 2017
I. Revenue from operations 17 3,661,911,924 2,682,024,779
II. Other Income 18 96,229,268 56,556,438
III. Total Revenue (I +II) 3,758,141,192 2,738,581,217
IV. Expenses:
Cost of materials consumed/Operational Expense 19 3,816,570,737 2,874,426,798
Employee benet expense 20 721,504,610 347,993,844
Financial costs 21 1,371,875,655 1,121,456,378
Depreciation and amortization expense 10 990,819 874,368
Other expenses 22 553,048,000 426,441,933
Prior Period Expenses 23 220,789,772 (8,678,442)
Total Expenses 6,684,779,593 4,762,514,879
V. Prot before exceptional and extraordinary
items and tax (III - IV) (2,926,638,401) (2,023,933,662)
VI. Exceptional Items 24 99,417,247 36,424,232
VII. Prot before extraordinary items and tax (V+VI) (2,827,221,154) (1,987,509,430)
VIII. Extraordinary Items - -
IX. Prot before tax (VII - VIII) (2,827,221,154) (1,987,509,430)
X. Tax expense:
(a) Current tax expense for current year - -
(b) Current tax expense relating to prior years - -
(c) Deferred tax Asset/ (Liability) - -
XI. Prot/(Loss) from the period from
continuing operations (2,827,221,154) (1,987,509,430)
XII. Prot/(Loss) for the period (2,827,221,154) (1,987,509,430)
XIII. Earning per equity share: 25
(1) Basic (70) (49)
(2) Diluted (70) (49)
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2017(Amount in Rupees)
Particulars 2016-2017 2015-2016
Note :- The above Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the AS-3 (Revised 1997) on "Cash Flow Statements" issued by ICAI. Previous year gures have been regrouped /rearranged wherever necessary.
As per our report of even date attached
For and on behalf of For and on behalf of the Board
Chandra Gupta & Associates Sd/- Sd/- Sd/- Chartered Accountants (Ashwani Lohani) (Vinod Hejmadi) (C.S. Subbiah)FRN No 000259N Chairman Director Chief Executive Ofcer Sd/- Sd/- Sd/-Gunjan Aggarwal (Manjiree M. Vaze) (Kamal Roul)Partner Company Secretary Chief Financial Ofcer Membership No. : 061893
Place: New Delhi Date: 22 August 2017
A. CASH FLOW FROM OPERATING ACTIVITIES a) Prot/(Loss) before tax for the year as per Prot & Loss A/C (2,827,221,154) (1,987,509,430) b) Add:- Adjustment for : 1. Depreciation and amortisation expenses 990,819 874,368 2. Provisions / Un-claimed Liabilities Written Back (99,417,247) (36,424,232) 3. Interest Paid 1,393,211,681 1,149,288,599 4. Interest Earned 45,324,939 56,551,202 5. Prior Period Adjustments (Net) 220,789,772 (8,678,441) 6. Provision for obsolescence of spares (33,320,771) (15,113,171) 7. Loss or Gain on Assets held for disposal 1,222,821 46,764 8. Accumulated Depreciation-vehicles - 355,733 1,528,802,015 1,146,900,822 c) Operating Profit/(Loss) before Changes in working capital: (1,298,419,139) (840,608,607)
ADD: Adjustments for (increase) / decrease in operating assets: Other non-current assets Inventories 45,624,749 (72,852,998) Trade receivables 225,626,114 (194,476,643) Short-term loans and advances 32,643,690 (292,683,220) Long-term loans and advances (7,010,429) (39,278,333) Other current assets (225,021,385) (235,032,849) Other non-current assets 71,862,738
ADD: Adjustments for increase / (decrease) in operating liabilities: Trade payables 166,516,898 (1,455,983,555) Other current liabilities (83,942,920) 421,159,750 Short-term borrowing 2,932,948,427 33,572,817 Other long-term liabilities 9,672,974 8,980,662 Short-term provisions 318,978 - Long-term provisions (2,830,724) 3,022,683,633 333,888
3,094,546,372 (1,826,260,481) d) Cash generated from operations Prior Period Adjustments (Net) (220,789,772) 8,678,441 e) Net Cash from Operating Activities 1,575,337,461 (2,658,190,647)
B. CASH FLOW FROM INVESTING ACTIVITES a) Purchase of Fixed Assets (2,355,916) (2,489,222) b) Transfer of Fixed Assets to Air India Limited - - c) Interest Income (45,324,939) (47,680,855) (47,680,855) (56,551,202) (59,040,424) (59,040,424)C. CASH FLOW FROM FINANCING ACTIVITES a) Conversion of Current Liability into Equity 4,000,000,000
b) Interest Paid (1,393,211,681) (1,393,211,681) (1,393,211,681) (1,149,288,600) 2,850,711,400 2,850,711,400
D. NET INCREASE IN CASH & CASH EQUNT. (A+B+C) 134,444,925 133,480,329
E. CASH & CASH EQUNT. AT BEGINNING OF THE YEAR 441,697,015 308,216,686
F. CASH & CASH EQUNT. AT THE END OF THE YEAR (E+D) 576,141,940 441,697,015
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STNOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31 MARCH 2017
(A) CORPORATE INFORMATION
Alliance Air is operating under the aegis of Airline Allied Services Limited, a wholly owned subsidiary of Air India Limited. AASL has an Authorized Capital of Rs. 500 Crores and a Paid-up Capital of Rs 402.25 Crores. Currently Alliance Air is operating passenger services with effective operational eet of 10 leased aircraft (2 ATR42-320 Turboprop 48 seater and 8 ATR-72 600 Turboprop 70 seater) on Category II & III routes. It targets to become a dominant airline of India in its class, providing connectivity to Tier 2 and 3 cities as well as a feeder to its parent company - Air India Limited and subsidiary Air India Express Ltd. In line with the above and Government of India's vision, under the Regional Connectivity Scheme (RCS) of
stMinistry of Civil Aviation – “UDAAN”, Alliance Air participated in 1 phase of the scheme and has been allotted 15 routes. Alliance Air has signed Term Sheet / LOI for an additional 10 ATR 72-600 aircraft to be delivered by September 2017. With the fresh induction, Alliance Air plans to expand its network and reach to neighboring countries. Further, it plans to increase the eet to 40 aircraft by March 2021. From the above, it is clear that 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 nancial parameters in this nancial year 2017-18 and thereafter further consolidate the gains.
(B) ACCOUNTING CONVENTION
i) Basis of Preparation
These Financial Statements of Airline Allied Services Limited (AASL) have been prepared on going concern concept on accrual basis, (except as stated elsewhere), under historical cost convention, and are in compliance with generally accepted accounting principles and the Accounting Standards notied under the Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
ii) Use of Estimates
The preparation of nancial statements in conformity with generally accepted accounting principles in India requires management of company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the nancial statements and the reported amounts of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which results are known/materializes.
iii) Operating Cycle
AASL being in the service sector, 12 months period has been adopted as the Operating Cycle" in-terms of the provisions of Schedule III to the Companies Act 2013.
NOTE - 1 : SIGNIFICANT ACCOUNTING POLICIES
1. FIXED ASSETS
(i) a) Fixed Assets (including major components) are stated at cost including incidental costs incurred pertaining to their acquisition and bringing them to the location for use, upto the date of putting the concerned asset to use,
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b) Since, the aircraft are taken on operating lease, the related inventories-rotables and spares are not owned by AASL, hence not capitalized.
(ii) Physical verication of the assets is done on a rotational basis so that every asset is veried in every two years and the discrepancies observed in the course of the verication are adjusted in the year in which report is submitted.
(iii) "Assets held for Sale”
In respect of assets held with an intention to sale, the net book value of the asset is transferred from block of the xed assets to "Assets held for Sale", when the sale becomes highly probable are classied as Current Assets. No depreciation is provided for if the price at which the Asset is sold exceeds its cost.
2. DEPRECIATION / AMORTIZATION
a) Depreciation is provided on all assets of the companies in the Group on straight-line method over the useful life of assets as prescribed in the Schedule II of the Companies Act 2013, keeping a residual value of 5% of the original cost except for the assets given below in Sub-Para as the life of these assets are not prescribed in Schedule II and has been determined by technically qualied persons as approved by the Board of Directors of the companies concerned, keeping a residual value of 5% of the original cost.
i) Depreciation has been provided for on straight line method on the basis of useful life estimated by the management technically qualied persons. The details of such assets are as under:
S.No. Type of Asset Life Adopted Life Prescribed by Company by Schedule II
(i) Computers (including Software) 3 yrs 3 yrs
(ii) Furniture & Fittings 10 yrs 10 yrs
(iii) Plant & Machinery 15 yrs 15 yrs
(iv) Vehicles 8 yrs 8 yrs
(v) Ground Support Equipment Depreciation on Ground Support Equipment specic to leased CRJ & ATR aircraft is provided based on the completed aircraft lease months over the total aircraft lease months from the date of use with realizable value at end of lease taken as NIL.
b) Major modications/refurbishment, modernization/conversion carried to leased assets are shown
under improvement to leasehold assets and amortized over the balance period of lease.
c) No depreciation needs to be provided on "Assets held for Sale" as stated by Accounting Standard.
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3. INVENTORIES
i) Inventories are valued at weighted average cost. However, Aircraft Turbine Fuel (ATF) in aircraft as at the year-end are valued at closing prevailing rate, since the average rates would not be appropriate.
ii) Expendables/consumables are charged off at the time of initial issue except those issued for repairs of repairable items which are expensed when the work order is closed along with the repair costs.
iii) Obsolescence provision for aircraft stores and spare parts:
a) Provision is made for the non-moving inventory exceeding a period of ve years (net of realizable value of 5%) except for (b) & (c) below and netted off from the value of inventory.
b) Inventory of Aircraft Fleet which has been phased out, is shown at estimated realizable value unless the same can be used in other Aircraft.
c) Obsolescence 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.
iv) Obsolescence provision for non-aircraft stores and spares is made for non-moving inventory exceeding a period of ve years.
v) Spares retrieved from the cannibalization of the scrapped aircraft are taken into stock at zero value.
4. MANUFACTURER'S CREDIT
Manufacture's credit entitlements are recognized as Incidental Revenue on accrual basis by treating the same as ̀ Advances', which is adjusted when such entitlements are used to discharge the liability relating to acquisition of assets or incurring of expenditure.
5. REVENUE RECOGNITION
a) Passenger, Cargo and Mail Revenue are recognized when transportation service is provided. At the end of each nancial year, based on available historical statistical data, a certain estimated percentage of the value of tickets/airway bills which remained unutilized, is recognized as Revenue.
b) Freighter and Charter Revenue are accounted for on accrual basis as per the freighter/charter hours except on claims from parties which are accounted for on settlement basis,
c) Loss or gain on reissue/refund/ involuntary transfer of passengers to other carriers is deducted or included as the case may be in the revenue.
d) Income from Interest is recognized on a time proportion basis.
e) The claims receivable from Insurance Company are accounted for on the acceptance of the claims by the Insurance Company.
f) Warranty claims /credit notes received from vendors are recognized on acceptance of such claim/receipt of credit note.
g) Other Operating Revenue is recognized when goods are delivered or services are rendered.
h) Gain or loss arising out of sale/scrap of Fixed Assets including aircraft over the net depreciated value is taken to Statement of Prot & Loss as Non-Operating Revenue or Expenses.
6. GRANTS
a) Viability Gap Funding (VGF) is accounted for on the basis of difference between revenue and cost of operations on accrual basis and the same is treated as Operating Income.
b) Grants are recognized in accordance with the terms of the respective Grants on accrual basis considering the status of compliance of conditions prescribed and ascertainment that the Grant will be received.
7. PROVISION FOR DOUBTFUL DEBTS
Debts are provided for if they are either more than three years old or specically identied as doubtful even within three years.
However, in respect of debts pertaining to Govt., whether State or Central Departments or Public-Sector undertakings which are known to be recoverable with certainty (at the time of preparation of Financial Statements), are not provided for, in spite of their age exceeding three years.
8. FOREIGN CURRENCY TRANSACTIONS
Foreign Currency Monetary Items:
a) The Company has opted for accounting the exchange differences arising on reporting of long-term foreign currency monetary items in line with Accounting Standards notied under the Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 pertaining to AS-11 notied by the Govt. of India on 31st March 2009 (as amended on 29th December 2011) and further as amended from time to time.
i) Accordingly, the effect of exchange differences arising on settlement or reporting of long term monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous nancial statements, is accounted as addition or deduction to the cost of the assets so far as it relates to acquisition of depreciable capital assets and is depreciated over the balance useful life of the concerned asset and in other cases such difference is accumulated by transfer to "Foreign Currency Monetary Items Translation Difference Account" to be amortized over the balance period of such long term Assets or Liability.
ii) Foreign currency monetary items other than those identied as long term at the year-end are converted at the year-end exchange rate circulated by Foreign Exchange Dealers Association of India (FEDAI), and the gains/losses arising out of uctuations in exchange rates are recognized in the Statement of Prot and Loss.
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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9. EMPLOYEE BENEFITS
The Employee Benets comprise of Dened Contribution Plans and Dened Benet Plans.
a) Dened Contribution Plans consist of contributions to Employees Provident Fund. The Company has created separate Trusts to administer Provident Fund contributions to which contributions are made.
b) The Dened Benet Plans, which are not funded, consist of Gratuity, Leave Encashment. The liability for these benets is actuarially determined under the Projected Unit Credit Method at the year-end as per Indian Laws.
10. IMPAIRMENT OF ASSETS
The Company assesses at each Balance Sheet date whether there is any indication that an asset has been impaired. If any such indication exists, the provision for impairment is made in accordance with AS-28.
11. OPERATING LEASE
a) Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased assets are classied as Operating Lease and Lease rental payable for the year is charged to Statement of Prot and Loss. In respect of leases which have been extended by paying a termination/release sum, by which the company acquires, a residual right in the aircraft, such amount is amortized over the remaining useful life of the aircraft determined by ying hours.
b) Contributions made to lessors on account of Maintenance Reserve for which, maintenance is expected to arise during the lease period is treated as Expense.
12. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
a) Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outow of resources.
b) Contingent liabilities in each case are disclosed in respect of possible obligations that arise from past events but their existence conrmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.
c) Contingent Assets are neither recognized nor disclosed in the nancial statements as per Accounting Standard 29.
13. OTHER LIABILITIES
Liabilities which are more than three years old are written back under the head "Provision no Longer Required Written Back" unless such liabilities are specically known to be payable in the future.
14. PREPAID EXPENSES/LIABILITY FOR EXPENSES
Pre-paid expenses / Liabilities for expenses are recognized which are Rs 10,000/- and above in each case.
15. PRIOR PERIOD ITEMS
The Income and Expenditure which arise in the current period as a result of errors and omissions in preparation of nancial statements of one or more prior period are considered as Prior Period Items and are shown separately in the nancial statements.
16. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the Net Prot/(Loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year.
17. TRAINING CHARGES
Re-conversion and training charges are charged to the revenue in the year of incurrence of expenditure.
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2(a) Reconciliation of no. of shares (Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Authorised Share Capital500,00,000 Equity Shares of Rs.100/- each 5,000,000,000 5,000,000,000(Previous Year 500,00,000 Equity Shares of Rs. 100/- each) 5,000,000,000 5,000,000,000Issued, Subscribed & Paid up Share Capital 402,25,000 Equity Shares of Rs.100/- each, fully paid-up 4,022,500,000 4,022,500,000(Previous Year 402,25,000 Equity Shares of Rs. 100/- each)
4,022,500,000 4,022,500,000
No. of equity shares at the beginning of year 40,225,000 225,000Add No. of equity shares issued - 40,000,000Less No. of equity shares redeemed - -No. of equity shares at the closing of the year 40,225,000 40,225,000
Name of Shareholder As at March 31, 2017 As at March 31, 2016
Air India Limited, Holding Company and its nominees
(on behalf of holding company) 40,225,000 40,225,000
No. Of Share 40,225,000 40,225,000
Percentage of Holding 100% 100%
2(b) Equity Shares
The company has only one class of equity shares having a par value of Rs. 100 per share. Each shareholder is eligible for one vote per share held. There is no restriction of payment of dividend. In the liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts proportionate of their shareholding. 2(c) Equity Shares held by its Holding Company
402,25,000 Equity Shares (Previous Year 4,02,25,000 equity shares) are held by Air India Limited, the holding company and its nominees (on behalf of holding company)
Following are the Shareholders who hold more than 5% shares in share capital of company.
Company has only one class of equity shares having a par value of Rs. 100/-. Each holder of equity shares is entitiled to one vote per share.
2(d) Details of shareholder holding more than 5% of Equity Shares:
TOTAL
NOTE “02” : SHARE CAPITAL (Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
AASL
78
NOTE “03” : RESERVE & SURPLUS (Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Surplus /(Decit) in statement of prot & loss
Opening balance (14,631,234,348) (12,643,369,185)
Add:Prot / (Loss) for the year (2,827,221,154) (1,987,509,430)
Less: Depreciation adjustment - 355,733
Closing balance (17,458,455,502) (14,631,234,348)
(17,458,455,502) (14,631,234,348)
NOTE “04” : OTHER LONG TERM LIABILITIES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Security Deposits 320,051,490 322,882,214
320,051,490 322,882,214
NOTE “05” : LONG TERM PROVISION(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Provision for Gratuity Liability 42,094,829 47,750,926
Provision for Leave Enchashment 15,329,070 -
57,423,899 47,750,926
TOTAL
TOTAL
TOTAL
NOTE “06” : SHORT TERM BORROWINGS(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Air India Ltd. (Holding Company) Net 13,517,525,677 10,584,577,250
13,517,525,677 10,584,577,250TOTAL
NOTE “07” : TRADE PAYABLES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Provision for Expenses - Fuel & Oil 527,901 527,901Provision for Expenses - Landing & Parking 253,025,151 209,759,166Provision for Expenses - Stores & Spares 142,706,009 71,410,257Provision for Expenses - Others (Trade) 31,438,424 86,109,935Vendor - India - Reconciliation Account 930,289,131 806,968,180Vendor - Outside India- Reconciliation Acct. 341,813,637 486,033,684Supplier Suspense MRO - PBH 57,432,077 29,323,556
1,757,232,330 1,690,132,679TOTAL
AASL
79
NOTE “10” : FIXED ASSETS & DEPRECIATION SCHEDULE(Amount in Rupees)
Gross Additions Sold/ Gross Accumul- Depreciation Depreciation Cumulatives Net Net PARTICULARS OF ASSETS Block During Discarded Block ated Dep. for the Discarded as on Block Block as on 2016-2017 During as on upto Year during the 31.03.2017 as on as on 31.03.2016 2016-17 31.03.2017 01.04.2016 2016-17 Year 31.03.2017 31.03.2016
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
PLANT & EQUIPMENT 6858941 671933 3138839 4392035 5278031 146454 2047363 3377122 1014913 1580910
FURNITURE & FIXTURES 5913837 41500 1383760 4571577 5489612 22910 1345591 4166931 404646 424227
VEHICLE 5059212 0 1822409 3236803 3567783 173544 1822409 1918918 1317885 1491427
DATA PROCESSING EQUIPMENT 10000956 1642483 5454707 6188733 8632981 647912 5389653 3891240 2297493 1367976
GROUND SUPPORT EQUIPMENT(ATR) 15261820 0 7086870 8174949 15261819 0 7086870 8174949 0 0
MEDICAL EQUIPMENT 271500 0 115500 156000 224141 0 87377 136763 19237 47359
F.A PENDING DISPOSAL 0 0 0 0 0 0 0 0 0 0
TOTAL 43366266 2355916 19002085 26720097 38454367 990819 17779264 21665922 5054174 4911899
1. Gross Block as on 31.03.2017 includes Rs. 2355916 which were purchased during the year and the depreciation on these assets has been calculated on the basis of days in accordance with their useful life.
2. Fixed Assets includes items procured by Air India , accounted on the basis of debits.
NOTE “11” : LONG TERM LOANS & ADVANCES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Advance Payment of Income Tax and TDS (net of Provision for taxation) 126,641,590 120,705,468 Balances with Statutory / Govt AuthoritiesIncome Tax Deducted At Source 7,010,429 5,936,122
TOTAL 133,652,019 126,641,590
NOTE “08” : OTHER CURRENT LIABLITIES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
TOTAL
Advance from Customers 157,687,720 103,038,638
Other Liabilities 673,200,498 811,792,500
830,888,218 914,831,138
NOTE “09” : SHORT TERM PROVISIONS(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Provision for Gratuity Liability 1,949,014 2,375,442 Provision for Leave Enchashment 745,406 -
2,694,420 2,375,442
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NOTE “12” : INVENTORIES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Stores and Spare Parts 493,468,470 524,807,999
Loose Tools 239,564 239,565
Goods in Transit 6,606,426 20,589,106
Less: Provision for Obsolescence (327,418,618) (360,739,388)
Less: Provision For Inventory Shortages (15,860,193) (15,557,654)
157,035,649 169,339,628
NOTE “13” : TRADE RECEIVABLES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Trade receivables outstanding for a period exceeding
six months from the date they were due for payment
Secured, considered good - -
Unsecured, considered good 144,665,743 965,883,987
Doubtful - -
Less: Provision for doubtful trade receivables (2,731,196) (2,731,196)
141,934,547 963,152,791
Other Trade receivables
Secured, considered good - -
Unsecured, considered good 912,236,321 316,644,191
Doubtful - -
Less: Provision for doubtful trade receivables - -
912,236,321 316,644,191
1,054,170,868 1,279,796,982
NOTE “14” : CASH AND BANK BALANCES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Cash and Cash Equivalents(i) Balance with Banks In Current Accounts 8,877,819 1,490,984(ii) Cash in hand Imprest Cash Floats With Staff 34,401 400,843
Other Bank Balances Fixed Deposits with Bank 567,229,720 439,805,188 (under lien against SBLC) 576,141,940 441,697,015
TOTAL
TOTAL
TOTAL
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NOTE “15” : SHORT TERM LOAN & ADVANCES(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Security Deposits 269,696,951 253,793,530
Advances Recoverable in Cash or Kind 214,610,158 272,073,497
Advances to Employee - 1,083,356
Prepaid Exp. Others 51,177,840 41,178,256
TOTAL 535,484,949 568,128,639
NOTE “16” : OTHER CURRENT ASSETS(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
Other Non Trade Receivables 588,320,933 335,356,538
Secured Considered Good
Outstanding Recoveries -Financial Accts/Foreign Parties 0 27,943,010
TOTAL 588,320,933 363,299,548
NOTE “17” : REVENUE FROM OPERATIONS(Amount in Rupees)
Particulars As at March 31, 2017 As at March 31, 2016
1. Operational Revenue
i) Scheduled Trafc Services
a) Passenger 3,081,712,810 2,077,093,367
b) Excess Baggage 1,514,348 11,085,584
c) Mail 217,420 911,745
d) Cargo 8,276,388 3,099,727
3,091,720,966 2,092,190,423
Less- Related to Previous Year - 904,326
3,091,720,966 2,091,286,097
ii) Non-Schedule Trafc Services
a) Charter 22,642,619 23,508,000
b) Subsidy for Operation from Government 536,821,103 562,949,398
559,463,722 586,457,398
2. Handling, Servicing and Incidental Revenue
a) Incidental 10,727,236 4,281,284
10,727,236 4,281,284
3,661,911,924 2,682,024,779
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82
NOTE “18” : OTHER INCOME(Amount in Rupees)
Particulars 2016-17 2015-16
1. Interest Income from i) Bank Interest Interest on Call & Fixed Deposit-India 45,324,939 32,226,888 ii) Others Interest on Other Sundry Accounts 50,904,329 24,324,3142. Prot on Sale of Fixed Asset (Net) Loss or Gain on Assets held for disposal - 5,236 96,229,268 56,556,438
NOTE “19” : COST OF MATERIAL CONSUMED/OPERATIONAL EXPENSES(Amount in Rupees)
Particulars 2016-17 2015-16
Aircraft Fuel & Oil :Fuel (Ops) - Aircraft - Duty Paid 716,526,505 506,320,009
InsuranceInsurance - Aircraft 26,606,650 29,254,564 Insurance General 87,724 21,199 26,694,374 29,275,763
Material Consumed-Aircraft 84,857,764 41,644,250Provision for Obsolescence (Net) (33,320,770) (15,113,171)
Aircraft Lease, Handling & Maintenance chargesLease 1,525,082,894.36 1,175,102,754 Handling 86,710,647.00 39,692,970 Maintenance 1,149,783,260.40 915,481,709 2,761,576,802 2,130,277,432
Navigation, Landing, Housing & ParkingLanding Fees - Scheduled & Other Ops. 53,066,708 45,292,218 Housing & Parking Fees 15,092,987 15,025,849 Flight Comm & Navigation Charges 96,388,334 74,389,971 164,548,029 134,708,038
Passenger AmenitiesPax Amenities - Catering On Ground 10,832,389 6,878,668 Pax Amenities - Catering On Board 55,415,502 20,863,958 Pax Amenities - Hotel Expenses 11,523 - Pax Amenities - News Paper & Magazines 1,240,194 653,644 67,499,608 28,396,270
Other Communication ChargesTelephone Equipment Rental 50,181 25,854 Postage Telegram & Courier Charges 119,977 26,919 Telephone & Trunk Call Charges 1,334,136 1,275,112 1,504,294 1,327,885 Service chargeMisc. Taxes paid on Revenue Items - PO Based Inv. 26,684,131 17,590,321 26,684,131 17,590,321 TOTAL 3,816,570,737 2,874,426,798
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NOTE “20” : EMPLOYEE BENEFIT EXPENSES(Amount in Rupees)
Particulars 2016-17 2015-16
1. Salary, Wages and Bonus
Salaries - Staff In India 418,346,904 196,086,213
Bonus Expense 2,977,623 6,258,679
421,324,527 202,344,8922. Crew Allowances
Hourly Payments 6,751,333 5,437,693
Foreign Contract Pilots Fees & Claims 154,224,829 91,702,519
160,976,162 97,140,212 3. Contribution to Provident and Other Funds
CC Provident Fund-Staff in India 10,428,530 6,244,016
10,428,530 6,244,016 4. Staff Welfare Expenses (Net)
Other Staff Welfare Expenses 10,292,403 2,552,226
Staff Training Expenses 91,548,966 27,406,937
101,841,369 29,959,163
5. Gratuity 10,859,546 12,305,561
6. Leave Encasement 16,074,476 -
TOTAL 721,504,610 347,993,844
NOTE “21” : FINANCIAL COSTS(Amount in Rupees)
Particulars 2016-17 2015-16
(i) Interest on Loans:
Interest on AI Loan (Holding Company) 1,353,634,526 1,113,180,356
Bank Charges 18,241,129 8,276,022
1,371,875,655 1,121,456,378
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NOTE “22” : OTHER EXPENSES(Amount in Rupees)
Particulars 2016-17 2015-16
Travelling Expenses 102,783,212 39,419,941 Rent 14,976,837 11,952,454 Repair Charges 8,216,093 545,937 Hire of Transport 22,534,826 17,204,352 Electricity / Heating & Fuel Charges 2,974,880 2,606,081 Water Charges - 114,500 Printing and Stationary 1,681,273 1,355,987 Publicity and Sales Promotion 1,310,698 - Legal Charges 765,769 3,277,771 Audit & Other Fees- Audit Fees 517,500 517,500 - Reimbursement of Expenses - - Provision for Redelivery & other charges 318,528,421 224,337,510 Exchange Variation (Net) (3,644,425) 13,466,270 Professional / Consultation Fees & Expenses 9,129,451 6,337,225 Fees to DGCA 264,000 2,605,500 Ofce Cleaning Expenses 28,782,664 35,363,211 Entertainment Expenses - General 752,422 501,425 Books & Periodicals - Jeppesen / Technical 4,393,237 4,234,055 Loss on Sale of Assets 1,222,821 - Other Misc. Expenses 16,522,294 34,769,993 Delayed Payment Charges to Fuel Companies 18,252,629 26,508,922 Interest on delayed payment of TDS 2,555,939 31,373 Interest on delayed payment of Service Tax 527,458 1,291,926 TOTAL 553,048,000 426,441,933
NOTE “23” : PRIOR PERIOD EXPENSES(Amount in Rupees)
Particulars 2016-17 2015-16
Prior Period Expenses 202,791,496 (7,774,116)
Prior Period Revenue 17,998,276 (904,326)
TOTAL 220,789,772 (8,678,442)
NOTE “24” : EXCEPTIONAL ITEM(Amount in Rupees)
Particulars 2016-17 2015-16
Provision for Inventory Reconciliation (Expenses) 302,539 15,557,654
Provisions No Longer Required (99,719,786) (51,981,886)
TOTAL (99,417,247) (36,424,232)
AASL
85
NOTE “25” : DISCLOSURE OF EARNING PER SHARE(Amount in Rupees)
Particulars 2016-17 2015-16
a) Weighted average number of shares at the beginning of year 40,225,000 40,225,000
b) Weighted average number of shares at the end of year 40,225,000 40,225,000
c) Net prot after tax available for equity shareholders (Rupees) (2,827,221,154) (1,987,509,430)
d) Basic and Diluted Earning Per Share (Rupees) (70) (49)
e) Par Value of Share (Rupees) 100 100
26. CONTINGENT LIABILITIES NOT PROVIDED FOR:
A. Claims against AASL not acknowledged as debts (excluding interest and penalty wherever likely to be applicable) and being contested to the extent ascertainable and quantiable:
(Rupees in Million)
Sr. No. Description 2016-17 2015-16
(i) Income Tax Demand Notices received by the Company which are under Appeal (including TDS default) 3373.78 3368.84
(ii) Others (**) 914.04 655.32
Total 4218.35 4024.16
(i) Explanatory Statement in respect of Contingent Liabilities
(Rupees in Million)
Income Tax demand for A.Y. 1997-98 Rs.14.04 Appeal dismissed by ITAT in absence of COD approval (Rs14.04) (Total amount deposited under protest, application led for restoration of Appeal).
Income Tax demand for A.Y. 2000-01 Rs. 17.43 Under appeal with ITAT. Miscellaneous Application (Rs. 17.43) led for reopen.
Income Tax demand for A.Y. 2004-05 Rs. 3.20 Under appeal before CIT (A) (Rs. 3.20)
Income Tax demand for A.Y. 2008-09 Rs.1485.15 Under appeal with ITAT (Rs.1485.15)
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86
Income Tax demand for A.Y. 2010-11 Rs. 1729.33 Under appeal with ITAT. (Rs. 1729.33)
Income Tax demand for A.Y. 2011-12 Rs. 112.10 Under appeal before CIT (A) (Rs. 112.10)
(All income tax demands shown above are excluding interest after the date of order and before adjustment of Rs. 30 million recovered adhoc against the said demands from the accounts of the company directly).
Income Tax Demand on account of TDS defaults amounting. Rs.12.53 million (Rs. 7.58 million)
(ii) Others (**) :
Standby Letter of Credits under Aircraft Lease and Maintenance Support Agreement for ATR and CRJ operations Rs.813.05 (Rs. 575.78 million).
(Based on guarantee given by Air India Ltd. the parent company)
LIBOR Rs. 5.25 million (Rs. 53.94 million). (rate of interest on delay in foreign remittance is taken as per contract with the parties).
Miscellaneous claim - Rs. 95.74 million (Rs. 25.61 million). [including for unsettled legal claims of Rs.6.26 million (Rs.6.26 million), disputed/un-
reconciled handling charges payable to AISATS Rs. 26.28 million (Rs. NIL) and claims towards BAPL Rs.63.2 million (Rs. NIL)]
B. No provision has been considered necessary in respect of disputed demand of Income tax amounting Rs.3331.25 million (Rs. 3331.25 million) in view of company's appeals pending with appellate authorities. However, the same is shown above under contingent Liabilities. (The disputed demands shown above are excluding interest on demand).
27. (i) Capital Commitments
Estimated amount of contracts remaining to be executed on Capital Account are NIL.
(ii) Other Long-Term Commitments : NIL
28. CHANGES IN ACCOUNTING POLICIES
During the Financial Year the company has introduced new policy in respect of Leave encashment, as a result of this change, accounts have been impacted to the tune of Rs.16.07 million, mentioned under Accounting Policy No.:9(b) Employee benets & loss has been increased by the said amount.
29 FIXED ASSETS.
1) The physical verication of assets for the biennial period ended 2014-15 had been done for Delhi and Kolkata station during 2015-16. The assets with acquisition value of Rs. 1.62 million reported obsolete/unserviceable/untraceable, were written off in Financial Year 2016-17.
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2) The physical verication of assets for the biennial period ended 2016-17 had been done for Kolkata station only during the year 2016-17. The assets with acquisition value of Rs. 8.52 million reported obsolete/unserviceable/untraceable, were written off in the Financial Year 2016-17.
3) The assets (obsolete/unserviceable) with acquisition value Rs. 8.86 million were written off in the Financial Year 2016-17 on the basis of scrap notes received from Administration department.
Based on physical asset report along with scrap note, the shortages have been dealt with. Assets (obsolete/unserviceable/untraceable) amounting Rs.19 million were written off from the books of accounts during 2016-17, with the approval of Board of Directors.
The total Accumulated Depreciation on these assets amounts to Rs. 17.78 million. After charging off accumulated depreciation against gross value of the assets, the Loss/Gain on scrapping of Assets amounts to Rs. 1.22 million.
30. COMPENSATION/CREDITS
Grants Receivable by AASL
i) The grant receivable from NEC for ATR North East operations was accounted for as income taking st
into accounts, the operations of ATR for the year ending 31 December 2012 amounting Rs. 495.44 million. NEC contested the claim of Grant support for the year 2012, however, the committee set up under Planning Commission to resolve the issue, has recommended for Rs. 609.10 million based on actual decit that MoCA may provide budgetary support to meet the VGF for the year 2012. However, the company as a prudence, has continued to account for Rs. 495.44 million as originally accounted since the same is also disputed.
ii) The North-East Council has signed a MoU for VGF for operating ights in North-East Sector effective August 2014 which is still continuing.
iii) The Union Territory of Lakshadweep (UTL) has continued to sanction VGF for Agatti operations for the year 2016-17.
iv) The Union Territory of Daman & Diu has continued to sanction VGF for Diu operations for the year 2016-17.
v) Further, AASL has started operating during the year 2016-17 on following sectors under VGF Arrangements with respective Govt. bodies:
No. VGF Signed Sectors Operated Period
I Govt. of Punjab Delhi-Bathinda-Delhi Effective:11.12.2016
31. COMPONENT ASSETS
Consequent to the changes in the Schedule II effective 2015-16, major components (except in the case of AWL) with different useful lives are to be treated as separate assets. Since, the aircraft are taken on dry lease, no major addition has been made. Hence, there is no disclosure on account of component accounting.
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88
32. EFFECT OF CHANGES IN EXCHANGE RATES (AS-11)
a) Foreign currency Expenditure transactions are recorded at established monthly rates (based on published IATA rates).
Foreign currency monetary items other than those identied as long term at the year-end are converted at the year-end exchange rate circulated by Foreign Exchange Dealers Association of India (FEDAI), and the gains/losses arising out of uctuations in exchange rates are recognized in the Statement of Prot and Loss.
b) Additional Information
Information given below include amounts debited by Air India Ltd and also include deemed expenditure and earnings in foreign currency.
(Rupees in Million)
Particulars CURRENT PREVIOUS YEAR YEAR 2016-17 2015-16
A. Expenditure on Imports (CIF) during the year ended 31st March 2017
- Aircraft Spares Parts & Tools 44.47 110.23
- Capital Items-Ground Support Equipment NIL NIL
B. Expenditure on Consumption during the year ended 31st March, 2017.
- Imported Spares & Components 81.77 40.64
- Indigenous Spares NIL NIL
C. Earnings in Foreign Currency
- Interline Revenue NIL NIL
D. Expenditure in Foreign Currency
- Aircraft Lease & Maintenance Charges 1857.77 1541.18
- Purchase of Stores & Equipment 44.47 110.23
- Technical Literature 1.46 2.17
- Training & Travelling 92.58 29.98
- Legal charges 0.09 2.65
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89
c) Foreign currency exposures recognized by the company that have not been hedged by a derivative instrument or otherwise as under: -
(Rupees in Million)
st st Particulars Currency As at 31 Mar 2017 As at 31 Mar 2016 Type
Trade Payables US DOLLAR 5.26 7.34
Amount in INR 340.84 486.03
EURO 0.014 NIL
Amount in INR 0.97 NIL
33. CONFIRMATIONS/RECONCILIATIONS
a) The process of identication of unmatched receivables and payables (including items migrated to SAP at block level instead of line items) is under process of matching/reconciliation. Impact, if any, of consequential adjustment arising out of reconciliation will be dealt with in the year concerned in which the same is identied till the whole process is completed.
b) The outstanding balances with Oil Companies viz. Indian Oil Corporation Ltd. is Rs.129.33 million, Bharat Petroleum Corporation Ltd. Rs.12.14 million, Hindustan Petroleum Corporation Ltd. Rs.29.63 million, Reliance Industries Ltd. Rs.0.17million and Shell MRPL Aviation Ltd. Rs.NIL. The accounts of IOCL, RIL, BPCL, HPCL and Shell-MRPL have been reconciled till 31.03.2017.
c) The Service Tax including input credit to be availed, Tax deducted at Source (TDS), Employee Provident Fund and Revenue related taxes are being reconciled to be in line with the returns led/statutory records maintained.
34. INTERNAL CONTROL
AASL has appointed external chartered accountant's rms so as to strengthen the internal audit/control process to ensure the coverage of all the areas as envisaged in the Minimum Audit Programme at regional ofces, user departments and Registered Ofce.
35. INVENTORIES
i) The inventories mainly include Aircraft spares, rotables, consumables and tools of ATR and CRJ aircrafts. The procurement is made by AIL on behalf of the company. Inventory of the company are maintained/ controlled by AIL. The consumption and closing stock therefore is on the basis of records and details derived from the store records maintained/ controlled by Air India Ltd. at Kolkata, Delhi and Hyderabad.
ii) Goods in transit amounting to Rs.6.61 million (Rs. 20.59 million) include items at High Seas, items lying with Customs and items under inspection based on certication by Air India Ltd.
iii) Custom Duties, Freight & Incidentals have been allocated on pro-rata basis on year end value of closing Aircraft spares, rotables and consumption. Unallocated custom duty paid on aircraft spares
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90
and rotables is shown under advance recoverable in cash or kind instead of forming value of inventory.
iv) In respect of AASL, a consolidated Provision for Obsolescence amounting to Rs.327.42 Million (PY: Rs.360.7 Million) towards aircraft spares, rotables and special tools in respect of ATR and CRJ aircraft has been made as on 31.3.2017. During the year there was a write back of Rs.33.32 Million (15.11 million) in this provision. However, there are no non-moving spares.
v) Physical Verication of inventory for the biennial period 2016-17was done for Kolkata. During the physical verication of stores for Kolkata for year ended 31.03.2017, shortage of Rs. 0.30 million was reported. The same has been provided for during the year.
36. STATUS OF RECONCILIATION WITH AIRPORT OPERATORS.
The reconciliation status with various Airport Operators such as AAI, MIAL, DIAL, as on 31st March 2017 is given hereunder:
(Rupees in Million)
S.No Name of Airport Balance Balance Difference Reconciliation Operator Payable Receivable as on statement as on 31.3.17 on 31.3.17 31.3.17
1. Airport Authority of 616.22 NA 616.22 Reconciliation is India (AAI) under process (including provision)
2. Mumbai International 0.28 4.22 3.94 Reconciliation is Airport Ltd. (MIAL) under process
3. Delhi International 115.58 145.19 29.61 Reconciliation Airport Ltd. (DIAL.) Completed
37. SEGMENT REPORTING:
i) The company is engaged in airline business, which is considered as a single whole business segment. All incomes are incidental to the above business. Details of the revenue earned from various activities related to airline business.
ii) The Company operates ights on domestic routes including charters on demand.
iii) The revenue earning is from the aircraft, which are on operating lease. These are deployed in various sectors. There is no appropriate basis for allocating the assets and related liabilities in geographical segments.
38. RELATED PARTY TRANSACTIONS
a. Holding Company AIR INDIA LTD.
b. Associate Company AIESL and AIATSL
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c. No loans or credit transactions were outstanding with Directors or Ofcers of the Group or their relatives at the end of the year which is required to be disclosed in accounts under the Companies Act, 2013.
st d. Key Management Personnel & Relatives (as on 31 March 2017).
st List of Key Managerial Personnel of Airline Allied Services Ltd. (AASL) as on 31 March 2017.
Sr. No. Name Designation
1. Shri Ashwani Lohani Chairman CMD, Air India Ltd.
2. Shri Vinod S Hejmadi Director Director (Finance) of Air India Ltd.
3. Shri Pankaj Srivastava Director Director (Commercial) of Air India Ltd.
4. rd
Capt A K Govil Director (w.e.f 3 March, 2017) Executive Director (Operations) of Air India Ltd.
5. Smt. Meenakshi Dua Director Executive Director (Northern Region) of Air India Ltd.
6. Smt. (Dr.) Shefali Juneja Director Director (Finance), Ministry of Civil Aviation
7. Ms. Puja Jindal Government Nominee Director - th MoCA (Ceased w.e.f. 8
April 2016)
8. Capt. Arvind Kathpalia Nominee Director of Air India rd (Ceased w.e.f. 3 March 2017)
9. Shri C.S. Subbiah . Chief Executive Ofcer
10. Shri Kamal Roul Chief Financial Ofcer.
11. Ms. Manjiree M. Vaze Company Secretary st (w.e.f. 21 March, 2017)
12. Shri Gagan Batra Company Secretary (Ceased w.e.f.
st 21 March, 2017)
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(e) Managerial Remuneration:
The details of the Managerial Remuneration: In Million
S.No. Particulars 2016-17 2015-16
1. Executive Director Finance (with effect from 1.27 1.51 th 24 June,2015 till October 2016)
1.27 1.51
(f) Transactions with related parties during the year:
The company operated leased aircraft, directly leased from Lessors. Air India Ltd. provides marketing, sales and reservations services for Alliance Air ights. While the work related to other support services like ground handling and engineering services are being done by the other
thsubsidiaries companies of AIL, i.e. AIATSL (Arrangement dated 7 Nov 2014) and AIESL
th(Arrangement 29 July 2013) respectively for AASL ights. For these services, the rates of charges have been laid down and have been signed with these companies.
(i) Holding Company: Air India Limited (Rupees in million)
As on 31.03.2017 As on 31.03.2016
BALANCE PAYABLE AT THE 13517.52 10584.58 YEAR END TO AIL
Equity Infusion during the year - 4000.00 Credits for Services Rendered 100.09 108.91 (Salary of AASL Personnel working for AIL)
Debits for Services Received Labour charges on Maintenance (as per MoU) 0.00 2.22
SAP Maintenance charges 14.04 14.04 6.75 8.97
Debits for Funds and Payments made through AIL
Funds Transfer Through Bank 3916.31 2375.10
Payments made to Oil Companies 265.56 2274.52
Payments made to Foreign 402.27 209.47 Vendors
Payments made to Foreign 306.98 59.70 Vendors (Stores)
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As on 31.03.2017 As on 31.03.2016
Payments made to Vendors - - (AI SATS)
Payments made to Indian 47.35 18.67 Vendors
Payments made to Ground - - Handling Agent
Deposit with High Court 0.00 220.00
4938.47 5156.55
Agencies Arrangement:
Trafc Revenue (Gross) 3087.07 2092.19
JN Tax (Service tax on 150.33 86.86 passenger Revenue)
Less: Misc. Taxes paid on 24.99 17.04 revenue items
Net Traffic Revenue 3212.41 2162.01
Insurance claim received 95.52 95.52
Interest Charged by AIL 1353.64 1113.18
Leasing Arrangements :
Management Contract inclu. 34.83 24.90 (Pay & Allow. of AIL employees)
Items pending acceptance by 136.28 23.35 Air India (Debited By AASL)
Items pending acceptance by - - Air India (Credited by AASL)
Guarantees Standby Letter of Credits for ATR 813.05 575.78 and CRJ Operations.
Corporate Guarantees given to Lessors of AASL by Air India
However, Air India Ltd. Has also 2658.33 provided corporate guarantees for the aircraft lease.
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(ii) Short term borrowings amounting Rs.13517.52 million (Rs. 10584.58 million) due to Air India Ltd, representing net of transfers/disbursements of funds to/for the company after adjusting revenue earnings from ight operations.
(iii) The Holding Company, Air India Limited debited a sum of Rs.1353.64 million (Rs.1113.18 million) towards interest on account of delayed payment on the average of opening balance as on 01.04.2016 and closing balance as on 31.03.2017. The above interest has been calculated @ 11.82% (11.08%) per annum.
Further no TDS has been deducted on the said interest as per legal opinion obtained by Management.
(g) Other current assets include amount of Rs.582.60 million (Rs.335.35 million) receivable from Associate Company Air India Engineering Services Ltd (AIESL). The Company charged interest on the average outstanding balance of AIESL as per decision of management. Interest would be recovered at the same rate as charged by Air India Limited (Holding Company of both the companies). Accordingly, the Company has accounted for Rs.50.91 million (Rs.24.32) million in 2016-17 as other income.
Trade payable include amount of Rs.153.79 million (Rs.75.19 million) Payable to Associate Company Air India Air Transport Services Ltd. (AIATSL).
39. LEASES
(A) The company has taken aircraft on non-cancelable operating lease as under:
Lessor Valid upto
Ø ATR 42-320 ABRIC Leasing Limited
VT-ABA 30-Sep.17 VT-ABB 30-Sep.17
Ø ATR 72-600 AVAP Leasing (Asia) Ltd
VT-AII 22-Dec.26 VT-AIT 25-Feb.27
Celestial Aviation Trading 68 Ltd
VT-AIU 27-May.25 VT-AIV 30-June.25 VT-AIW 13-Oct.25 VT-AIX 15-Jan.28 VT-AIY 19-Jan.28 VT-AIZ 14-July.28
Ø CRJ 700 EIC Ireland Leasing No. Two Limited 13-Jan.2017(Still not VT-RJE de-registered)
CILAN MSN 10048 Ltd., Ireland 28-Nov-2016 (Still not VT-RJD de-registered)
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(B) Operating Lease
The Company has taken 10 aircraft (2 ATR-42 320 and 8 ATR-72 600) on non-cancelable operating lease.
Liability on account of future minimum lease rentals in respect of leases
(Rupees in Million)
Particulars As at 31.3.2017 As at 31.3.2016
i) Not later than one year 1759.81* 1626.61
ii) Later than one year and not later than ve years 6681.58 4168.32
iii) Later than ve years 8020.91 5181.42
Total 16462.31 10976.35
*Includes aircraft lease, maintenance/others, GMSA
(C) The proportionate expenditure for redelivery cost for leased ATR and CRJ aircraft has been worked out for Rs.436.09 million (Rs.355.13 million) up to 31.03.2017 on the basis of aircraft months in terms of the agreements executed with the parties and provision made for the same in the accounts.
40. EMPLOYEE BENEFITS
(A) General description of Defined Benefit Plan
a. 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.
b. Privilege Leave Encashment: Privilege Leave Encashment is payable to all eligible employees at the time of superannuation. From the FY 2016-17, AASL has provided for the encashment of Privilege Leave on actuarial valuation basis for all categories of employees.
c. The salaries of deputationists from Air India Ltd. are as per the terms of deputation and are accounted on the basis of the debits received from Air India Ltd. Retirement benets including PF to the deputationists are accounted by Air India Ltd. The debit from Air India Ltd. for its employees on deputation includes charge for Provident Fund & Gratuity.
(B) Defined Contribution Plan
Employees Provident Fund: AASL has Employees Provident Fund Trusts under the Provident Fund Act 1952, which governs the Provident Fund Plans for eligible employees. The Company and its employees contribute 10% of the PF Pay to the Provident Fund Trust.
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(C) Defined Benefit Plans — Gratuity
In accordance with the Revised AS 15 (Revised), the Company is using the Projected Unit Credit Method and the other assumptions as per the Market.
Particulars 31.03.2017 31.03.2016
Discount rate 7.50% per annum 8.00% per annum
Future salary increase 8.00% per annum 8.00% per annum
Table Showing Changes in Present Value of Obligations:
(Rupees in Million)
Period 31.03.2017 31.03.2016 Present value of the obligation at 50.13 39.55 the beginning of the period
Interest cost 3.76 3.16
Current service cost 3.77 4.20
Benets paid (if any) (0.10) (1.72)
Actuarial (gain)/loss (13.50) 4.94
Present value of the obligation at the 44.04 50.13 end of the period
Key results (The amount to be recognized in the Balance Sheet) :
(Rupees in Million)
Period 31.03.2017 31.03.2016 Present value of the obligation at the 44.04 50.13 end of the period
Fair value of plan assets at end 0 0 of period Net liability/(asset) recognized in Balance 44.04 50.13 Sheet and related analysis
Funded Status (44.04) (50.13)
Best estimate for contribution during 4.22 4.45 next Period
Expense recognized in the statement of Profit and Loss:
(Rupees in Million)
Period 31.03.2017 31.03.2016
Interest cost 3.76 3.16
Current service cost 3.77 4.20
Expected return on plan asset (0) (0)
Net actuarial (gain)/loss recognized in the period (13.50) 4.94
Expenses to be recognized in the statement of P&L accounts *(5.98) 12.30
*This Actuarial gain includes Rs. 16.84 Millions excess provision write back due to transfer of 160 employees to AIESL. Actual Expenditure for employee of AASL during the year is Rs 10.86 Million.
The assumptions employed for the calculations are tabulated:
Discount rate 7.50 % per annum 8.00 % per annum
Salary Growth Rate 8.00 % per annum 8.00 % per annum
Mortality IALM 2006-08 Ultimate IALM 2006-08 Ultimate
Expected rate of return 0 0
Withdrawal rate (Per Annum) 3.00% p.a. 3.00% p.a.
Disclosure for the last 5 Years
(Rupees in Million)
Particulars 31 March 31 March 31 March 31 March 31 March 2017 2016 2015 2014 2013
Present Value of dened 44.04 50.13 39.55 35.63 31.68 obligation as at the end of the period
Plan assets at the end of 0 0 0 0 0 the period
Net liability recognized in 44.04 50.13 39.55 35.63 31.68 the balance sheet
Experience adjustment (16.10) 4.96 (1.62) (2.11) (2.22) on actuarial gain/loss
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Current Liability (*It is probable outlay in next 12 months as required by the Companies Act) :
(Rupees in Million)
Period 31.03.2017 31.03.2016
Current Liability (Short Term) * 1.95 2.38
Non-Current Liability (Long Term) 42.09 47.75
Total Liability 44.04 50.13
(D) Defined Benefit Plans —Leave encashment
In accordance with the Revised AS 15 (Revised), the Company is using the Projected Unit Credit Method and the other assumptions as per the Market.
Table Showing Changes in Present Value of Obligations:
(Rupees in Million)
Period 31.03.2017
Present value of the obligation at the end 16.07 of the period
Key results (The amount to be recognized in the Balance Sheet):
(Rupees in Million)
Period 31.03.2017
Present value of the obligation at the end 16.07 of the period
Fair value of plan assets at end of period 0
Net liability/(asset) recognized in Balance 16.07 Sheet and related analysis
Funded Status (16.07)
The assumptions employed for the calculations are tabulated:
Period As on 31.03.2017
Discount rate 7.50 % per annum
Salary Growth Rate 8.00 % per annum
Mortality IALM 2006-08 Ultimate
Expected rate of return 0
Withdrawal rate (Per Annum) 3.00% p.a.
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Benefits valued:
Period 31.03.2017
Normal Retirement Age 60 Years
Salary As per rules of the company
Benets on Normal Retirement 1/30 * Salary * Number of leaves.
Benet on early exit As above, subject to rules of the company.
Benet on death As above, subject to rules of the company.
Current Liability (*It is probable outlay in next 12 months as required by the Companies Act) :
(Rupees in Million) Period 31.03.2017
Current Liability (Short Term)* 0.74
Non-Current Liability (Long Term) 15.33
Total Liability 16.07
41. EARNINGS PER SHARE
(Rupees in Million)
As at 31.03.2017 As at 31.03.2016
Prot/(Loss) After Tax & Before Extra-Ordinary (2927.18) (2023.93) Items
Less :Extra ordinary Items 99.42 36.42
Prot/(Loss) After Tax & Extra-Ordinary Items (2827.76) (1987.51)
Weighted Average No. of Equity Shares 4022.50 4022.50
EPS Basic & Diluted
a) Before Extra-Ordinary Items (50.32)(72.76) (Rs. per Share)
b) After Extra-Ordinary Items (Rs. per Share) (70) (49)
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42. REMUNERATION TO AUDITORS:
The details of the audit fees and expenses of the Auditors:-
(Rupees in Million)
Particulars 2016-17 2015-16
Audit Fees - For the Year 0.52 0.52
Total 0.52 0.52
43. GOING CONCERN
In order to improve its Operational & Financial performance, parent company Air India Limited has formulated a Turn Around Plan (TAP). Being a Government Company, the Government of India has all the intension to revive it along with the parent company. TAP was approved by Government in February 2012. It is envisaged that Alliance Air would become protable over period of time by acquiring new Aircraft. Due to support of Air India Limited as well as various measures taken towards improving its operational and nancial positions, it is expected that nancial position of company would improve in future. Air India Limited will be converting an amount of Rs. 50000 million, out of the amount outstanding from AASL in its books into equity in FY 2017-18.
44. OTHER CURRENT LIABILITIES:
Based on the information available with the Company, the balances outstanding as at the Balance Sheet date is Nil (Nil) with regard to Micro, Small and Medium Enterprises as dened under the Micro, Small and Medium Enterprises Development Act, 2006.
45. M/S GATI:
An agreement for freighter charter operations (undertaken by AASL) between Air India Ltd. and M/s GATI was terminated by GATI in March 2009, consequent to which AI invoked the Bank Guarantee of Rs. 300 million deposited by GATI. The Arbitral Tribunal has given it's award against which an appeal has been led by Air India Limited before the Hon'ble Delhi High Court which has also upheld the decision of Arbitral Tribunal. To le an appeal in Delhi High Court (Double Bench) against the subject order, AIL has deposited Rs. 220 million with Hon'ble High Court as deposit money on 17.11.2015. No provision has been made for Debtors of Rs. 294.0 million though the same is more than 3 years, since an appeal has been led and the matter is sub-judice. The management is hopeful for a favorable judgment and guarantee invoked amount is lying with AASL.
46. One aircraft ATR-42, MSN 406 (VT-ABO) taken on lease from M/s Abric was involved in an incident on 22.12.2015 at Kolkata. Since the aircraft was damaged extensively, the settlement agreement was signed with the lessor with the payable amount of US$ 3.3635 million in lieu of the damage and release of aircraft. The claim under Hull insurance was lodged with the insurers of the company and an amount of US$ 1.4726 million was accepted by Insurers after a deductible of US$ 100,000.
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Provision for the compensation payable to the lessor and provision for insurance claim receivable from the insurer were made last year, both of which have been paid / received in the year 2016-17. Since the aircraft was damaged due to the negligence of Jet Airways, the claim was lodged with the Jet Airways for consequential damages / losses suffered by the company. An amount of US$ 1.7989 million equivalent to INR 12.05 crores at the exchange rate of Rs. 67 per US$ has been lodged and is pending for acceptance / nal settlement.
No income has been recorded in the books of accounts for above claim from Jet Airways as per the policy of the company that such claims from the vendors / insurers and parties are recognized upon acceptance of such claims / receipts.
47. Disclosures relating to Specied Bank Notes*(SBNs) held and transacted during the period from th th
8 November 2016 to 30 December 2016.
(Rupees in Million)
Particulars SBNs* Other Total (Amount in ̀ ) Denomination notes (Amount in ̀ )
Closing cash in hand as on 8 November 2016 0.05 0.00 0.05
(+) Permitted receipts - 2.16 2.16
(-) Permitted payments - 2.11 2.11
(-) Amount deposited in Banks 0.05 0.00 0.05
Closing cash in hand as on 30 December 2016 - 0.05 0.05
* Specied Bank Notes(SBNs) mean the bank notes of denominations of the existing series of the value of ve hundred rupees and one thousand rupees as dened under the notication of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E),
thdated the 8 November 2016.
st48. From 1 April 2016, 160 Engineers & Technical employees has been transferred from AASL to
AIESL and all their corresponding terminal benets would be also borne by AIESL. Accordingly a sum of Rs.16.84 Millions outstanding provisions for gratuity on the said employees has been reversed during the year.
49. The company has registered charges of Rs.3437.06 million (Rs.3437.06 million) the company's assets towards dues against leased aircraft.
50. In opinion of the Management, any of the assets other than xed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated, unless specied otherwise.
51. The company has amended the Accounting Policy to bring it in line with its Holding Company, however there is no nancial impact.
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52. Previous Year gures have been re-grouped/re-arranged wherever considered necessary to be compatible with the Schedule III of the Companies Act 2013, to the extent of information being available and practicable of compilation.
53. The gures have been rounded off to the nearest rupee.
Signatures to the Schedules forming part of the Balance Sheet and Statement of Prot and Loss and to the above notes.
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As per our report of even date attached
For and on behalf of For and on behalf of the Board
Chandra Gupta & Associates Sd/- Sd/- Sd/- Chartered Accountants (Ashwani Lohani) (Vinod Hejmadi) (C.S. Subbiah)FRN No 000259N Chairman Director Chief Executive Ofcer
Sd/- Sd/- Sd/-Gunjan Aggarwal (Manjiree M. Vaze) (Kamal Roul)Partner Company Secretary Chief Financial Ofcer Membership No. : 061893
Place: New Delhi Date: 22 August 2017