annual report aw - kempegowda international · pdf filemr.s ravi shankar, representative of...

15th Annual Report 2015-16

Contents

Board of Directors : 03

Directors’ Report : 05

Standalone

Auditor’s Report : 27

Annexure to Auditor’s Report : 31

Financial Statements

- Balance Sheet : 38

Profit & Loss Account : 39

- Cash Flow Statement : 40

Significant Accounting Policies : 42

Notes to Financial Statements : 49

Consolidated

Auditor’s Report : 69

Annexure to Auditor’s Report : 75

Financial Statements

- Balance Sheet : 80

- Profit & Loss Account : 81

- Cash Flow Statement : 82

Significant Accounting Policies : 84

Notes to Financial Statements : 91

Attachment to Financial Statements - Form AOC - 1 : 110

BANGALORE INTERNATIONAL AIRPORT LIMITED

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CIN : U45203KA2001PLC028418

Board of Directors : Mr. Arvind Jadhav, IAS - Chairman

: Dr. G V Krishna Reddy – Co-Chairman

: Mr. G V Sanjay Reddy – Managing Director

: Mr. Issac George Anicattu

: Mr. Krishna Ram Bhupal

: Mr. D R Kaarthikeyan

: Mrs. Vandita Sharma, IAS

: Mr. Arvind Shrivastava, IAS

: Mr. Sudhir Raheja

: Mr.Venkatramana R Hegde

: Mr. Basil Justin Wetters

: Mr. Johannes Schmidt

: Mr. Pramod Kumar Bhambani

: Mr. Daniel Schmucki

: Mr. S Balasubramanian (Independent Director)

: Mr. A Meher Prasad (Independent Director)

Chief Financial Officer : Mr. Bhaskar Bodapati

Company Secretary : Mr. M T Siva Kumar

Statutory Auditors : M/s. B S R and Company

Maruti Info-Tech Centre, 11-12/1 Inner Ring Road,

Koramangala, Bengaluru -560 071

Secretarial Auditors : M/s. V. Sreedharan and Associates

32/33, 1st Floor, GNR Complex, 8th Cross,

Wilson Garden, Bengaluru – 560027

Cost Auditors : M/s. Narasimha Murthy & Co,

3-6-365, 104&105, Pavani Estate, Y. V. Rao Mansion,

Himayatnagar, Hyderabad – 500 029

Internal Auditors : M/s. Deloitte Haskins Sells LLP

Deloitte Centre, Anchorage II, 100/2

Richmond Road, Bengaluru – 560 025

Registered Office : Administration Block,Kempegowda International Airport,

Bengaluru – 560 300; Tel: +91 80 6678 2639

Website : www.bengaluruairport.com

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DIRECTORS’ REPORT

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The Directors take pleasure in presenting the Fifteenth Annual Report of Bangalore International Airport Limited (the “Company” or “your Company”) together with the audited financial state-ments for the financial year ended 31st March, 2016;

1. FINANCIAL RESULTS 2015-16 The details of the key financial results are summarised as follows:

(Rupees in Crore)

Financial Year 2015-16

Financial Year 2014-15

Income 1149.03 932.67Expenditure Operating Expenses 320.53 313.91

Finance cost 168.71 197.28

Depreciation 205.38 208.97

694.62 720.16Profit/(Loss) for the year 454.41 212.51 Less: Provision for taxation 16.80 137.20

Profit/(Loss) after tax 437.61 75.31 Add: Profit/(Loss) brought forward 467.03 391.72

Profit/(Loss) carried forward to Balance Sheet 904.64 467.03

Financial Overview During the year under review, your Company achieved an Income of Rs.1149.03 crore (increased

by 23 % over the previous year) and has reported a Profit after tax of Rs. 437.61 crore compared to the Profit of Rs.75.31 crore reported during the last financial year. The airport is a regulatory asset and earnings are subject to regulatory tariff orders. Some part of the profit that would relate to excess / shortfall recovery are likely to be adjusted in the forthcoming tariff order and to that extent impact the earnings in future.

Dividend The Board recommended a dividend of Re. 1 per paid up Equity Share on 38,46,00,000 Equity Shares of

Rs. 10 each for the year ended 31st March, 2016. The Dividend on Equity shares is subject to the approval of the Shareholders at the forthcoming Annual General Meeting (‘AGM’).

Allotment of Shares: During the year under review, no fresh allotment of shares took place.

Changes in Shareholding in BIAL: There is no change in the shareholding pattern during the year. However, One Share held by

Mr.S Ravi Shankar, representative of KSIIDC was transferred to Mr.N R N Simha, representative of KSIIDC during the year.

Foreign exchange earnings & outgo: The foreign exchange outgoings during the year related mainly to the procurements / payments

in foreign currencies for the airport services as part of day-to-day operations. Details of foreign exchange earnings/expenditure have been furnished under Note 30 & 31 Notes to Financial Statements.

Particulars of loans, guarantees or investments:

The Company has not provided any guarantee or made any investments during the year. Details of loan provided during the year have been furnished under Note 20 and 36 of Notes to Financial Statements.


To,The Members of Bangalore International Airport Limited

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2. OVERVIEW / INDUSTRY OUTLOOK Annual Traffic Figures and Trends

During the financial year 2015 - 2016, Kempegowda International Airport Bengaluru (the ‘Airport or KIAB’) handled a throughput of 18.97 million passengers with a growth of 23.2% over FY 2014 –15 (15.40 million).

During the FY 2015-16 your Airport handled a total Air Traffic Movements (ATMs) of 153,831 representing a growth of 14.6% over FY 2014 – 15 (134,209 ATMs).

During the FY 2015-16 your Airport handled 291,920 metric tons of Cargo representing a growth of 4.4% over FY 2014-15 (279,532 MT).

Key Highlights of Airport Operations:

Details 2015 - 2016 2014 - 2015 Growth %

Air Traffic Movements 153,831 134,209 14.6%

Number of passengers 18,971,290 15,401,926 23.2%

Cargo (Metric Tons) 291,920 279,532 4.4%

The average Domestic and International Passenger seat load factor was 80% & 78% respectively for the FY 2015 - 16.

New Passenger and Cargo Airlines Air Pegasus, Vistara, TruJet, Thai AirAsia, Nepal Airlines and Kuwait Airways started passenger

services from Bengaluru.

QuikJet, Malaysia and Ethiopian Cargo airlines started freighter services from Bengaluru.

Marketing Activities conducted at Your Airport Various passenger engagement activities were conducted throughout the year including ‘I am

India’, Ganesh Utsava, Sankranti Festival and the second Season of Smiles Event.

Your Airport also hosted Pacific Asia Travel Association (PATA) and Invest Karnataka 2015 Events.

Industry Outlook

India’s domestic air passenger traffic has been growing at a healthy rate (13.0% - 10 year CAGR till FY2016 and 22.1% - in FY2016), driven by growing economic activity and affordable air fares. Moving forward, the domestic and international passenger traffic are expected to grow at an annual average rate of 12% and 8% and Cargo at 12% and 10% respectively in the next five years. The domestic airlines are likely to add 55 new aircraft during FY2017 as against 33 added during FY2016. In addition to the capacity growth, the industry passenger load factor (PLF) has also grown from an average of 75% to 83% over FY2013 to FY2016.

The International traffic to/from India has also been growing at a steady pace over the past decade, registering a CAGR of 10.5% between FY2006 and FY2016. Though, the pace has slowed down over the last three years (7.7% growth during FY2016) due to the weak economic environment, the overall international traffic growth has remained satisfactory.

With the new National Civil Aviation Policy (NCAP), the change in the 5/20 ruling will only see an accelerated delivery plan by Air Asia India and Vistara -both of whom are our focal carriers moving forward and believe it can bring significant growth on domestic and the international front. Further, the push in improving regional connectivity through the RCS scheme will enable the regional carriers to improve their profitability and launch additional routes and the impact of the same is expected to start early next year. In FY 2016-17, IndiGo Airlines (major carrier at our airport) plan to add at BLR increased domestic flights starting W16 shifted to early S16 leading to positive variance in projected ATMs. The continuous growth of ATMs at BLR airport will put further pressure on all airport resources.


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It is expected that passenger growth to continue to remain robust at 20-25% in FY 2016-17, however, in the near to medium term it will be largely dependent on the movement in the crude oil prices, foreign exchange and recent reform measures announced in NCAP.

Regulatory Scenario Significant and material orders passed by the Regulators or courts or tribunals impacting the

going concern status of the Company. There were no significant and material orders passed by the Regulators or courts or tribunals

impacting the going concern status of the Company.

3. OPERATIONS UPDATE Operational Updates, Service Quality and Related Initiatives AAI has enhanced the runway capacity to 34 Air Traffic Movements per hour for the peak hours

at your airport effective Summer 2016 season (27th March 2016). This enhanced capacity would support the business development with the ability to add flights during the peak hours.

Your airport celebrated the 100 Millionth Passenger on the 18th March 2016.

Your airport opened a New Transit Lounge facility to customers.

Your airport Commercial Revenue grew by 28% and stands at Rs. 227.5 Crores. The main categories of Retail revenue grew by 44% and F & B revenue grew by 32% compared to last year.

Your airport achieved an overall satisfaction score of 4.66 for the calendar year 2015 in the ACI Airport Service Quality passenger survey (ASQ) and was ranked 29 among 258 participating airports worldwide.

A new ambulance exclusively for the landside has been introduced from 28th April 2015 to meet the medical requirements of passengers, staff and other beneficiaries of the airport from Trumpet flyover to the PTB curbside.

Your airport received appreciation from AAI and Ministry of Civil Aviation for handling passengers rescued or transferred from Chennai post flood.

Continuous Improvement Initiatives Various energy conservation / cost saving measures have been implemented which has enabled

energy saving of 14400 Kwh per month.

Awards and Accolades / Certifications Your airport has achieved the distinction of becoming the first Airport in the country to achieve

the Greenco Platinum rating from CII Green Building Council (GBC).

Your airport successfully renewed Airport Carbon Accreditation Certificate for Level - 3 (Optimization level) for year 2015 - 16 in May 2015.

Your airport was awarded Gold Category in all the 13 QC projects that were nominated for the Quality Circle Forum of India Competition 2015 has been awarded Gold Category.

Your airport was awarded Emerging Cargo Airport at Air Cargo India 2016.

Your Airport bagged the ‘Best Airport’ and ‘Best Aviation Marketing Team’ awards at the ‘South India Travel’ Awards function held in Hyderabad on 12th April, 2016.

Your Airport has been awarded the ‘Fastest Growing Airport’ with 10-20 million passengers by ‘Asian Annies’ for achieving 25.2% growth in 2015

4. PROJECT UPDATE

BIAL Terminal 1 Refurbishment Project

The terminal refurbishment project at Kempegowda International Airport, Bengaluru was envisaged to give the original terminal – in operation for seven years now – a face lift and improve passenger facilities. It involves redesigning commercial areas and providing passengers more choice.


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All the project works envisaged were completed. The completed and commissioned areas include 53 check in counters up gradation, International PESC, new orange portal, 6 ticketing counters, 1 departure and 3 arrival area toilets, planters, 6 food and beverages outlets, 5 domestic and 4 international speciality retail outlets, tourist visa on arrival facility and International to Domestic Transfer lounge

Forecourt Project

Forecourt project works consists of landside roads, services and signage’s, pedestrian canopy and walkways. Project duration period is 9 months and the current target for completion by end September, 2016.

The road works were on-going for the departure loop and arrival loop. The foundations works were on-going for the canopy structure. Canopy steel fabrication works commenced.

Interim T1 Improvement (ITI) Project

The Terminal 2; Phase 1 is trageted to be made ready by March, 2021. The traffic by March, 2021 is estimated to be around 26.5 million passengers. Facilities up gradation needs to be carried out in the existing terminal to handle 26.5 million passengers. The facilities to be added have been identified and works have commenced. Swing gate and Arrival Belt 10 works have commenced. The domestic PESC area works for 4 security lanes were in progress. Design works are ongoing for the west bus bay, BHS canopy and check-in area. This project is targeted for completion by end Jun’17.

New South Parallel Runway (NSPR) Project

The schematic designs are completed for the NSPR project. The earthworks package was awarded in January, 2016 and the 10% of the earthworks was completed during the month of March, 2016. The deep drainage construction works have commenced and the enabling works like new project office construction have started. Other enabling works are in the procurement stage. The tender package preparation for the pavement works, AGL were on-going and the project is targeted for commissioning by third quarter of the year, 2019.

North Airfield Up gradation (Existing Runway)

In order to cater to the increased traffic, upgrading of existing runway is required to enable it handle up to 48 ATM’s per hour by adding 2 rapid exit taxiways and 2 connecting taxiways. The detail design for the rapid exit taxiways and connecting Taxiways were completed. The tender documents are under preparation, contractor targeted to be on board by December, 2016. Construction period is expected to be from March, 2017 to September 2017.

Terminal 2

During the last year, the Terminal 2 has been in the terminal configuration and the concept designs stage. Your Company had appointed the Lead Architectural consultant, Terminal Planner/Airside Engineering consultant, Baggage Handling consultant, Cost consultant and Landscape consultant to progress on the terminal configuration and on the concept designs. The Terminal area review stage has been completed and the design brief for the Terminal 2 had been finalized. During the last quarter of 2015-16, the terminal configuration had been finalized. Concepts designs are in progress and is targeted to be completed by September, 2016.

5. COMMERCIAL UPDATE

The total commercial revenues during 2015-16 grew by 28% over the previous year and the revenue per departing passenger increased by 11% (includes Retail, Food & Beverages and Lounges) compared to previous year. Several new concepts in Retail (New Duty Free Shop, Fashion accessories, Toy Shop, South Indian Silks & Handicrafts) and F&B (Mediterranean, Italian & Fast Food) have been added to enhancing passenger experience. The new Transit Lounge at Arrival hall


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was opened during the year. The occupancies of various digital medias’ installed during expansion have seen considerable increase. KIA, Bengaluru added biggest media (20mts banner) at the arrival hall. After successful 2 years of operations, frequency of “Flybus” services to Mysore was increased to 8 departures per day and new destination Mangalore was added during the year. The 2nd edition of airport shopping festival “Season of Smiles” was held during the festive seasons of December 2015, which gave the passengers/visitors enhanced experience.

6. HUMAN RESOURCES

The Human Resources (“HR”) of your Company progressed well during 2015-16 by ensuring acquisition of skilled manpower into the company and building the organization capability to take on new horizons for future.

Your company has been recognized by the World HRD Congress in 2015-16 as a “Dream Company to Work for” and also received an award for “Managing Health at Work”.

Your company has initiated and implemented various employee engagement and people management systems & processes. As an outcome of this:

• Overall employee engagement score has increased by 26% from 65 in 2013-14 to 82 in 2015-16 (survey was conducted by the Great Place To Work® Institute)

• Voluntary employee attrition has reduced from 11.5% in 2014-15 to 9.4% in 2015-16.

Your company has implemented key organization capability building initiatives across all levels viz.

• Leadership Development Programs at Senior Management levels

• Managerial Development Programs for Managerial levels

• Business Etiquette and Attitude related programs for Junior levels

• Functional/technical capability building programs across levels

Your company has ensured compliance with applicable Labour laws and accordingly has been cer-tified by appropriate government authorities during the year. No major industrial Relations issues have been reported during the year.

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appoint-ment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are covered in the extract of Annual return.

7. DISCLOSURE OF INFORMATION PURSUANT TO SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013

Conservation of Energy & Technology absorption

• Your Company has achieved Airport Carbon Accreditation Level 2 (Reduction Level) in 2012 which was upgraded to Level 3 (Optimization Level) in the year 2013 successfully. During the year, the same level - 3 is renewed successfully in the year 2015.

• The surveillance audit of all the four ISO standards i.e. ISO 14001:2014, ISO 9001:2008, OHSAS 18001:2007 & ISO 50001:2011 which were achieved earlier has been successfully renewed in 2015

• Energy saving measures like conversion to LED lamps etc. continued in 2015 also. The area lighting for the trumpet converted with LED lighting. Further use of biodiesel along with diesel is continuing to reduce overall carbon foot print. The exercise of carbon footprint reduction enhanced by involving stakeholders which resulted in Level 3 Airport Carbon Accreditation.

• As per the latest guidelines of Bureau of Energy Efficiency, your Company has its own energy


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management organization in place consisting of certified energy auditor.

• During T1A refurbishment, efforts are taken to implement energy saving lighting fixtures wherever possible. The entire PESC area, East bus lounge and west bus lounge were converted to LED based lighting. Further, energy saving measures were implemented in air-conditioning system.

• As part of water sustenance, your company has in the process of rejuvenating one more existing surface well. The work will be completed by July 2016. Further, innovative schemes for recovery of condensate water from AHU completed and on an average 60 KL of condensate water being recovered every day.

• To reduce the carbon foot print, your company has already planned to use alternate energy source or green power for Airport operations. Accordingly, roof top solar power in various building were initiated and completed for 4 buildings, for another 2 buildings, the works are in progress and will be completed by May, 2016. With this, total solar roof top energy will be around 500 KW. Further, around 25 Million units of solar energy harvesting were planned in 2016 through various models. This includes solar system in Airside, car park based solar power and open access procurement.

8. PUBLIC DEPOSITS Your Company has not accepted any deposits and hence no amount of principal or interest was

outstanding as on the date of Balance Sheet.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Dr. G V Krishna Reddy, (DIN 00005212), Mr. Pramod Kumar Bhambani (DIN 00318719) and Mr. Daniel Schmucki (DIN 03339936) retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

During the year under review, there were changes in the Board members.

Changes in Directorship of GoK

Mr. Kaushik Mukherjee, IAS, representing Government of Karnataka vacated his office as Director and Chairman of your Company due to withdrawal of nomination from Government of Karnataka on his attaining superannuation from the Government service with effect from 9th February, 2016. Mr. Arvind Jadhav, IAS was appointed as Director and Chairman of your Company with effect from 9th February, 2016 in the casual vacancy created by the cessation of Mr. Kaushik Mukherjee, IAS.

The Board places on record its appreciation for the valuable services rendered by the outgoing Director and Chairman, Mr. Kaushik Mukherjee, IAS during his tenure as Director and Chairman of your Company.

Declaration by Independent Directors

The Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and that there are no changes in their status Independence for the Financial Year 2015-16.

In addition to the provisions of Companies Act, 2013, the appointment of Directors are governed by Shareholders Agreement of the company dated 23rdJanuary 2002 (amended and restated up to 28th July 2006).

Key Managerial Personnel

Mr. G V Sanjay Reddy, Managing Director, Mr. Bodapati Bhaskar, Chief Financial Officer and Mr. M T Siva Kumar, Company Secretary are the “Key Managerial Personnel” of the company.


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Board evaluation

Pursuant to the provisions of the Companies Act, 2013, the Independent Directors at their meet-ing considered/evaluated the Board’s performance, performance of the Chairman and other Non-Independent Directors, without participation of any of the Non-Independent directors and the Management.

Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors. During the finan-cial year 5 Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

10. CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate Governance goes beyond the statu-tory form. Sound Corporate Governance is a key driver of sustainable corporate growth and long-term value creation for the stakeholders and protection of their interests. Your Company endeavors to meet the growing aspirations of all stakeholders including shareholders, employees and customers. Your Company is committed to maintain the highest level of transparency, ac-countability and equity in its operations. Your Company always strives to follow the path of good Governance through a broad framework of various processes.

Vigil Mechanism & Whistle Blower Policy

Your Company have established a Vigil mechanism & Whistle Blower policy for employees and its directors, as prescribed under section 177 of the Companies Act 2013 to report genuine concerns about unethical behaviors, actual or suspected fraud or violation of the Company’s Code of Conduct. The Mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism. The employees are informed of this policy through appropriate internal communications. Your company hereby affirms that no Director/Employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Remuneration policy.

Risk management policy

The Company oversees the risk through Business Continuity Management and related Audit.

Policy on Prevention of Sexual Harassment of Women at Workplace

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder, your Company has constituted an Internal complaints committee (“ICC”). During the year under review, there were no cases received / filed pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

11. SUBSIDIARY COMPANY

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the Financial Statement of the Company’s Subsidiary viz., Bangalore Airport Hotel Limited, in Form AOC – 1 is attached to the Financial Statement.

12. CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of Section 129 (3) of the Companies Act, 2013 the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards.


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13. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of Annual Return in Form MGT 9 as on 31st March 2016 is annexed as “Annexure I”.

14. AUDIT COMMITTEE In terms of Section 177 of the Companies Act, 2013 the Audit Committee were reconstituted and

presently consists 3 Directors as its members viz., Mr.Sundaram Balasubramanian, Dr. Anumolu Meher Prasad, Independent Directors and Mr. Issac George Anicattu. The role, terms of reference, the authority and power of the Audit Committee are in conformity with the requirements of Section 177 of the Companies Act, 2013 and Rules made thereunder.

The Audit Committee meets periodically with the Internal Auditors and the Statutory Auditors to review the manner in which the Auditors are discharging their responsibilities and to discuss about auditing, internal control system and financial reporting issues. To ensure complete independence, the Statutory Auditors and the Internal Auditors have full and free access to the members of the Audit Committee to discuss any matter of substance. Four meetings of the Audit Committee were held during the financial year 2015-16.

15. AUDITORS AND THEIR REPORT Statutory Auditors The Company’s auditors M/s. BSR and Company, Chartered Accountants had expressed to vacate

office as Statutory Auditors of the company in the forthcoming Annual General Meeting. M/s. BSR & Associates LLP, Chartered Accountants, which are part of the same audit firm are eligible for appointment as “Statutory Auditors” of the Company. The Company has received confirmation from the Auditors regarding their consent and eligibility under section 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules 2014 for appointment as the Statutory Auditors of the Company.

The Audit Committee and the Board of Directors have recommended the appointment of the Statutory Auditors for the financial year 2016-17. The necessary resolutions are being placed before the Shareholders for approval.

The Shareholders will be required to appoint the Statutory Auditors for the financial year 2016-17 and fix their remuneration.

The observations of M/s. BSR and Company in the form of “Emphasis of Matter” together with the Notes to the financial statements referred to in the Auditor’s report are self-explanatory and do not call for any further explanation from the Directors.

Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and

Audit) Amendment Rules, 2014 the cost records maintained by the Company in respect of its Aeronautical services are required to be audited. Your Directors had, on the recommendation of the audit committee appointed M/s. Narasimha Murthy and Co, Cost Accountants to audit the cost accounts of the Company for the financial year 2015-16. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member’s ratification for the remuneration payable to M/s. Narasimha Murthy and Co, the Cost Auditors is included in the notice convening the 15th Annual general meeting.

Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has ap-pointed M/s. V. Sreedharan & Associates, Company Secretary in practice to undertake the Sec-retarial Audit of the Company for the Financial Year ended 31st March, 2016. The report of the Secretarial audit is annexed as “Annexure II”.


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Internal Controls Systems

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal audit function which forms part of the Finance Department, through the Internal Auditors, monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of the internal audit, the process owners undertake corrective action in their respective areas and thereby strengthen the controls.

16. DIRECTORS’ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 (3) (c) OF THE COMPANIES ACT, 2013

Pursuant to the requirements specified under Section 134(3)(c) of the Companies Act, 2013, with respect to the Directors’ Responsibilities Statement; your Directors hereby makes the following statements ;

i. that in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii. that such accounting policies as mentioned in Note 2 of the Notes to the financial statements have been selected and applied 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 as at 31st March, 2016 and of the profit of the Company for the financial year ended on that date ;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. that the Annual Financial Statements have been prepared for the financial year ended 31st March, 2016 on a “going concern” basis.

v. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

17. RELATED PARTY TRANSACTION

The transaction entered into by the company with the related party is in the ordinary course of business and at arm’s length price basis. The details of transactions are provided in Form. No. AOC – 2 is annexed as “Annexure III”.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee on 20th October, 2014 upon induction of an Independent Director. The Committee comprises of Mr. S. Balasubramanian, Independent Director, Mr. G.V. Sanjay Reddy, Managing Director, Mr. Venkatramana R. Hegde and Mr. Pramod Kumar Bhambani. The Board approved the CSR policy at the meeting held on 23rd January, 2015 based on the recommendation of CSR Committee. The CSR policy is uploaded on the company’s website.

As a philosophy, BIAL believes in making the community it works and lives in sustainable and self-reliant. We work towards partnering with our ecosystem to ensure good community relations, which is fundamental to the value system of your company. Our corporate social responsibility goes beyond our immediate stakeholders and encompasses the entire community. Hence, we selected initiatives in Education, Environment, Safety, Health and the Prime Minister’s Swachh Bharat Abhiyaan campaign for immediate intervention to create a positive impact on the community.


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The CSR activities have been identified in accordance to the company’s Corporate Social Responsibility policy. Primarily led by the members of the program cell and a body of volunteers, the structured approach to CSR includes a needs assessment study before embarking on new initiatives.

Following are the CSR key activities for the fiscal:

PROMOTING EDUCATION

Your Company has selected villages that are in the vicinity of the airport and its surroundings to help the immediate community. Providing a conducive environment for imparting education is key to ensure children are able to study, motivated to attend school and are focused in learning. In order to facilitate better education to children attending government schools in the identified villages, your company decided to embark on renovation and construction work at schools at Yerthiginahalli, Bhuvanahalli, Baichapuru, Anneshwara and Chikkasanne and Doddasanne.

EMPLOYMENT ENHANCING VOCATIONAL SKILLS AND SPECIAL EDUCATION

• Sponsorship towards development skills of differently abled children through CII–Engage Ability program

• Road Safety Awareness program during road safety week was conducted to impart knowledge on safe driving skills, highway driving skills, first aid etc… to the airport taxi driver community

• Safety Awareness Programs in collaboration with National Safety Council training on “Airside Safety” were conducted for the benefit of outsourced employees to enhance their work skills

• Know your Airport initiative for nearly 160 children from different NGOs, orphanages and around 400 students from various schools and colleges conducted where these youngsters visited your airport to learn about basic airport operations and facilities

• Joy of Giving week campaign: Blood donation camps organized; Employees donated educational books and kits to government school children as part of the campaign; during Christmas, under privileged children received gifts and books

PROMOTING HEALTH

• BIAL conducted free health and eye check-up camps for the airport taxi driver community who were also educated on health and hygiene aspects, first aid and with safe driving techniques

SWACHH BHARAT ABHIYAAN

Your company undertook construction of toilets at government schools supporting Swachh Bharat Abhiyaan, the mass movement national campaign started by the Prime Minister to create a clean India and facilitate good sanitation. The construction of toilets were completed at Doddabathi village, Kumbalur village, Mudhahadadi village, kukkuwada village & Kariganur village.

PROMOTING ENVIRONMENTAL SUSTAINABILITY

Your company being a role model for sustainable progress is a key strategic intent for your com-pany and clearly aligns with our CSR Policy, and environmental sustainability and conservation is a part of this vision.

• World Environment Day - Plantation of tree saplings across BIAL campuses by employees who made a commitment to ‘Go Green’

• CSR Team visited nearby villages (Sulebele, Kanmangala, Bettakote & Devanahalli) to edu-cate villagers on environment implications arising from dumping of garbage & food waste in open areas and its cascading impact on airport operations. Posters were distributed among the villagers for amplifying this message.


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Other initiatives:

Your company under the “Lost and Found” section: Articles such as toys, books, unused clothes, etc… which get accumulated at Lost and Found through unattended bags/ bags left behind are donated to NGOs and orphanages on a periodic way as per SOP.

Your Company has initiated timely actions in providing flood reliefs to Chennai flood victims: During Chennai’s worst flood, many people from outside Bengaluru who were evacuated from Chennai came to the city to return to their home towns/cities across India. These evacuees had lost their belongings and had little or no facilities to reach their home towns. Your Company had initiated the relief operations by providing food and shelter with assistance to connect to their nearest family members and facilitating next immediate flights allowing these people to reach their home towns safely.

19. ACKNOWLEDGEMENT

Your Directors take this opportunity to convey their sincere thanks to the Government of India, particularly, the Ministry of Civil Aviation, Ministry of Defence, Ministry of Commerce & Industry, Ministry of Finance and the Airports Authority of India and the Government of Karnataka, in particular the Infrastructure Development Department, the Finance Department, KSIIDC, Bangalore Water Supply and Sewage Board, Bangalore Electricity Supply Company, Karnataka Power Transmission Company Limited, Bangalore International Airport Area Planning Authority and other bodies associated with the Project, the Customers, Shareholders, Suppliers, Bankers, Business Partners/Associates, Financial institutions, Regulatory Agencies and other stakeholders for their support and encouragement to the Company.

Your Directors also wish to place on record their sincere appreciation to all the employees of the Company for their unstinted commitment and continued contribution to the Company. Their dedication and competence has ensured that the Company continues to be a leading player in the Airport Industry.

For and on behalf of the Board of Directors

Bengaluru 9th August, 2016 Managing Director Director (DIN:00005282) (DIN : 00318719)

_____________________________________________________________________________

Safe Harbor Statement:

This document contains forward-looking statements and information - that is, statements related to future, not past, events. These statements may be identified by words such as “expects”, “looks”, “forward to”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will”, “project” or words of similar meaning. Such statements are based on our current expectations and certain assumptions and are therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond BIAL’s control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of BIAL to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.


17

Annexure I to the Boards’ Report

Form No. MGT-9

EXTRACT OF ANNUAL RETURN

as on the financial year ended on 31st March 2016

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i. CIN : U45203KA2001PLC028418

ii. Registration Date : 05/01/2001

iii. Name of the Company : BANGALORE INTERNATIONAL AIRPORT LIMITED

iv. Category / Sub-Category : Company having share capital of the Company

v. Address of the Registered office : Administration Block, and contact details Kempegowda International

Airport, Bengaluru – 560 300

vi. Whether listed company : Yes/No

vii. Name, Address and Contact details of Registrar and Transfer Agent, if any – NA

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY - NA All the business activities contributing 10 % or more of the total turnover of the company;

Sl. No.

Name and Description of main products / services

NIC Code of the Product/ service

% to total turnover of the company

- - - -

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl. No.

Name and Address of the Company CIN/GLN

Holding/Subsidiary/Associate

% of shares held

Applicable Section

1 Bangalore Airport Hotel Limited Address: Alpha 2, Administration Block, Kempegowda International Airport, Bengaluru – 560 300

U55101KA2006PLC078358 Subsidiary 100 % Sec.2(87)


18

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise shareholding

Category-wise Share Holding No. of Shares held at the beginning of the year No. of Shares held at the end of the year

%Changeduring

the year

Demat Physi-cal Total

% ofTotal

SharesDemat Phys-

ical Total% ofTotal

Shares

A. Promoters

(1) Indian

a) Individual/HUF

- 3 3 - - 3 3 - -

b) Central Govt 4,99,98,000 - 4,99,98,000 13% 4,99,98,000 - 4,99,98,000 13% -

c) State Govt (s) 4,99,97,997 - 4,99,97,997 13% 4,99,97,997 - 4,99,97,997 13% -

d) Bodies Corp. 16,53,78,000 - 16,53,78,000 43% 16,53,78,000 - 16,53,78,000 43% -

e) Banks / FI - - - - - - - - -

f) Any Other…. - - - - - - - - -

Sub-total (A) (1):- 26,53,73,997 3 26,53,73,997 69% 26,53,73,997 3 26,53,73,997 69%

(2) Foreign

a) NRIs-Individ-uals

- - - - - - - - -

b) Other – Indi-viduals

- - - - - - - - -

c) Bodies Corp. 11,92,26,000 - 11,92,26,000 31% 11,92,26,000 - 11,92,26,000 31% -

d) Banks / FI - - - - - - - - -

e) Any Other…. - - - - - - - - -

Sub-total (A) (2):- 11,92,26,000 - 11,92,26,000 31% 11,92,26,000 - 11,92,26,000 31% -

Total sharehold-ing of Promoter

(A) = (A)(1)+(A)(2)

38,45,99,997 3 38,46,00,000 100% 38,45,99,997 3 38,46,00,000 100% -

B. Public Share-holding

1) Institutions

a) Mutual Funds - - - - - - - - -

b) Banks / FI - - - - - - - - -

c) Central Govt - - - - - - - - -

d) State Govt(s) - - - - - - - - -

e) V C F - - - - - - - - -

f) Insurance Co.

- - - - - - - - -

g) FIIs - - - - - - - - -

h) Foreign VCF - - - - - - - - -

i) Others - - - - - - - - -

Sub-total (B) (1):- - - - - - - - - -

2) Non-Institutions

a) Bodies Corp.


19

i. Indian - - - - - - - - -

ii. Overseas - - - - - - - - -

b) Individuals

i. Individual shareholdersholding nominal share capital upto Rs. 1 lakh

ii. Individual sharehold-ers holding nominal share capital in excess of Rs 1 lakh

- - - - - - - - -

c) Others (specify)

- - - - - - - - -

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) 38,45,99,997 3 38,46,00,000 100% 38,45,99,997 3 38,46,00,000 100% -

ii) Shareholding of Promoters

Sl. No.

Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the Year

No. of Shares

% oftotal

Shares of the

company

%of SharesPledged /

encumberedto total shares

No. of Shares

% oftotal Shares

of the company

%of Shares Pledged /

encumberedto total shares

% change inshareholding during

the year

1 Karnataka State Industrial Infrastructure Development corporation limited

4,99,97,997 13% 30% 4,99,97,997 13% 30% -

2Airports Authority of ndia

4,99,98,000 13% 30% 4,99,98,000 13% 30% -

3Siemens Project Ventures mbH

9,99,96,000 26% 30% 9,99,96,000 26% 30% -

4 Bangalore Airport Infrastructure & Developers Private Limited

16,53,78,000 43% 30% 16,53,78,000 43% 30% -

5 Flughafen Zurich AG 1,92,30,000 5% 30% 1,92,30,000 5% 30% -

6 Mr. N R Narayana Murthy

1 - - 1 - - -

7 Mr. Y Sreenivasappa 1 - - 1 - - -

8 Mr. N R N Simha 1 - - 1 - - -


20

iii) Change in Promoters’ Shareholding – No changes during the reporting period

Sl. No.

Shareholding at the beginning of the year Cumulative Shareholding during 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 - - - -

Date wise Increase / Decrease in PromotersShareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):

- - - -

At the End of the year - - - -

iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) – Not Applicable

Sl. No.

Shareholding at the begin-ning of the year

Cumulative Shareholding during the year

For Each of the Top 10 Shareholders No. of shares


No. of shares



Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

- - - -

At the End of the year ( or on the date of separation, if separated during the year) - - - -

v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.

Shareholding at the beginning of the year

Cumulative Shareholding during the year

For Each of the Directors and KMP No. of shares


No. of shares



Date wise Increase / Decrease in Shareholding during the year specifying the reasons forincrease / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

- - - -

At the End of the year - - - -

V. INDEBTEDNESSIndebtedness of the Company including interest outstanding/accrued but not due for payment Rupees in Cr.

Secured Loans excluding deposits

Unsecured Loans Deposits Total Indebtedness

Indebtedness at the beginning of the financial year 1,646.62 332.50 - 1,979.12

i. Principal Amount 1,641.90 332.50 - 1,974.40

ii. Interest due but not paid - - - -

iii. Interest accrued but not due 4.72 - - 4.72

Total (i+ii+iii) 1,646.62 332.50 - 1,979.12

Change in Indebtedness during the financial year 284.04 - - 284.04

• Addition 10.00 - - 10.00

• Reduction 294.04 - - 294.04

Net Change 284.04 - - 284.04

Indebtedness at the end of the financial year

1,362.58 332.50 - 1,695.08


21

i. Principal Amount 1,359.04 332.50 - 1,691.54

ii. Interest due but not paid - - - -

iii. Interest accrued but not due 3.54 - - 3.54

Total (i+ii+iii) 1,362.58 332.50 - 1,695.08

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

– Following annexed as “Annex A”

A. Remuneration to Managing Director, Whole-time Directors and/or Manager;B. Remuneration to other directors;C. Remuneration to Key Managerial Personnel other than Md/Manager/Wtd;

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Companies Act

Brief Descrip-tion

Details of Penalty / Punishment/ Compounding fees imposed

Authority [RD / NCLT/ COURT]

Appeal made, if any (give Details)

Penalty- - - - -

Punishment- - - - -

Compounding- - - - -

OTHER OFFICERS IN DEFAULT

Penalty- - - - -

Punishment- - - - -

Compounding- - - - -


22

Annexure II to the Boards’ Report

FORM NO. MR-3

SECRETARIAL AUDIT REPORT

[Pursuant to Sub Section (1) of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

For The Financial Year Ended March 31, 2016

To, The Members of, Bangalore International Airport Limited Administration Block, Kempegowda International Airport,Bengaluru - 560300.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Bangalore International Airport Limited. (hereinafter referred to as the company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the company’s books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the company has, during the financial year ended on March 31, 2016 (hereinafter referred to as the audit period) 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:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company during the audit period according to the provisions of:

I. The Companies Act, 2013 (the Act) and the rules made thereunder; II. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; (not

applicable to the company during the audit period)III. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; IV. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder

applicable to the extent of External Commercial Borrowings. (During the audit period, Foreign Exchange Management Act,1999 and rules made thereunder to

the extent of Foreign Direct Investment and Overseas Direct Investment were not applicable to the company.)

V. Other laws applicable specifically to the Company namely: a. Airport Authority of India Act, 1994 and the rules made thereunder.b. The Airport Economic Regulatory Authority of India Act, 2008 and the rules made thereun-

der.The company being an unlisted public company, the following Regulations of the Securities and Exchange Board of India (SEBI) are not applicable:

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;


23

d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;

e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

We have examined compliance by the Company with respect to:a. Secretarial Standards issued by The Institute of Company Secretaries of India on Meetings

of the Board of Directors and General Meeting.

We have not examined:a. Applicable financial laws, like direct and indirect tax laws, since the same have been

subject to review by statutory financial audit and other designated professionals. b. Listing Agreement / Listing Regulations, as the company is an Unlisted Public

Company. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above.

We further report that:The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the 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, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

As per the minutes of the meetings duly recorded and signed by the Chairman, the decisions of the Board were unanimous and no dissenting views have been redorded.

We further report that based on the compliance report received from Company Secretary and taken on record by the Board, 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 and regulations.

We further report that during the audit period, there were no events/actions having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, etc.

August 9, 2016Bengaluru

For V. SREEDHARAN & ASSOCIATESCompany Secretaries

(V. Sreedharan)Partner

FCS: 2347; CP No. 833


24

Annexure III to the Boards’ Report

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013

including certain arm’s length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm’s length basis :

-NIL-

2. Details of material contracts or arrangement or transactions at arm’s length basis: - NIL -

For and on behalf of the Board of Directors

Bengaluru 9th August, 2016 Managing Director Director (DIN:00005282) (DIN : 00318719)


25

Annexure IV to the Boards’ Report

ANNUAL REPORT ON CORPROATE SOCIAL RESPOSIBILITY (CSR) ACTIVITIES

1. A brief outline of the Company’s CSR policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes.

CSR policy is stated therein Web-link: http://www.bengaluruairport.com/bial/pdf/CSR_Poli-cy-Final.pdf

2. Composition of the CSR Committee;

i) Mr. G.V. Sanjay Reddy, Managing Director, Chairman

ii) Mr. S. Balasubramanian (Independent Director), Member

iii) Mr. Venkatramana R. Hegde, Member

iv) Mr. Pramod Kumar Bhambani, Member

3. Average net profit of the Company for the last three financial year is Rs.175.19 crore

4. Prescribed CSR Expenditure (2% of the amount of Rs. 175.19 Cr) is Rs. 3.50 crore

5. Details of CSR spent during the financial year;

a. Total amount to be spent for the financial year is Rs. 3.50 crore

b. Amount unspent is Rs. 2.34 crore

c. Manner in which the amount spent during the financial year is detailed in “Annexure A ”

6. In case the Company has failed to spend two per cent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board report;

Reason for short-spending

As per the Section 135 of the Act, the Board shall ensure that the Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy. During the current year, the Company has spent Rs 1.16 crores (Previous year: Nil). However, the gross amount required to be spent by the Company during the year was Rs 3.50 crore (Previous year: Rs 3.17 crore). During the year, the Company had initiated renovation programs to the schools of the nearby villages. However, due to time involved in selection of programs, process of identification of contractors and approvals from local authorities to execute the program, the Company was not able to spend the eligible amount prior to the year end.

7. The CSR Committee of the Company hereby confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

Sundaram Balasubramanian G V Sanjay Reddy, Independent Director Managing Director (DIN: 02849971) (DIN: 00005282) Member of the CSR Committee Chairman of the CS R Committee


26

“Annexure A”Amount spent during the financial year 2015-16

Sl no.CSR project or activity identified

Sector in which the project is covered

Projects or pro-grams

Status

Amount out-lay (budget) project or programs

wise

Amount spent on the projects

or programs Sub-heads:

Cumulative expenditure upto to the reporting

period

Amount spent :

1. Local area or other

(1) Direct expenditure on projects or programs

Direct or through implementing agency

2. Specify state and district where projects or programs was undertaken

(2) Overheads:

1

Renovation of Yerthiganahalli Govt. Higher Primary school

Promoting Education Devanahalli Rural Com-

pleted 3,000,000

2,558,711 2,558,711

Direct

2

Swachh Bharat Abhiyan – Toi-lets construc-tion (4 blocks)

Promoting Health Davangere District Com-

pleted 3,445,400

3,490,240 3,490,240

Direct

3

Road safety training pro-gramme (Contract taxi drivers - KIAB, approx. 2000 drivers)


pleted 1,000,000

689,650 689,650

Direct

4Educational Books for NGO kids


pleted 100,000 99,996 99,996

Direct

5

Airport visits, World Environ-ment Day, Blood donation camp, event set-up

Administra-tive charges Devanahalli Rural Com-

pleted 200,000

Direct 152,231 152,231

6

Construction and renovation of 5 govern-ment schools - Consultancy services

Promoting Education Devanahalli Rural

Work in prog-ress

1,262,446

3,483,221 3,483,221

Direct

8Swach Bharat Abhiyan - 9 toilet blocks

Promoting Education and sanita-tion

Davnagere DistrictWork in prog-ress

8,000,000

1,094,380 1,094,380

Direct

9Airport educa-tional tour for NGO kids


pleted 30,000 26,732 26,732

Direct

10

Sponsorship of NGO - Dif-ferently abled person skill development

Promoting education Devanahalli Rural Com-

pleted 50,000 50,000 50,000

TOTAL 17,087,846 11,645,161 11,645,161


27

AUDITORS’ REPORT(STANDALONE)


28

TO THE MEMBERS OF BANGALORE INTERNATIONAL AIRPORT LIMITED


Report on the Standalone Financial StatementsWe have audited the accompanying standalone financial statements of Bangalore International Airport Limited (“the Company”), which comprise the balance sheet as at 31 March 2016, the statement of profit and loss, the cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial StatementsThe Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified 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 financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial 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 thereunder.

We conducted our audit in accordance with the Standards on Auditing specified 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation of the financial 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2016, and its profit and its cash flows for the year ended on that date.

29


Emphasis of Matter

a) We draw attention to Note 28(c) to the standalone financial statements. The Company, in the financial year 2013-14, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Company computed and accounted for deferred tax amounting to Rs 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013 (“the Act”).

During the financial year 2014-15, the Airports Economic Regulatory Authority (‘AERA’) in its Order No. 08 / 2014-15 dated 10 June 2014 issued to the Company, has stated that it has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act. Accordingly, the circular resolution as mentioned in the above paragraph was cancelled during the Board of Directors meeting held on 4 August 2014. We have been informed by the Management that pending notification of such useful lives of fixed assets by AERA, the Company would continue to follow the useful lives of fixed assets as per the existing accounting policy and has accounted for deferred tax liability aggregating Rs 158.70 crore as at 31 March 2015 and Rs 175.49 crore as at 31 March 2016 after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the current useful lives of fixed assets. Pending the aforesaid notification from AERA any impact on the depreciation, book value of fixed assets and the consequential impact on the profit for the year, reserves and surplus as at 31 March 2016 and taxes including deferred taxes is currently not ascertainable.

Our opinion is not modified in respect of this matter.

b) We further draw attention to Note 42 to the standalone financial statements. The Institute of Chartered Accountants of India has issued the “Guidance note on Accounting for Rate Regulated activities” which is applicable with effect from 1 April 2015. The Company is governed by the Airports Economic Regulatory Authority of India (‘AERA’ or ‘the Regulator’) which determines the Tariff to be charged by the Company in providing the regulated Aeronautical services. The above mentioned Guidance note requires the Company to estimate the regulated revenue and consequently the regulatory asset or liability, as the case maybe, based on the guidance provided by the Regulator which determines the fees to be charged by the Company for the regulated aeronautical services.

The Management believes that in view of the uncertainties relating to the useful lives of fixed assets to be followed by the Company and Tariff determination approach, which are pending clarification from AERA, as more fully explained in Note 42 to the standalone financial statements, it is not in a position to reliably estimate the Regulated revenue and the consequent regulatory asset or liability, as the case may be, to be accounted as at 31 March 2016 as per the provisions of the above mentioned guidance note. Accordingly, any adjustment to regulated revenue and its consequent impact on the regulatory asset or liability, as the case may be, arising out of the clarifications to be issued by AERA is currently not ascertainable.

Our opinion is not modified in respect of this matter.Report on Other Legal and Regulatory Requirements(i) As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’) issued by the Central

Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

Independent Auditors’ Report (continued)

30

(ii) As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The balance sheet, the statement of profit and loss, and the cash flow statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) In our opinion, the matters related to the useful lives of fixed assets, deferred tax and Accounting for Rate Regulated Activities described under the Emphasis of Matter paragraphs above, do not have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors as on 31 March 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B; and

h) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements – Refer Note 29 to the standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

for B S R and CompanyChartered AccountantsFirm registration number: 128900W

S SethuramanPartnerMembership number: 203491

Place: ChennaiDate: 22 April 2016


31

ANNEXURE TO AUDITORS’ REPORT(STANDALONE)


32

The Annexure referred to in the Independent Auditors’ Report to the Members of Bangalore International Airport Limited (“the Company”) for the year ended 31 March 2016,we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In accordance with the programme, fixed assets have been verified during the year and no material discrepancies were noticed on such verification.In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its fixed assets.

(ii)

(c) According to the information and explanations given to us, the title deeds of immovable properties are held in the name of the Company.

The inventories have been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable.The discrepancies identified on physical verification of inventories between physical stocks and book records were not material.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act.

(iv) According to the information and explanations given to us, the Company has not given any loan or made any investments or given any guarantees under provisions of Section 185 and 186 of the Act.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from the public.

(vi) The Central Government of India has prescribed the maintenance of cost records under Section 148(1) of the Act, read with Rule 3 of the Companies (Cost records and audit) Rules, 2014, as amended in relation to Aeronautical services rendered by the Company.We have broadly reviewed the books of accounts maintained by the Company and are of the opinion that prima facie, the prescribed accounts and books have been maintained. However, we have not made a detailed examination of the records.

(vii) a

b

According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, value added tax, duty of customs, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of duty of excise during the year.

According to the information and explanations given to us,no undisputed amounts payable in respect of provident fund, income-tax, wealth-tax, service tax, sales-tax, duty of customs, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

According to the information and explanations given to us, there are no dues of wealth-tax, sales-tax, customs duty which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of income-tax, entry tax, service-tax and property tax have not been deposited by the Company on account of disputes:

ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORT


33

Name of the statute Nature of dues Amount

(in Rs crore)

Period to which it relates

Forum where the dispute is

pending

Income Tax Act, 1961

Tax deduction at source (including interest)

6.84 2005-06 High Court of Karnataka


Demand under Section 156 on account of disallowances

2.67* 2009-10Income Tax Appellate Tribunal (ITAT)


Demand under Section 143(1) on account of disallowances

16.00 2011-12

Commissioner of Income Tax (Appeals), Bangalore

Karnataka Special Tax on Entry of Certain Goods Act, 2004

Special Entry Tax 2.13 2006-07 High Court of Karnataka

Karnataka Panchayath Raj Act, 1993

Property tax 14.62 2010-13 Anneshwara Gram Panchayath

Karnataka Panchayath Raj Act, 1993

Property tax 1.53 2010-13 Bettakotte Gram Panchayath

Finance Act, 1994

Service Tax including interest and penalty

9.59 2005-09 Customs, Excise and Service Tax Appellate Tribunal, Bangalore

Finance Act, 1994


1.83 2009-10

Finance Act, 1994


0.82 2010-11 Customs, Excise and Service Tax Appellate Tribunal, Bangalore

Finance Act, 1994


1.18 2009-12

*Out of the above, an amount of Rs 1.25 crore has been paid under protest.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institution or debentureholders during the year.

(ix)

(x)

According to the information and explanations given to us, the Company has not raised any money by way of public issue or further public offer (including debt instruments) during the year. According to the information and explanations given to us, the term loans taken by the Company have been applied for the purposes for which they were raised.

According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.


34

(xi) According to the information and explanation given to us and on the basis of our examination of the records of the Company, managerial remuneration has been paid and provided as per provisions of Section 197 read with Schedule V of the Act.

(xii)

(xiii)

In our opinion and according to the information and explanation given to us, the Company is not a nidhi company.

According to the information and explanations given to us and on the basis of our examination of the records of the Company, transactions entered with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and the details disclosed in the financial statements are as required by the applicable accounting standards.

(xiv)

(xv)

(xvi)

According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

According to the information and explanation given to us, and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them.

In our opinion the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.



Place: ChennaiDate: 22 April 2016


35

ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Bangalore International Airport Limited (“the Company”) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design,implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls overfinancial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the“Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit too btain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’sjudgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;


36

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal controls over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.



Place: Chennai Date: 22 April 2016


37

FINANCIAL STATEMENTS(STANDALONE)


38

BANGALORE INTERNATIONAL AIRPORT LIMITEDBANGALORE INTERNATIONAL AIRPORT LIMITEDBANGALORE INTERNATIONAL AIRPORT LIMITED

(in rupees crore)

BALANCE SHEET AS AT Note 31 March 2016 31 March 2015

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital 3 384.60 384.60

Reserves and surplus 4 904.26 467.13

1,288.86 851.73

NON-CURRENT LIABILITIES

Long-term borrowings 5 1,381.18 1,676.53

Deferred tax liability 6 175.49 158.70

Other long-term liabilities 7 420.10 346.57

Long-term provisions 8 0.60 1.78

1,977.37 2,183.58

CURRENT LIABILITIES

Short-term borrowings 9 10.00 -

Trade payables 10 66.95 71.72

Other current liabilities 11 404.18 413.80

Short-term provisions 12 16.23 8.06

497.36 493.58

TOTAL 3,763.59 3,528.89

ASSETS

NON-CURRENT ASSETS

Fixed assets 13

Tangible fixed assets 2,478.17 2,648.50

Intangible fixed assets 25.53 28.39

Capital work-in-progress 259.66 140.00

2,763.36 2,816.89

NON-CURRENT INVESTMENTS 14 2.00 2.00

Long-term loans and advances 15 542.85 216.28

Other non-current assets 16 - 3.09

3,308.21 3,038.26

CURRENT ASSETS

Inventories 17 17.18 16.72

Trade receivables 18 75.46 69.06

Cash and bank balances 19 282.16 193.45

Short-term loans and advances 20 38.70 178.76

Other current assets 21 41.88 32.64

455.38 490.63

TOTAL 3,763.59 3,528.89

SIGNIFICANT ACCOUNTING POLICIES 2The notes referred to above form an integral part of the standalone financial statements.As per our report of even date attached: for B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport Limited Firm registration number: 128900W

S Sethuraman Managing Director Director Partner (DIN:00005282) (DIN : 02849971) Membership number: 203491

Place: Chennai Director Chief Financial Officer Date: 22 April 2016 (DIN:06689221)

Company Secretary Place: Bengaluru Date: 22 April 2016

39


(in rupees crore, except per share data)STATEMENT OF PROFIT AND LOSS FOR THE Note Year ended Year ended 31 March 2016 31 March 2015

REVENUE

Revenue from operations 22 1,127.73 915.51

Other income 23 21.30 17.16

TOTAL REVENUE 1,149.03 932.67

EXPENSES

Employee benefits 24 109.83 99.67

Finance costs 25 168.71 197.28

Depreciation and amortisation 13 205.38 208.97

Other expenses 26 210.70 214.24

TOTAL EXPENSES 694.62 720.16

PROFIT BEFORE TAX 454.41 212.51

Income tax expense

Current tax / Minimum alternate tax (“MAT”) 96.83 41.56

MAT credit entitlement [Refer note 28(b)] (95.09) (41.56)

Reversal of tax for earlier year [Refer note 27] (1.73) -

Deferred tax expense [Refer note 6 and 28(c)] 16.79 137.20

TOTAL TAX EXPENSES 16.80 137.20

PROFIT AFTER TAX 437.61 75.31

Earnings per equity share [nominal value of share Rs 10 (previous year: Rs 10)]

Basic and diluted 40 11.38 1.96

Weighted average number of equity shares

Basic and diluted 384,600,000 384,600,000

SIGNIFICANT ACCOUNTING POLICIES 2

The notes referred to above form an integral part of the standalone financial statements.

As per our report of even date attached:

for B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport LimitedFirm registration number: 128900W

S Sethuraman Managing Director DirectorPartner (DIN:00005282) (DIN : 02849971)Membership number: 203491

Place: Chennai Director Chief Financial Officer Date: 22 April 2016 (DIN:06689221) Company Secretary Place: Bengaluru Date: 22 April 2016

40


(in rupees crore)

CASH FLOW STATEMENT FOR THE Note Year ended Year ended 31 March 2016 31 March 2015

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 454.41 212.51

Adjustments to reconcile profit before tax to cash provided by operating activities

Depreciation and amortisation 205.38 208.97

(Profit) / loss on sale of fixed assets (net) (0.06) 0.02

Unrealised foreign exchange gain (4.34) (4.25)

Provision for doubtful debts 1.87 -

Interest from banks (16.18) (16.83)

Finance costs 168.71 197.28

Operating profit before working capital changes 809.79 597.70

Changes in assets and liabilities:

Inventories (0.46) (1.54)

Trade receivables (8.27) (28.88)

Loans and advances and other assets (98.48) (93.11)

Liabilities and provisions 86.64 68.13

Cash generated from operations 789.22 542.30

Income tax paid (net of refund) (64.90) (50.98)

Net cash generated from operating activities (A) 724.32 491.32

CASH FLOWS FROM INVESTING ACTIVITIES

Payment towards capital expenditure (207.46) (137.22)

Interest received on fixed deposits 15.83 21.43

Proceeds from sale of fixed assets 0.68 0.60

Redemption/ maturity of bank deposits (having original maturity of more than three months) (2.10) 170.05

Net cash (used in) / from investing activities (B) (193.05) 54.86

Cash flows from financing activities

Repayment of loan taken from banks (287.86) (265.23)

Finance costs paid (169.89) (199.54)

Net cash used in financing activities (C) (457.75) (464.77)

41


(in rupees crore)


Net increase in cash and cash equivalents (A+B+C) 73.52 81.41

Cash and cash equivalents at the beginning of the year 19 182.43 101.02

Cash and cash equivalents at the end of the year 19

Cash on hand 0.01 0.01

Cheques on hand 0.05 0.39

Balances with banks:

Current accounts 38.18 12.00

Deposit accounts (with original maturity of 3 months or less) 227.71 170.03

Working capital overdraft from bank 9 (10.00) -

255.95 182.43

The notes referred to above form an integral part of the standalone financial statements.


for B S R and Company for and on behalf of the Board of Directors of

Chartered Accountants Bangalore International Airport LimitedFirm registration number: 128900W

S Sethuraman Managing Director Director

Partner (DIN:00005282) (DIN : 02849971)

Membership number: 203491

Place: Chennai Director Chief Financial Officer

Date: 22 April 2016 (DIN:06689221)

Company Secretary

Place: Bengaluru

Date: 22 April 2016

42


Notes to the standalone financial statements

1 Company Overview

Bangalore International Airport Limited (“BIAL” or “the Company”) has been incorporated on 5 January 2001 for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bangalore. Accordingly, a joint venture amongst Siemens Project Ventures GmbH, Germany (hereinafter ‘Siemens’), Flughafen Zurich AG, Switzerland (hereinafter ‘Zurich Airport’), L&T Infrastructure Development Projects Limited (hereinafter ‘L&TIDPL’), Karnataka State Industrial and Infrastructure Development Corporation Limited (hereinafter ‘KSIIDC’) and Airports Authority of India (hereinafter ‘AAI’) was entered into for the execution of this project.

Bengaluru International Airport (‘BIA’) has commenced commercial operations on 23 May 2008, the Airport Opening Date (hereinafter ‘AOD’). The Airport was renamed as Kempegowda International Airport (‘KIA’) on 14 December 2013 in the presence of Honourable Minister of Civil Aviation and Honourable Chief Minister of Karnataka.

During the year 2009-10, Bangalore Airport & Infrastructure Developers Private Limited (hereinafter ‘BAIDPL’) which is a step down subsidiary of GVK Power & Infrastructure Limited (hereinafter ‘GVK Power’) had acquired 17% of the outstanding equity shares from L&TIDPL and 12% of the outstanding equity shares from Zurich Airport. Further during the year 2011-12, BAIDPL acquired 14% of the outstanding equity shares from Siemens, thus making BAIDPL the single largest shareholder in the Company with 43% stake in aggregate.

2 Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these standalone financial statements.

2.1 Basis of preparation of standalone financial statements

The standalone financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting except for certain financial instruments which are measured at fair values and comply with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (‘ICAI’), and the provisions of the Companies Act, 2013 (“the Act”). The standalone financial statements are prepared in Rupees in crores unless otherwise stated.

2.2 Use of estimates

The preparation of standalone financial statements in conformity with the Generally Accepted Accounting Principles (“GAAP”) in India requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of income and expenses of the year, assets and liabilities and disclosures relating to contingent liabilities as of the date of the standalone financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III of the Act.

2.3 Revenue recognition

Revenue from airport operations are recognised on accrual basis, net of service tax, applicable

43

Notes to the standalone financial statements (continued)BANGALORE INTERNATIONAL AIRPORT LIMITED

discounts and collection charges, when services are rendered and it is probable that an economic benefit will be received, which can be quantified reliably.

Aeronautical Revenue (net of credit notes) includes revenue from all regulated charges levied at the KIA, i.e., landing fees, parking and housing fees, passenger service fee (facilitation component) and user development fees at the rates prescribed by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing, housing and parking charges are recognised, when such services are provided. Passenger service fees - facilitation component and user development fees are recognised in respect of each embarking passenger at a specified rate. Passenger service fees - security component collected as per MoCA / AERA orders are not recognised as revenue of the Company since the same is collected in a fiduciary capacity for and on behalf of Government of India. (Also refer note 42).

Non-Aeronautical Revenue means all revenue streams other than Aeronautical Revenue. The same consists of (i) revenue from concessions, which includes retail, fuel throughput charges, cargo handling charges, flight catering charges, aerobridge charges and ground handling charges; (ii) landside traffic charges; (iii) rents and land leases; (iv) information communication technology services; (v) food and beverage concessions; (vi) utility charges; and (vii) other non-aviation related charges.

Interest is recognised using the time proportion method based on rates implicit in the transaction. Award fees and tender fees are recognised on an accrual basis in accordance with the terms of the relevant arrangement. Utility charges includes power and water charges which are recovered from users of such utilities and are adjusted against the relevant expenses.

2.4 Tangible fixed assets and depreciation

Tangible fixed assets are stated at their original cost of acquisition less accumulated depreciation. The cost includes cost of subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned.

Advances paid towards acquisition of fixed assets, outstanding at each reporting date are shown under capital advances. The cost of fixed assets not ready for its intended use on such date is disclosed as Capital work-in-progress. The cost mainly comprises of material cost and other incidental and ancillary charges necessary for the asset to be ready to use. Till the date of asset is ready to use, no depreciation is computed on the amount classified as Capital work-in-progress.

Depreciation is provided on a Straight Line Method (‘SLM’) over the useful lives of the assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged on the basis of time.

Pursuant to this policy, the rates of depreciation determined by the Management are as set out below:

Class of Asset Rate of depreciation per annum* Building 3.33%-5% Engineering structures 3.33%-5% Plant and machinery 4.75%-16.21% Office equipment 10.34%-25% Computers 16.21%-25% Furniture and fixtures 6.33%-10% Vehicles 9.5%-20%

44


Notes to the standalone financial statements (continued)

*For these class of assets, based on Management’s internal assessment, the Management believes that the useful lives as given above best represent the period over which Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Act. Further, the Airport Economic Regulatory Authority (‘AERA’) in its order dated 10 June 2014 has mentioned that that it has separately initiated the process to issue a notification on useful lives for airport specific assets based on the Part B of Schedule II of the Act. (Also refer Note 28(c)).

2.5 Intangible assets and amortisation

Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

Computer software licenses are capitalised on the basis of costs incurred to acquire and put to use the specific software. Operating software is capitalised and amortised along with the related fixed asset. Other software is amortised, on a straight line method, over a period of three to five years based on Management’s assessment of useful life.

The Company had incurred certain legal and other expenses during the construction period towards various agreements, viz. Concession Agreement, Communication, Navigation and Surveillance and Air Traffic Management (CNS/ATM) Agreement, Operations and Management Services Agreement, State Support Agreement and Land Lease Agreement which are capitalised as ‘Intangibles – Others’ and are amortised over a period of seven or thirty years.

The amortisation period and method used for intangible assets are reviewed at each period end.

2.6 Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which these are incurred.

2.7 Lease accounting

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term. The lease term is the non - cancellable period for which the lessee has agreed to take the asset on lease together with any additional periods for which the lessee has the option to continue the lease, only in case this option is reasonably expected to be exercised at the time of inception of the lease, with or without any further payment.

2.8 Foreign currency transactions

The Company is exposed to foreign currency transactions including foreign currency expenses and payables. With a view to minimize the volatility arising from fluctuations in currency rates, the Company enters into foreign exchange forward contracts and other derivative instruments. Additionally, the Company enters into interest rate derivatives to minimise its interest costs.

45

BANGALORE INTERNATIONAL AIRPORT LIMITEDNotes to the standalone financial statements (continued)

Foreign exchange transactions are recorded in Indian rupees using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.

Monetary assets and liabilities denominated in foreign currencies as at the reporting date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are accounted for using the guidance in Accounting Standard (‘AS’) 11, ‘The effects of changes in foreign exchange rates’. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and purpose of the contract, either the contracts are recorded based on the forward rate/ fair value at the reporting date, or based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium or discount at the inception is amortised as income or expense over the life of the contract.

The Company has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements.

In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the Statement of Profit and Loss upon the occurrence of the hedged transaction.

To designate a forward contract as an effective hedge, the Management objectively evaluates and evidences with appropriate evidences with appropriate supporting documents at the inception of each contract and subsequently whether the contract is effect in achieving offsetting cash flows attributable to the hedged risk. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Statement of Profit and Loss.

2.9 Inventories

Inventory consists of spares for machineries, which are charged to the Statement of Profit and Loss as and when they are consumed. The inventories are valued using the weighted average cost method.

2.10 Retirement and other Employee Benefits

Defined contribution plans

The Company has defined contribution plans (where Company pays pre-defined amounts and does not have any legal or informal obligation to pay additional sums) for post employment benefits namely Provident Fund, and the Company’s contributions thereto are charged to Statement of Profit and Loss every year. The Company’s contributions to State plan, namely, Employee Pension Scheme, 1995, is charged to Statement of Profit and Loss every year.

Defined benefit plans

The Company’s gratuity benefit scheme is a defined benefit plan administered by the Life Insurance Corporation. The Company’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return

46



for their services in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company’s obligation under the plan is performed annually by a qualified actuary using the Projected Unit Credit Method.

The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expenses in the Statement of Profit and Loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in Statement of Profit and Loss on a straight-line basis over the average period until the benefits become vested. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

Compensated absences

Compensated absences are accrued based on an actuarial valuation as at the reporting date, carried out by an independent actuary using the Projected Unit Cost Method. The Company accrues for the expected cost of short term compensated absences in the period in which the employee renders service.

Other short-term employee benefits

Expense in respect of other short-term employee benefits including performance bonus is recognised on the basis of amount paid or payable for the period during which the employee renders services.

2.11 Concession fee

The Concession fee is computed as a percentage of gross revenue pursuant to the terms and conditions of the Concession Agreement for designing, financing, construction, operation and maintenance of an International Airport at Devanahalli, Bangalore and is recognised in the Statement of Profit and Loss.

2.12 Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the Income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The current income tax charge is determined in accordance with the relevant provisions of the Income-tax Act, 1961 applicable to the Company.

Deferred tax charge or credit are recognised for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and the profit as per the financial statements. Deferred tax in respect of timing difference which originate during the tax holiday period but reverse after the tax holiday period is recognised in the year in which the timing difference originate. For this purpose, the timing differences which originate first are considered to be reversed first. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each reporting date and written down or written up to reflect the amount that is reasonably/virtually certain to be realised.

47


In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (‘MAT’) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.13 Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit/loss after tax, attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive equity shares outstanding during the year.

2.14 Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation as at the reporting date. The provisions are measured on an undiscounted basis.

Onerous Contracts

A contract is considered as onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.

Contingencies

The disclosure of contingent liability is made when, as a result of obligating events, there is a possible obligation or a present obligation that may, but probably will not, require outflow of resources. Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognised when it is probable that a liability has been incurred, and the amount can be estimated reliably. No provision or disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation where the likelihood of outflow of resources is remote.

2.15 Impairment of assets

The Company periodically assesses whether there is any indication that an asset or a group of asset comprising a cash-generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the reporting date, there is an indication that a previously assessed impairment loss no longer exists, the

48



recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised.

2.16 Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.

2.17 Investments

Long-term investments are carried at cost less provision for diminution, other than temporary diminution in the value of the investments. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is carried out separately in respect of each investment.

2.18 Cash and cash equivalents

Cash and cash equivalents comprise cash and cash on deposit with banks and financial institutions. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

49

3 Share capital (in rupees crore, except as otherwise stated) Particulars As at 31 March 2016 As at 31 March 2015

Equity shares

Authorised

700,000,000 (Previous year: 700,000,000) equity shares of Rs 10 each 700.00 700.00

Issued, subscribed and fully paid up

384,600,000 (Previous year: 384,600,000) equity shares of Rs 10 each

384.60 384.60

384.60 384.60

a Reconciliation of shares outstanding at the beginning and at the end of the reporting year:

Particulars As at 31 March 2016 As at 31 March 2015

Equity shares

At the commencement of the year 384,600,000 384,600,000

Number of shares issued during the year - -

At the end of the year 384,600,000 384,600,000

b Rights, preferences and restrictions attached to the equity shares

The Company has a single class of equity shares having par value of Rs 10 per share. Accordingly, all equity shares rank equally with regards to dividends and share in the Company’s residual assets. Each holder of equity shares is entitled to one vote per share. The Company can declare and pay dividends. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. No dividends have been declared by the Company till date.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c Particular of shareholders holding more than 5% shares of a class of shares

Name of the share holders As at 31 March 2016 As at 31 March 2015 No. of shares % held No. of shares % held

Bangalore Airport & Infrastructure Developers Private Limited 165,378,000 43 165,378,000 43

Siemens Project Ventures GmbH, Germany 99,996,000 26 99,996,000 26

Karnataka State Industrial and Infrastructure Development

Corporation Limited (KSIIDC) 49,997,997 13 49,997,997 13

Airports Authority of India 49,998,000 13 49,998,000 13

Flughafen Zurich AG, Switzerland 19,230,000 5 19,230,000 5

*Also refer Note 1

4 Reserves and surplus (in rupees crore)

Particulars As at 31 March 2016 As at 31 March 2015 Hedge reserve [Refer note 39]

At the commencement of the year 0.10 0.27

Additions during the year (0.48) (0.17)

At the end of the year (0.38) 0.10

Surplus in the Statement of profit and loss


Add: Profit for the year 437.61 75.31

At the end of the year 904.64 467.03

Total 904.26 467.13

Notes to the standalone financial statements (continued)BANGALORE INTERNATIONAL AIRPORT LIMITED

50


5 Long-term borrowings (in rupees crore)


Secured loan

From banks:

Rupee term loans * 1,004.17 1,260.34

Foreign currency term loan ** 44.51 83.69

1,048.68 1,344.03

Unsecured loan

From other parties:

State financial support (Base amount) *** 272.25 272.25

State financial support (Contingent amount) *** 60.25 60.25

332.50 332.50

1,381.18 1,676.53

* In March 2005, the Company had entered into a loan agreement with the ICICI Bank with a clause which specified the right with the rupee lender to assign, novate or transfer the loan. Based on the same, the loan had been assigned by ICICI Bank to the various banks on various dates. Under this agreement, the Company had availed Indian currency term loan of Rs 1,229.21 crore. The rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all of the Company’s immovable properties located in the State of Karnataka; on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in thirty equal quarterly installments which commenced from 31 October 2010. The interest rate on the above loan ranges from 9 percent to 13 percent p.a. payable at the end of each month. The Company has repaid 22 principal installments till 31 March 2016.

In December 2012, the Company had entered into another rupee loan agreement with ICICI Bank and Axis Bank for an amount of Rs.1,100 crore. This agreement specifies the right of these rupee lenders to assign, novate or transfer the loan. Based on this, the banks have novated the loans to various other banks on various dates. This rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in fifty two quarterly installments commencing from 31 December 2013 (1% till quarter ended 31 March 2014; 1.5 % till quarter ended 31 March 2015 and 2% thereon till quarter ended September 2026). The interest rate on the above loan is presently at 11.75% p.a., payable at the end of each month. The Company has repaid 10 principal installments till 31 March 2016.

The Company has also entered into a rupee loan agreement with ICICI Bank and Export Import Bank of India for an amount of Rs 160 crore on 29 March 2016. This term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The Company has not yet drawn the loan amount.

** The Company availed a foreign currency term loan of USD 5 crore (Rs 207.64 crore) from ICICI Bank Limited under a facility agreement. The foreign currency term loan is secured by way of a first ranking mortgage and charge with the Security Trustee in respect of all of the Company’s movable and immovable properties and assets (both, present and future); borrower’s right under each project documents; interest in all licenses, permits, approvals, assignments, concessions, easements and consents; all revenue and receivables; insurance contracts; letter of credit, guarantee or performance bonds issued in favour of the Company and hypothecated to the Security Trustee (acting for the benefit of the lenders), pari passu with the rupee term loan. The principal amounts are repayable in thirty equal quarterly installments commenced from 31 October 2010. The interest rate as per agreement is 6 months USD LIBOR rate plus 150 basis points. The interest is paid on half yearly installments on 31 January and 31 July every year respectively. The Company has repaid 22 principal installments till 31 March 2016.


51

*** The Company had entered into a State Support Agreement (hereinafter ‘SSA’) [for the development, construction, operation and maintenance of KIA] with the Government of Karnataka (GoK) on 20 January 2005 (as amended on 20 June 2006) whereby GoK, subject to other terms, would make available to the Company over the project period, Rs 272.25 crore (‘Base amount’) and Rs 77.75 crore (‘Contingent amount’), which is to be used exclusively towards financing of the ‘base project cost’ and ‘project contingency’ respectively. The amounts, being interest free, are repayable in twenty equal half yearly installments commencing from 30 April 2018.

The Management would identify/ recommend and the Board of Directors would consider and approve such expenditure as can be categorized/ financed under project contingency. The SSA stipulates the mechanism for obtaining funding from GoK for such project contingency amounts.

6 Deferred tax liability [Refer note 28(c)] (in rupees crore)


Excess of depreciation/ amortisation on fixed assets allowed under

the Income Tax Act, 1961 over depreciation/ amortisation as per books 175.49 158.70

175.49 158.70

7 Other long-term liabilities (in rupees crore)


To parties other than related parties:

For purchase of fixed assets 9.18 1.40

Security deposits from service provider, right holders, etc. 117.13 97.34

Concession fee payable (Refer note below) 217.29 171.33

To related parties:

Security deposits from service provider, right holders, etc. [Refer note 36] 76.50 76.50

420.10 346.57

The Company has entered into a Concession Agreement (hereinafter ‘CA’) with the Ministry of Civil Aviation, Government of India on 5 July 2004 (as amended on 20 November 2006, to include scope of re-design) whereby the Government of India has granted to the Company exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of KIA [excluding the right to carry out the reserved activities as per CA or to provide Communication and Navigation Surveillance/ Air Traffic Management (CNS/ ATM) services, which are required to be provided by AAI] for an initial period of 30 years (and renewable for a further period of 30 years subject to stipulated conditions) from the date of commencement of commercial operations of air traffic and has provided for the payment of a concession fee by the Company.

The concession fee for the first ten financial years shall be payable in twenty equal half-yearly installments and first such installment being due and payable on 30 June and second of such installment being due and payable on 31 December (‘Reference Date’) on the eleventh financial year after the AOD. For the rest of the term, the installment shall be payable on the Reference Date falling thereafter.

8 Long-term provisions (in rupees crore)


Provision for employee benefit

Gratuity [Refer note 34 (a)] 0.60 1.78

0.60 1.78

9 Short-term borrowings (in rupees crore)


Secured loan

Working capital overdraft from bank# 10.00 -

10.00 -


52

# In April 2015, the Company was granted a working capital overdraft facility from Canara Bank with an overall credit limit of Rs 50 crores. In March 2016, the Company availed an overdraft of Rs 10 crores from this facility. The same is secured by way of a mortgage on movable properties including plant and machinery, tools and accessories along with other movable assets, and all receivables, inventories, operating cash flow and other current assets (both, present and future). The principal amount of the overdraft facility is repayable on demand from the date of availment. The applicable interest rate is Base rate plus 0.80% p.a. payable at the end of each month.

10 Trade payables (in rupees crore)


Dues to micro and small enterprises [Refer note 41] 0.27 2.10

Others 66.68 69.62

66.95 71.72

11 Other current liabilities (in rupees crore)


Book overdraft 2.99 0.21

Current maturities of long-term borrowings

From banks:

Rupee term loans 256.18 256.19

Foreign currency term loan 44.18 41.68

Interest accrued but not due on borrowings 3.54 4.72

Security deposits from service provider, right holders, etc. 14.50 3.39

Income received in advance 1.76 0.23

Deferred revenue 0.18 0.15

Accrued salaries and benefits 18.90 13.34

Other payables

For purchase of fixed assets* 46.87 83.54

Withholding and other taxes payable 3.33 2.47

Mark-to-market loss on forward and options contracts 0.93 0.17

Other liabilities 10.82 7.71

404.18 413.80

*The Company is carrying an accrual aggregating Rs 0.30 crore (Previous year: Rs 11.64 crore) as at 31 March 2016 towards the Terminal expansion and Apron, Rs 4.03 crore towards Terminal 2 (Previous year: Nil) and Rs 6.96 crore (Previous year: Rs 8.86 crore) towards other sustaining projects based on the terms of the contract, purchase orders raised, and the best estimate of the Management as the final bills are yet to be received from the vendors as at the period end. The Company is of the view that the provision has been created based on the best estimates and will approximate the actual liability to be settled.

12 Short-term provisions (in rupees crore)


Provision for employee benefits

Compensated absences 8.32 7.30

Provision for tax (net of advance tax) 7.91 0.76

16.23 8.06


53

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54



14 Non-current investments (in rupees crore)


Long-term, non-trade, unquoted, at cost

Investment in subsidiary

Bangalore Airport Hotel Limited 2.00 2.00

[72,000,000 (Previous year: 72,000,000) equity shares of Rs 10 each, fully paid-up] 2.00 2.00


Additions during the year - -

At the end of the year 2.00 2.00

Aggregate amount of unquoted investments 2.00 2.00

15 Long-term loans and advances (Unsecured, considered good unless otherwise stated) (in rupees crore)


Capital advances 37.62 11.52

Deposits with government authorities 11.48 9.49 Other deposits 0.28 0.28

Minimum alternate tax credit entitlement [Refer note 28(b)] 188.27 93.18

Advance tax (net of provision) 33.05 56.10

Amount recoverable from Passenger Service Fee (Security Component)

Account [Refer note 27] 51.88 45.71

To related parties

Advances [Refer notes 20 and 36]* 220.27 -

542.85 216.28

* Relates to advances given to Bangalore Airport Hotel Limited against security deposits of Rs 76.50 crore. The opening balance of advances given amounting to Rs 143.81 crore along with the advances given during the current year amounting to Rs 76.44 crore has been classified as long-term based on the management’s assessment of the repayment period.

16 Other non-current assets

(in rupees crore)


Other bank balances

Non-current portion of bank deposits* (Refer note 37) - 3.09

- 3.09

*Bank deposit amounting Rs Nil (Previous year: Rs 3.09) being fixed deposit placed as security with bank against a guarantee.

17 Inventories (in rupees crore)


Stores and spares 17.18 16.72

17.18 16.72

55


18 Trade receivables (in rupees crore)


Receivables outstanding for a period exceeding six months from the date they became due for payment

Secured, considered good 2.56 1.97

Unsecured, considered good 3.89 1.62

Considered doubtful 1.87 -

8.32 3.59

Other receivables



69.01 65.47

Total receivables 77.33 69.06

Less: Provision for doubtful debts (1.87) -

75.46 69.06

19 Cash and bank balances

(in rupees crore)


Cash and cash equivalents





Deposit accounts (with original maturity of 3 months or less) 227.71 170.03 265.95 182.43

Other bank balances

Deposit accounts (due to mature within 12 month of reporting date)* 16.21 11.02

16.21 11.02

282.16 193.45

* Bank deposits amounting to Rs 2.72 crore (Previous year: Rs 2.72 crore) being fixed deposit placed as security with bank against a guarantee.

20 Short-term loans and advances (Unsecured, considered good unless otherwise stated)

(in rupees crore)


To parties other than related parties

Prepaid expenses 14.63 12.16

Mark-to-market gain on forward and options contracts 16.95 17.45

Others 0.22 0.20

Service tax credit receivable 6.54 4.78

Other deposits 0.36 0.36

To related parties

Advances [Refer notes 15 and 36] - 143.81

38.70 178.76

56



21 Other current assets (Unsecured, considered good unless otherwise stated) (in rupees crore)


Interest accrued but not due on fixed deposits 2.29 1.94

Unbilled revenue 39.59 30.70 41.88 32.64

22 Revenue from operations

(in rupees crore)

Particulars Year ended 31 March 2016 Year ended 31 March 2015

Sale of services

Aeronautical revenue 705.69 581.31

Non-aeronautical revenue (Refer note 36) 422.04 334.20

1,127.73 915.51

23 Other income

(in rupees crore)


Interest from banks 16.18 16.83

Interest on refund of income tax 4.56 -

Profit on sale of fixed assets (net) 0.06 -

Tender fees 0.02 0.13

Miscellaneous income 0.48 0.20 21.30 17.16

24 Employee benefits (in rupees crore)


Salaries, bonus and allowances 98.62 87.92

Contribution to provident and other funds [Refer notes 34(a) and 34(b)] 6.31 6.29

Staff welfare expenses 2.77 3.79

Staff recruitment and training 2.13 1.67

109.83 99.67

25 Finance costs

(in rupees crore)


Interest expense

Rupee term loan* 155.87 183.02

Foreign currency term loan* 9.22 12.96

Other borrowing costs 3.62 1.30

168.71 197.28

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 2.86 crore (Previous year: Rs 2.87 crore) [Refer note 27].

The exchange difference to the extent considered as an adjustment to borrowing costs is Rs Nil (Previous year: Rs Nil).

57


26 Other expenses

(in rupees crore)


Rent

Land lease ** 11.79 6.35

Others 0.31 0.39

Rates and taxes 13.34 27.15

Insurance 2.09 2.02

Power and water* 41.40 38.00

[Net of recovery Rs 23.56 crore (Previous year: Rs 19.39 crore)]

Repairs and maintenance to buildings 18.68 18.64

Repairs and maintenance to machinery and others 38.54 36.05

Consumption of stores and spares [Refer note 32] 7.00 6.13

Concession fee 45.96 37.31

Legal and professional 3.39 3.44

Technical consultancy 6.70 6.61

Operations and management services fee 2.65 15.05

Advertisement 3.60 3.70

Travelling and conveyance 10.18 11.05

Communication [Net of recovery Rs 0.02 crore (Previous year: Rs 0.03 crore)]* 0.29 0.23

Contributions towards Corporate Social Responsibility [Refer note 43] 1.16 -

Printing and stationery 0.32 0.43

Exchange loss (net) 0.22 0.18

Loss on sale of fixed assets (net) - 0.02


Miscellaneous 1.21 1.49

210.70 214.24

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 1.24 crore (Previous year: Rs 0.95 crore) [Refer note 27]. Balance recoveries are made from other Trade Concessionaires at the Airport.

** Land lease agreement

The Company has entered into a Land Lease Agreement (LLA) with KSIIDC on 20 January 2005 whereby, for the purposes of KIA, KSIIDC has leased to the Company approximately 3,884 acres of land situated within Devanahalli Taluk and Bengaluru North Taluk. A Land Lease Deed (LLD), which supersedes the LLA (containing the same clauses as the LLA) has been signed between the aforesaid parties and registered with the local authority on 30 April 2005. The term of the LLD is concurrent with the term of the CA.

The land, valued at Rs 175 crore (referred to as ‘site cost’), carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

Out of the additional land of approximately 133 acres that KSIIDC had to acquire and lease to the Company as per the LLD, KSIIDC has handed over land aggregating to approximately 124 acres. The Company has entered into an additional Land Lease Deed (LLD) with KSIIDC on 31 December 2011. This additional land valued at Rs. 36.78 crore carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

58



The Company has entered into arrangements for sub-lease of land to concessionaires for purposes of aeronautical and non-aeronautical activities.

27 Passenger Service Fee

Passenger Service Fee (PSF) collected from the departing passengers has two components, viz. Facilitation component (FC) and Security component (SC). As per orders issued by Ministry of Civil Aviation (‘MoCA’) from time to time, PSF (SC) collections are held by the Company in fiduciary capacity for the Government of India and are deposited in an escrow bank account maintained for meeting security related expenses. As per the Airports Economic Regulatory Authority (‘AERA’) tariff order dated 10 June 2014, effective 1 July 2014, the PSF collected from the departing passengers will only include the SC. The FC of the PSF is merged along with the user development fee as per the Tariff Order.

The following is the Memorandum Account relating to PSF (SC) for which the books are maintained separately. The balances/transactions do not form part of the Company’s books of account.

(in rupees crore)

Income and Expenditure Account for the Year ended 31 March 2016 Year ended 31 March 2015

Income

PSF (SC) (net of service tax) 123.06 98.91

Other income 0.72 123.78 0.63 99.54

Expenditure 117.09 114.34 Excess of income over expenditure transferred to PSF (SC) Fund 6.69 (14.80)

(in rupees crore) Balance Sheet As at 31 March 2016 As at 31 March 2015

Assets

Fixed assets (net of accumulated depreciation) 18.26 20.29

Current assets and advances 35.98 29.57

Trade receivables 17.39 20.04

Cash and bank balances



Deposit accounts 18.58 19.59 7.78 7.86 91.22 77.76

Liabilities

Book overdraft - 0.08

Payable to the Company* 51.88 45.71

Current liabilities and provisions 14.59 13.91

PSF (SC) fund 24.75 18.06

91.22 77.76

* The amount is payable by PSF(SC) to the Company and will be paid when sufficient funds are available in the PSF(SC) account or after meeting the security related expenditure.

The following capital and revenue expenditure have been transferred/ debited to PSF (SC) Account by the Company and included in the above balances: (in rupees crore)

Particulars Year ended Year ended 31 March 2016 31 March 2015

Interest on bank loans relating to the security assets 2.86 2.87

Other security related expenditure 1.24 0.95

59


27 Passenger Service Fee (continued)

The Company had received observations from the Comptroller and Auditor General of India (‘CAG’) during the audit for the

years 2010-2011, stating that the airport perimeter wall costing Rs 9.53 crore should not form a part of the PSF(SC) books

based on Ministry of Civil Aviation (‘MoCA’) SOP and clarification dated 5 July 2010. The Company had replied to the CAG stating

that the general clarification by MoCA in July 2010, stated that the 16 April 2010 order shall be applicable prospectively and

should not be applied retrospectively and accordingly no adjustment is required to be carried out. The CAG had also sent their

comments to the MoCA for the audit for the year 2010-2011 in the month of March 2012 with a copy of the same to the Company.

During the audit for the year 2011-2012, the CAG had sought the latest position on this issue. The Company had once again

justified the treatment of expenditure on the airport security wall as security related expenditure.

In June 2013, the Company received a communication from MoCA in relation to the audit for the year 2011-12, which did

not request for further comments on the issue related to treatment of expenditure on the security wall as security related

expenditure. The CAG has during the audit for years 2012-2013 and 2013-2014 also did not request for any further information

on the aforesaid expenditure on airport security wall. Accordingly, the Company has retained the security related capital assets

(including perimeter wall) in the books of PSF (SC).

During the earlier year, the Company has received an order from MoCA dated 18 February 2014 directing the Company to

reimburse all capital expenditure incurred out of the PSF(SC) within a period of one month together with the interest accrued.

The Company has filed a writ petition with the High Court of Karnataka seeking a stay on MoCA’s order. The Honourable High

Court has granted an interim stay on the said order. The Honourable High Court has also granted MoCA time to file their

objections in the matter.

The tax expense of the PSF(SC) books for the current year amounting to Rs 2.98 crore has not been considered in the tax

computation of the Company for the current year. The same has been adjusted with the PSF(SC) fund balance as at 31 March

2016 in the books of PSF (SC). During the previous year, the tax loss of the PSF(SC) amounting to Rs 5.14 crore has been adjusted

with the total income of the Company. During the current year, the Company has also transferred PSF(SC) tax for the financial

year 2012-13 amounting to Rs 1.73 crores as per the MoCA SOP.

28 Taxation and Depreciation

(a) The Finance Act, 2001 had introduced, with effect from assessment year 2002-03 (effective 1 April 2001), detailed

Transfer Pricing regulations for computing taxable income and expenditure from ‘international transactions’ between

‘associated enterprises’ on an ‘arm’s length’ basis. The Finance Act, 2012 extended the transfer pricing provisions to

specified domestic transactions (SDTs) along with the International transactions. These regulations, inter alia, also require

the maintenance of prescribed documents and information including furnishing a report from an ‘accountant’ within the

due date of filing the Return of Income.

For the year ended 31 March 2015, the Company had undertaken a study to comply with the regulations for which the

prescribed certificate of the Accountant has been obtained and that did not envisage any additional tax liability. For the

year ended 31 March 2016, the Company is in the process of undertaking a study to comply with the said regulations.

(b) The Company has opted to claim deduction under Section 80-IA of the Income Tax Act, 1961(“IT Act”) on the entire income

effective year ended 31 March 2013, and had also claimed Minimum alternate tax (“MAT”) credit under Section 115JAA of

the IT Act aggregating Rs 90.67 crore upto 31 March 2013.

The MAT credit asset aggregating to Rs 90.67 crore as at 31 March 2013, was based on the projected future profits of the

Company from the real estate and other businesses which may not be eligible for a deduction under Section 80-IA of the IT

Act; which is supported by the Land lease agreement, which gives the Company the right to use the land parcel for various

Non-Airport activities for a period of 30 years from the Airport opening date (i.e. 23 May 2008), which the Company is

committed to undertake. The Management believed that there will be sufficient future taxable profits to utilise the

aforementioned MAT credit entitlement within the stipulated period prescribed as per the provisions of the IT Act.

As per the provisions of the IT Act, the Company can avail and set off these MAT credits against normal tax within a

stipulated period of ten years from the year of availment. Further, as per the prescribed accounting regulations, MAT can

be recognised only if there is convincing evidence that the Company would be in a position to set off the carried forward

60



MAT in future years. As at 31 March 2014, in the absence of convincing evidence of profits emanating from the non-eligible

80-IA businesses, the Management decided to write down the MAT credit entitlement aggregating to Rs 71.06 crore which

was availed upto 31 March 2012 as the same was to be utilised within the tax holiday period or else it would have lapsed.

The Management believes that the Company would generate sufficient profits which will be subject to normal tax in the

post-tax holiday period (effective 1 April 2022) and has retained the MAT credit recognised from the financial year ended

31 March 2013 onwards aggregating to Rs 188.27 crore (including Rs 95.09 crore availed for the current year). (Also refer

Note 15).

(c) The Company, in the previous year, accounted for depreciation using useful life based on their internal assessment

which is different compared to the useful lives specified in Part C of Schedule II of the Act.The Company computed and

accounted for deferred tax amounting to Rs 21.50 crore as at 31 March 2014, after considering reversal of temporary

timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed

assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of

fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013

(“the Act”).

The Airports Economic Regulatory Authority (‘AERA’) of India’s Order No 08 / 2014-15 dated 10 June 2014 which is

specific to the Company, mentioned that they have initiated the process to issue a notification on the useful lives

for airport specific assets as per Part B of Schedule II of the Act. Accordingly, the Company continues to follow the

useful lives of fixed assets in line with the earlier financial years based on the Management’s assessment. The circular

resolution which approved the revised useful lives which were in line with the useful lives of fixed assets as per Part C of

Schedule II of the Act as mentioned above was cancelled during the Board of Directors meeting held on 4 August 2014.

Pending notification of such useful lives of fixed assets by AERA, the Company would continue to follow the useful lives of

fixed assets as per the existing accounting policy and as at 31 March 2016 has also accounted for the deferred tax based

on the current useful lives of fixed assets amounting to Rs 175.49 crore after considering reversal of temporary timing

differences during the tax holiday period upto financial year 2021-22. The Management would change the useful lives of

the fixed assets and record adjustments related to depreciation, book value of fixed assets and the consequential impact

on taxes including deferred tax computation arising out of temporary timing differences on account of depreciation post

notification of useful lives by AERA as per Part B of Schedule II of the Act as aforesaid.

The Company has furnished the required disclosure as part of the accounting policy that the useful lives of fixed assets

followed by the Company are different from the useful lives of fixed assets prescribed in Part C of Schedule II of the Act.

(Also refer note 2.4).

(d) The Company had received a demand order dated 21 November 2013 from Anneswara Gram Panchayat to pay property

tax amounting to Rs 19.50 crore for the period 2010-2014. Further, during the year the Company has received a demand

order dated 21 October 2014 from Bettakotte Gram Panchayat for Rs 2.04 crore for the period 2010-2013 and 2014-2015

as per Karnataka Panchayat Raj Act, 1993.The Company has paid the property tax for the financial year 2013-2014 for all

the Panchayats amounting to Rs 7.20 crore. Further, the Company had written to the Government of Karnataka seeking a

waiver/reduction for the period 2010-2013. The Company has not received any demand order from the other Panchayats

for the earlier years except as stated above. The Company based on the prescribed rates has accounted for the property

tax for the earlier years and 2015-16 as at 31 March 2016 based on the best estimate of the liability.

(e) The Company had received a demand order dated 10 March 2016 from Bangalore International Airport Area Planning

Authority (hereinafter referred to as “BIAAPA”) to pay tank rejuvenation cess amounting to Rs 4.94 crore for the current

year. The Company based on the prescribed rates has accounted for the liability for the current year based on the order

received from BIAAPA. Furthermore, the Company’s Management believes that this is a one time cess and no further

liability needs to be booked for the prior years.

61


29 Contingent liabilities and commitments (To the extent not provided for)

Contingent liabilities:

(in rupees crore)


Claims against the Company not acknowledged as debts - 0.36

(a) The Company had issued Bank Guarantee to Customs authorities aggregating Rs 2.72 crore (Previous year: Rs 2.72 crore) with respect to grant of project import license to extend concessional rate of duty for import of certain eligible equipments for use in KIA Terminal 1 Expansion project.

(b) The Company has filed an application to get itself impleaded as one of the aggrieved party against an appeal filed by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs 2.13 crore (Previous year: Rs 2.13 crore).

(c) The Income Tax Department had filed an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of Development Costs to overseas promoters by the Company. The Company had earlier paid the TDS amount of Rs. 5.94 crore in 2005-2006 (Previous year: Rs 5.94 crore) under protest before getting the relief from ITAT. This was refunded to the Company along with interest of Rs. 0.90 crore in 2008-2009 (Previous year: Rs 0.90 crore) as a result of favourable ITAT order. The High Court heard the case on 1 July 2014 and remanded it back to Tribunal for reconsideration. The Income Tax Tribunal resumed the case on 7 January 2015 and had posted the matter for further hearing on 16 February 2016, post which the next hearing will be held in due course.

(d) The Company has received demand orders from Commissioner of Service tax for the periods 2005-2009, 2009-2010, 2010-2011 and October 2009 to March 2012 for payment of service tax of Rs 3.19 crore as a recipient of service towards reimbursement of salary costs to Zurich Airport (Previous year: Rs 3.19 crore). The interest and penalty as per the above demand orders till 31 March 2016 amounts to Rs 3.72 crore (Previous year: Rs 3.14 crore) and Rs 3.67 crore (Previous year: Rs 3.52 crore) respectively. Further, show cause notices have been issued for period 2012-2013 for a sum of Rs 0.29 crore (net of payment made amounting to Rs 1.18 crore) (Previous year: Rs 0.29 crore (net of payment made amounting to Rs 1.18 crore)) and April 2013 to September 2014 for a sum of Rs 0.54 crore on the same account and few other matters respectively. These payments relate to salaries of expatriates who were seconded to the Company. The Company has preferred an appeal against demand orders before the Custom, Excise and Service Tax Appellate Tribunal (“CESTAT”) and has challenged the show cause notice which is not confirmed by a formal demand as at the reporting date. During the previous period, the Company has obtained stay orders from the CESTAT on the demand orders in original and presently awaiting disposal on merits. The Company has challenged the demands based on the judicial precedence on the matter and is confident of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the Company which cannot be treated as services received by the Company. In the management’s view, Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by Expatriate Remuneration Reimbursement Agreement between the Company and Zurich Airport. Furthermore, the Company’s management is of the view that the Company has accounted these payments as salaries and discharged appropriate tax deducted at source as the economic employer of the said expatriates.

(e) The Company received an Income-tax assessment order for AY 2010-11 in March 2013 from Deputy Commissioner of Income Tax, Bengaluru with a net demand of Rs.15.59 crore (Previous year: Rs 15.59 crore). During the previous year, the Company preferred Rectification and Appeal before Commissioner of Income Tax (Appeals) and successfully obtained partial relief at the appellate stage. The net demand was reduced to Rs. 2.66 crore which was fully covered by the pre-deposit and refunds due to the Company from the Department. The Company approached the Income Tax Appellate Tribunal (“ITAT”) for the balance relief and the department has also challenged the Commissioner of Income Tax (Appeals) Order. The case was admitted by the ITAT on 5 February 2015 and is posted for next hearing on 9 June 2016.

(f) For dispute with MoCA relating to capital expenditure incurred out of the PSF(SC) books and details regarding the writ petition filed by the Company on which interim stay has been granted by the High Court of Karnataka (Refer note 27). Any quantiifcation of final outcome of the matter cannot be currently determined.

The Company is not carrying provisions for all the above mentioned amounts in its books of account, as the Company is confident of successfully litigating the matters.

62



Commitments: (in rupees crore)

Particulars As at 31 As at 31 March 2016 March 2015

Estimated amount of unexecuted capital contracts (net of advances) 519.43 54.32

Other commitments * 22.59 -

* Pertains to open forward exchange contracts aggregating Rs 22.59 crore (Previous year: Rs Nil).

30 Expenditure in foreign currency (in rupees crore)


Salaries and wages 0.02 1.63

Technical consultancy - 0.78

Operations and management services fees 0.12 0.19

Repairs and maintenance 0.83 2.23

Interest – banks 2.21 2.74



Others 0.04 0.02

4.00 8.43

31 Imports (Valued on the Cost, Insurance and Freight basis) (in rupees crore)


Capital goods (including Capital work-in-progress) 16.77 15.52


32 Consumption of stores and spares (in rupees crore)

Particulars Year ended 31 March 2016 Year ended 31 March 2015 Amount % Amount %

Indigenous 5.71 82% 5.26 84%

Imported 1.29 18% 0.87 16%

7.00 100% 6.13 100%

33 Auditors’ remuneration (included in legal and professional expenses) (in rupees crore)


Statutory audit (including limited reviews) 0.30 0.30

Others (including certification and other fees) 0.17 0.13

0.47 0.43

Reimbursement of out-of-pocket expenses 0.01 0.01

63


34 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below:

a) Defined Benefit Plan

The Company provides for gratuity, a defined benefit plan (the gratuity plan) to its employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee’s last drawn salary and years of employment with the Company.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

(in rupees crore)

Particulars As at As at 31 March 2016 31 March 2015

Obligations at the beginning of the year 6.36 4.41

Current service cost 1.13 0.88

Interest cost 0.59 0.47

Actuarial loss on obligations 0.38 1.04

Benefits paid during the year (0.42) (0.44)

Obligations at the end of the year 8.04 6.36

Change in the plan assets (in rupees crore)


Plan asset at the beginning of the year 4.58 2.91

Expected return on plan assets 0.44 0.28

Actuarial (loss)/ gain 0.02 (0.05)

Contribution 2.82 1.88


Plan asset at the end of the year 7.44 4.58

Reconciliation of present value of obligation and fair value of plan assets (in rupees crore)


Fair value of plan assets at the the end of the year (7.44) (4.58)

Present value of defined benefit obligation at the end of the year 8.04 6.36

Liability recognised in the balance sheet 0.60 1.78

Classified as:

Long-term provisions 0.60 1.78

Short-term provisions - -

Total 0.60 1.78

Expense recognised during the year:

(in rupees crore)




Expected return on plan assets (0.44) (0.28)

Actuarial loss 0.36 1.09

Total 1.64 2.16

64



34 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below (continued):

Assumptions


Discount rate per annum 7.85% 7.95%

Salary escalation rate 7% 7%

Expected rate of return on plan assets 8.0% 8.0%

Attrition rate Age 21-44:2% Age 21-44:2%

Age 45-59:1% Age 45-59:1%

Ceiling limit of Gratuity 0.10 0.10

Amounts for the current year and the previous four years are as follows: (in rupees crore)

Particulars As at

31 March 2016 31 March 2015 31 March 2014 31 March 2013 31 March 2012

Defined benefit obligations 8.04 6.36 4.41 4.26 3.08

Plan assets (7.44) (4.58) (2.91) (1.87) -

Surplus/ (deficit) (0.60) (1.78) (1.50) (2.39) (3.08)

Experience adjustment on plan liabilities 0.29 0.09 (0.13) (0.37) (0.09)

Experience adjustment on plan assets 0.02 (0.05) (0.04) 0.07 -

The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion

and other relevant factors.

b) Defined Contribution Plan

The Company has contributed Rs 5.79 crore (gross of amount transferred to Capital work-in-progress) towards provident

fund during the year (Previous year: Rs 5.56 crore).

35 Segment Reporting

The Company is in the business of operations of the Airport at Bengaluru. Consequently, disclosure under AS 17

“Segment reporting” has not been made, as, in the opinion of the Management, the Company does not have separate

reportable business or geographical segments.

36 Related party

List of related parties:

Name of the party Description of relationship

Siemens Project Ventures GmbH, Germany Enterprises which exercise significant influence over the Company

Bangalore Airport & Infrastructure Developers Private Limited Enterprises which exercise significant influence over the Company

Bangalore Airport Hotel Limited Subsidiary

Mr. G V Sanjay Reddy Key Management Personnel

Orbit Tours and Travels Private Limited Enterprises in which directors have significant influence

GVK Projects & Technical Services Limited Enterprises in which directors have significant influence

Airports Authority of India Shareholders having substantial interest

GVK Power & Infrastructure Limited Enterprises in which directors have significant influence

PT GVK Services Indonesia Enterprises in which directors have significant influence

65


36 Related party (continued)

The details of amounts due to or due from related parties as at 31 March 2016 and 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature As at As at 31 March 2016 31 March 2015

GVK Projects & Technical Services Limited. Trade payables - 4.20

Orbit Tours and Travels Private Limited Trade payables 0.04 -

Siemens Project Ventures GmbH, Germany Trade payables 0.01 0.08

Bangalore Airport Hotel Limited Long-term loans and advances (refer note 15 and 20) 220.27 -

Bangalore Airport Hotel Limited Short-term loans and advances (refer note 15 and 20) - 143.81

Bangalore Airport Hotel Limited Other long-term liabilities 76.50 76.50

Airports Authority of India Trade receivables 3.07 0.30

The details of related party transactions entered into by the Company for the year ended 31 March 2016 and 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature of transaction Year ended Year ended 31 March 2016 31 March 2015

G.V. Sanjay Reddy Remuneration 7.02 3.40

Orbit Tours and Travels Private Limited Travelling and conveyance 1.73 -

GVK Projects & Technical Services Limited Travelling and conveyance and Technical consultancy - 5.95

GVK Power & Infrastructure Limited (GVKPTSL) Travelling and conveyance - -

Siemens Project Ventures GmbH, Germany Travelling and conveyance 0.37 0.62

Airports Authority of India Non-aeronautical revenue 2.77 2.33

Bangalore Airport Hotel Limited Restaurant & Conference room expense 0.10 -

Bangalore Airport Hotel Limited Technical consultancy cost reimbursed to GVKPTSL 3.29 9.69

Bangalore Airport Hotel Limited Advances given 73.17 81.40

37 Reconciliation of bank deposits Particulars As at As at 31 March 2016 31 March 2015

Bank deposits with original maturity of 3 months or less included under ‘Cash and cash equivalents’ 227.71 170.03

Bank deposits due to mature within 12 months of the reporting date included under ‘Other bank balances’ 16.21 11.02

Bank deposits/balances due to mature after 12 months of the reporting date included under ‘Other non-current assets’ - 3.09

Total 243.92 184.14

66

38 Leases

Operating lease (in rupees crore)


Rent* 0.31 0.63

*The Company has entered into leasing arrangements for office and residential premises, which are generally cancellable in nature. Such leases are generally for a period ranging from eleven to one hundred eight months with options for renewal against increased rent, and premature termination of agreement with notice periods ranging between one to six months.The same also includes rent for expatriates which is included as a part of employee benefit expense. During the current year, the lease for office premises were cancelled before the end of the lease term.

The amount of lease rentals towards cancellable operating leases for office premises is Rs Nil (Previous year: Rs 0.05 crore towards cancellable operating lease).

Sub-lease of land to concessionaires:

The Company has entered into agreements for sub-lease of approximately 3.18 acres, with three concessionaires/ airline operators to use the land for commercial operations. The agreements provide for transfer of land back to the Company along with the buildings constructed by the concessionaires/ airline operators, at the end of the sub-lease term which ranges from seven to fifteen years. The Company has recognised revenue of Rs 3.94 crore (Previous year: Rs 3.63 crore) as part of Non-aeronautical revenue (Also refer note 22).

39 Derivatives

AS 30 and unhedged foreign currency exposure

As at 31 March 2016, the Company has outstanding forward contracts amounting to USD 0.26 crore (Rs 17.19 crore) (Previous year: USD Nil), GBP 0.06 crore (Rs 5.40 crore) (Previous year: GBP Nil). These derivative instruments have been entered to hedge highly probable forecasted payables.

The Company has unhedged foreign currency exposure of Rs 0.15 crore (Previous year: Rs 2.67 crore) for payables as at reporting date.


Foreign currency Amount Amount (Rs) Foreign currency Amount Amount (Rs)

EUR 0.01 0.13 0.02 1.26

CHF 0.01 0.02 0.01 0.64

USD - - 0.01 0.77

Total 0.02 0.15 0.04 2.67

The Company has applied the principles of AS 30, as per announcement by ICAI, except to the extent such principles of AS 30 do not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006.

In accordance with the principles of AS 30, those derivative instruments (comprising foreign currency forward contract and swap) which qualify for cash flow hedge accounting have been fair valued as at reporting date and the resultant exchange gain/(loss) as at the year-end aggregating to Rs 0.38 crore (Previous year: Rs 0.10 crore) has been accounted in Hedge reserve (Also refer note 4).

Currency and interest rate swaps

The Company has also designated the original dollar-denominated foreign currency borrowing amounting to USD 3.00 crore (Rs 162.09 crore) (Previous year: USD 3.00 crore), along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument to hedge its interest rate risk on future interest payments in USD from floating rate risk on USD Loan. The exchange gain on the above has been recorded in the Statement of Profit and Loss amounting to Rs. 0.73 crore (Previous year: Rs 0.91 crore).



67

40 Earnings per share

(in rupees crore, except as otherwise stated)


Nominal value of equity shares (Rs) 10 10

Weighted average number of equity shares outstanding – Basic and Diluted 384,600,000 384,600,000

Profit after tax for the year considered for the calculation of basic and diluted earnings per share 437.61 75.31

Earnings per share – Basic and diluted (Rs) 11.38 1.96

41 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondences with its customer the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable of such enterprises as at 31 March 2016 has been made in the standalone financial statements based on information received and available with the Company. The dues to such enterprises which have provided goods and services to the Company and which qualify under the definition of Micro and Small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 is stated as under:

(in rupees crore)

Particulars 31 March 2016 31 March 2015

(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year:

Principal 0.26 2.09

Interest 0.01 0.01

(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, (the Act) along with the amount of the payment made to the supplier beyond the appointed day during each accounting year 0.60 7.77

(iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the said Act - -

(iv) The amount of interest accrued and remaining unpaid on 31 March 2016 in respect of principal amount settled during the year 0.01 0.63

(v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Act - -

The above information has been determined to the extent such parties have been identified by the Company, which has been relied upon by the auditors.

42 The Company is governed by the Airports Economic Regulatory Authority of India (‘AERA’). The tariffs for the Aeronautical services is determined by AERA on the basis of the revenue requirement for a control period in relation to Aeronautical services which will cover the expected cost of providing the regulated service, including a fair return on the investment in the regulated operations i.e. Regulatory Asset Base. As per the AERA Order No 08 / 2014-15 dated 10 June 2014 applicable to the Company, the aeronautical revenues covered as a part of the rate regulation primarily include the User development fee, Landing fees, Parking fees, Housing fees, Fuel throughput charges, etc. AERA has approved the rates to be charged for the services mentioned above for the current control period i.e. 1 April 2011 to 31 March 2016 with effect from 1 July 2014. AERA at the end of the control period will true up various variables which primarily include adjustments to Regulatory asset base, Operational cost, Aggregate required revenue from 40% shared revenue till to a Single till, number of passengers and the depreciation on the airport assets. The Institute of


68


Chartered Accountants of India has issued the “Guidance note on Accounting for Rate Regulated activities” which is applicable with effect from 1 April 2015. The Guidance note requires the Company to estimate the regulated revenue and consequently account for the Regulatory asset or a Regulatory liability based on the guidance provided by the Regulator which determines the fees to be charged by the Company for the Regulated services. Adjustment to the rates will be carried out at the end of the control period to determine the revised rates to be charged for the next control period basis the difference between the estimates used for the Tariff determination with the actuals to be considered.

The Management of the Company is of the view that the below mentioned uncertainties pertaining to the Regulatory decisions will not enable the Company to determine the regulated revenue and consequently the regulatory asset or regulatory liability to be accounted as at 31 March 2016 as a reliable estimate of the amount of the obligation cannot be determined:

• AERA has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act;

• The Company has contested the AERA’s tariff order in AERAAT Tribunal. The Company has made the submission of tariff proposal on 30% Shared Revenue till (SRT) whereas AERA has used a methodology where the tariff determination will ultimately result in a Single Till.

• There exists a precedence where MoCA has directed AERA to approve a 30% SRT in case of another Greenfield Airport from a retrospective date.

The above factors will impact the true up amount to the Regulated revenue and the consequent impact on the Regulatory asset or liability which is required to be estimated and accounted as at 31 March 2016.”

43 Corporate Social Responsibility

As per the Section 135 of the Act, the Board shall ensure that the Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy. During the current year, the Company has spent Rs 1.16 crores (Previous year : Nil). However, the gross amount required to be spent by the Company during the year was Rs 3.50 crore (Previous year : Rs 3.16 crore). During the year, the Company had initiated renovation programs to the schools of the nearby villages. However, due to time involved in selection of programs, process of identification of contractors and approvals from local authorities to execute the program, the Company was not able to spend the eligible amount prior to the year end.

(in rupees crore)

Particulars In Cash Yet to be paid in cash Total

i. Construction / Acquisition of any assets 0.85 0.31 1.16

ii. Purposes other than (i) above - - -

Total 0.85 0.31 1.16

for B S R and Company for and on behalf of the Board of Directors of

Chartered Accountants Bangalore International Airport Limited

Firm registration number: 128900W

S Sethuraman Managing Director Director Partner (DIN:00005282) (DIN : 02849971) Membership number: 203491 Place: Chennai Date: 22 April 2016 Director Chief Financial Officer (DIN:06689221)


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AUDITORS’ REPORT(CONSOLIDATED)

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Independent Auditors’ ReportTo the Members of Bangalore International Airport LimitedReport on the Consolidated Financial StatementsWe have audited the accompanying consolidated financial statements of Bangalore International Airport Limited (“the Holding Company”) and Bangalore Airport Hotel Limited (“the Subsidiary Company”) (Holding Company and its Subsidiary Company together referred to as “Group”), which comprise the consolidated balance sheet as at 31 March 2016, the consolidated statement of profit and loss, the consolidated cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as” the consolidated financial statements”).

Management’s Responsibility for the Consolidated Financial StatementsThe Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (“the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Board of Directors of the Holding Company, as aforesaid.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.

While conducting the 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 thereunder.

We conducted our audit in accordance with the Standards on Auditing specified 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Holding Company’s preparation of the consolidated financial 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 the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditor in terms of their report referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.


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Opinion

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditor on separate financial statements of the Subsidiary Company incorporated in India, the aforesaid consolidated financial statements 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:

i. in case of the consolidated balance sheet, of the consolidated state of affairs of the Group as at 31 March 2016;

ii. in case of the consolidated statement of profit and loss, of consolidated profits for the year ended on that date; and

iii. in case of the consolidated cash flow statement, of the consolidated cash flows for the year ended on that date.

Emphasis of Matters

a) We draw attention to Note 27(c) to the consolidated financial statements. The Holding Company, in the financial year 2013-14, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Holding Company computed and accounted for deferred tax amounting to Rs 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Act.

During the financial year 2014-15, the Airport Economic Regulatory Authority (‘AERA’) in its Order No 08/2014-15 dated 10 June 2014 issued to the Holding Company has stated that it has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act. Accordingly, the circular resolution as mentioned in the above paragraph was cancelled during the Board of Directors meeting held on 4 August 2014. We have been informed by the Management that pending notification of such useful lives of fixed assets by AERA, the Holding Company would continue to follow the useful lives of fixed assets as per the existing accounting policy and has accounted for deferred tax liability as at 31 March 2015 aggregating Rs 158.70 crore and Rs 175.49 crore as at 31 March 2016 in its books after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the current useful lives of fixed assets. Pending the aforesaid notification from AERA any impact on the depreciation, book value of fixed assets and the consequential impact on the profit for the year, reserves and surplus as at 31 March 2016 and taxes including deferred taxes of the Holding Company is currently not ascertainable.


b) We further draw attention to Note 39 to the consolidated financial statements. The Institute of Chartered Accountants of India has issued the “Guidance note on Accounting for Rate Regulated activities” which is applicable with effect from 1 April 2015. The Holding Company is governed by the Airports Economic Regulatory Authority of India (‘AERA’ or ‘the Regulator’) which determines the Tariff to be charged by the Holding Company in providing the regulated Aeronautical services. The above mentioned Guidance note requires the Holding Company to estimate the regulated revenue and consequently the regulatory asset or liability, as the case may be, based on the guidance provided by the Regulator which determines the fees to be charged by the Holding Company for the regulated aeronautical services.

BANGALORE INTERNATIONAL AIRPORT LIMITEDReport on the Consolidated Financial Statements

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The Management believes that in view of the uncertainties relating to the useful lives of fixed assets to be followed by the Holding Company and Tariff determination approach, which are pending clarification from AERA, as more fully explained in Note 39 to the consolidated financial statements, it is not in a position to reliably estimate the Regulated revenue and the consequent regulatory asset or liability, as the case may be, to be accounted as at 31 March 2016 as per the provisions of the above mentioned guidance note. Accordingly, any adjustment to regulated revenue and its consequent impact on the regulatory asset or liability, as the case may be, arising out of the clarifications to be issued by AERA is currently not ascertainable.


Other Matter

We did not audit the financial statements of the Subsidiary Company incorporated in India (Bangalore Airport Hotel Limited), whose financial statements reflect total assets of Rs 543.95 crore (13.57% of total consolidated assets of the Group)as at 31 March 2016, total revenues of Rs 0.01 crore(0.001% of total consolidated assets of the Group) and net cash inflows amounting to Rs 0.84 crore for the year then ended, as considered in the consolidated financial statements. These financial statements have been audited by other auditor whose report has been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of the Subsidiary Company incorporated in India, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far it relates to the aforesaid Subsidiary Company, is based solely on the report of the other auditor.

Our opinionon the consolidated financial statements, and our reporton Other Legal and RegulatoryRequirements below, is not modified in respect of this matterwith respect to our reliance on thework done and the report of the other auditor.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the other auditor on separate financial statements of a Subsidiary Company incorporated in India, as noted in ‘Other Matter’ paragraph, we report, to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

b) In our opinion, proper books of account as required by law relating to the preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the report of the other auditor;

c) Theconsolidatedbalance sheet, the consolidated statement of profit and loss, and theconsolidatedcash flow statement dealt with by this Report are in agreement with the relevant books of accounts maintained for the purpose of preparation of the consolidated financial statements;

d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) In our opinion, the matter related to the useful lives of fixed assets,deferred tax and Accounting for Rate Regulated Activities described under the Emphasis of Matter paragraph above, does not have an adverse effect on the functioning of the Group;

f) On the basis of written representations received from the directors of the Holding Company as at 31 March 2016 taken on record by the Board of Directors of the Holding Company and basis the relevant assertion contained in the audit report on separate financial statements of the Subsidiary


Report on the Consolidated Financial Statements

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Company incorporated in India, none of the Directors of the Group is disqualified as on 31 March 2016 from being appointed as a Director in terms of Section 164 (2) of the Act;

g) With respect to the adequacy of the internal financial controls over financial reporting of the Group and the operating effectiveness of such controls, refer to our separate report in Annexure A; and

h) With respect to the other matters to be included in the Auditors’ 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 and based on the consideration of the report of the other auditors’ on the separate financial statements as also the other financial information of the Subsidiary Company incorporated in India, as noted in the ‘Other Matter’ paragraph:

i. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Holding Company and the Subsidiary Company incorporated in India– Refer Note 28 to the consolidated financial statements;

ii. The Holding Company and the Subsidiary Company incorporated in India did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding Company and the Subsidiary Company incorporated in India.

for B S R and Company

Chartered Accountants


S Sethuraman

Partner


Place: Chennai

Date: 22 April 2016

BANGALORE INTERNATIONAL AIRPORT LIMITEDReport on the Consolidated Financial Statements

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ANNEXURE TO AUDITORS’ REPORT(CONSOLIDATED)


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Annexure A to the Independent Auditors’ Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended 31 March 2016 we have audited the internal financial controls over financial reporting of Bangalore International Airport Limited (“the Holding Company”) and its Subsidiary Company, which is incorporated in India, as of that date.

Management’s Responsibility for Internal Financial ControlsThe respective Board of Directors of the Holding Company and its Subsidiary Company, which is incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’).These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation ofreliable financial information, as required under the Act.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the Group’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the“Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribedunder section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditor in terms of their report referred to in other matters paragraph below, is sufficient and appropriate to providea basis for our audit opinion on the Group’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Group’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.A Group’s internal financial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Group;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Holding Company and Subsidiary Company are being made only in accordance with authorisations of respective management and directors of the company; and


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(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, ordisposition of the Group’s assets that could have a material effect on the consolidated financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management over ride of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Holding Company and its Subsidiary Company have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal controls over financial reporting criteria established by the Group considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by ICAI.

Other Matters

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over reporting insofar as it relates to one Subsidiary Company, Bangalore Airport Hotel Limited, which is a Company incorporated in India, is based on the corresponding report of the auditor of such Company incorporated in India.

for B S R and Company

Chartered Accountants


S Sethuraman

Partner


Place: Chennai

Date: 22 April 2016


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FINANCIAL STATEMENTS(CONSOLIDATED)


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BANGALORE INTERNATIONAL AIRPORT LIMITED AND ITS SUBSIDIARY

(in rupees crore)

CONSOLIDATED BALANCE SHEET AS AT Note 31 March 2016 31 March 2015

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital 3 384.60 384.60

Reserves and surplus 4 904.13 467.25

1,288.73 851.85

NON-CURRENT LIABILITIES

Long-term borrowings 5 1,684.27 1,981.53

Deferred tax liability 6 175.49 158.70

Other long-term liabilities 7 343.60 270.07

Long-term provisions 8 0.63 1.78

2,203.99 2,412.08 CURRENT LIABILITIES

Short-term borrowings 9 10.00 -

Trade payables 10 71.59 71.72

Other current liabilities 11 417.35 426.09

Short-term provisions 12 16.24 8.06

515.18 505.87

TOTAL 4,007.90 3,769.80

ASSETS

NON-CURRENT ASSETS

Fixed assets 13

Tangible fixed assets 2,478.17 2,648.50

Intangible fixed assets 25.53 28.39

Capital work-in-progress 703.11 510.63

3,206.81 3,187.52 Long-term loans and advances 14 324.18 216.40

Other non-current assets 15 - 3.09

3,530.99 3,407.01CURRENT ASSETSInventories 16 18.77 16.72

Trade receivables 17 77.92 69.06

Cash and bank balances 18 297.76 208.21

Short-term loans and advances 19 40.58 36.16

Other current assets 20 41.88 32.64

476.91 362.79TOTAL 4,007.90 3,769.80Significant accounting policies 2

The notes referred to above form an integral part of the consolidated financial statements. As per our report of even date attached: for B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport Limited Firm registration number: 128900W S Sethuraman Managing Director Director Partner (DIN:00005282) (DIN : 02849971)Membership number: 203491

Place: Chennai

Date: 22 April 2016 Director Chief Financial Officer (DIN:06689221)


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(in rupees crore, except per share data)CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE Note Year ended Year ended 31 March 2016 31 March 2015

REVENUE

Revenue from operations 21 1,127.73 915.51

Other income 22 21.31 17.35

Total revenue 1,149.04 932.86

EXPENSES

Employee benefits 23 109.83 99.67

Finance costs 24 168.74 197.28

Depreciation and amortisation 13 205.38 208.97

Other expenses 25 210.93 214.53

Total expenses 694.88 720.45

PROFIT BEFORE TAX 454.16 212.41

INCOME TAX EXPENSE

Current tax / Minimum alternate tax (“MAT”) 96.83 41.56

MAT credit entitlement [Refer note 27(b)] (95.09) (41.56)

Reversal of tax for earlier year [Refer note 26] (1.73) -

Deferred tax expense [Refer note 6 and 27(c)] 16.79 137.20

Total tax expenses 16.80 137.20

PROFIT AFTER TAX 437.36 75.21

Earnings per equity share [nominal value of share Rs 10 (previous year: Rs 10)]

Basic and diluted 36 11.37 1.96

Weighted average number of equity shares

Basic and diluted 384,600,000 384,600,000

Significant accounting policies 2

The notes referred to above form an integral part of the consolidated financial statements.


for B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport Limited Firm registration number: 128900W

S Sethuraman Managing Director DirectorPartner (DIN:00005282) (DIN : 02849971)Membership number: 203491 Place: Chennai Date: 22 April 2016 Director Chief Financial Officer (DIN:06689221)


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(in rupees crore)


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 454.16 212.41

Adjustments to reconcile profit before tax to cash provided by operating activities

Depreciation and amortisation 205.38 208.97

(Profit)/ loss on sale of fixed assets (net) (0.06) 0.02

Unrealised foreign exchange gain (4.34) (4.25)


Interest from banks (16.19) (16.83)

Finance costs 168.74 197.31

Operating profit before working capital changes 809.56 597.63

Changes in assets and liabilities:

Inventories (2.05) (1.54)

Trade receivables (10.73) (28.88)

Loans and advances and other assets (22.82) (3.12)

Liabilities and provisions 91.85 36.16

Cash generated from operations 865.81 600.25

Income tax paid (net of refund) (64.93) (51.09)

Net cash generated from operating activities (A) 800.88 549.16

Cash flows from investing activities

Payment towards capital expenditure (245.83) (194.41)

Interest received on fixed deposits 15.84 21.43

Proceeds from sale of fixed assets 0.69 0.60

Redemption/ maturity of bank deposits (having original maturity of

more than three months) (2.10) 170.05

Net cash used in investing activities (B) (231.40) (2.33)

Cash flows from financing activities

Repayment of loan taken from banks (287.86) (265.24)

Finance costs paid (207.26) (196.35)

Net cash used in financing activities (C) (495.12) (461.59)


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(in rupees crore)

CONSOLIDATED CASH FLOW STATEMENT FOR THE Note Year ended Year ended 31 March 2016 31 March 2015

Net increase in cash and cash equivalents ( A+B+C) 74.36 85.24

Cash and cash equivalents at the beginning of the year 18 186.26 101.02

Cash and cash equivalents at the end of the year 18






Working capital overdraft from bank 9 (10.00) -

260.62 186.26

The notes referred to above form an integral part of the consolidated financial statements.



S Sethuraman Managing Director DirectorPartner (DIN:00005282) (DIN : 02849971)Membership number: 203491

Place: Chennai Date: 22 April 2016 Director Chief Financial Officer (DIN:06689221)



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1 Overview

Bangalore International Airport Limited (‘BIAL’ or ‘the Holding Company’) together with its subsidiary Bangalore Airport Hotel Limited (‘BAHL’ or ‘the Subsidiary’) collectively referred as ‘the Group’ is into designing, financing, construction, operation and maintenance of an international airport and construction, operation and maintenance of a Hotel at Devanahalli, Bengaluru.

The Holding Company has been incorporated on 5th January 2001 for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bengaluru. Accordingly, a joint venture amongst Siemens Project Ventures GmbH, Germany (hereinafter ‘Siemens’), Flughafen Zurich AG, Switzerland (hereinafter ‘Zurich Airport’), L&T Infrastructure Development Projects Limited (hereinafter ‘L&TIDPL’), Karnataka State Industrial and Infrastructure Development Corporation Limited (hereinafter ‘KSIIDC’) and Airports Authority of India (hereinafter ‘AAI’) was entered into for the execution of this project.

Bengaluru International Airport (‘BIA’) has commenced commercial operations on 23rd May 2008, the Airport Opening Date (hereinafter ‘AOD’). The Airport was renamed as Kempegowda International Airport (‘KIA’) on 14 December 2013 in the presence of Honourable Minister of Civil Aviation and Honourable Chief Minister of Karnataka.

During the year 2009-10, Bangalore Airport & Infrastructure Developers Private Limited (hereinafter ‘BAIDPL’) which is a step down subsidiary of GVK Power & Infrastructure Limited (hereinafter ‘GVK Power’) had acquired 17% of the outstanding equity shares from L&TIDPL and 12% of the outstanding equity shares from Zurich Airport. Further during the year 2011-12, BAIDPL acquired 14% of the outstanding equity shares from Siemens, thus making BAIDPL the single largest shareholder in the Company with 43% stake in aggregate.

During the year 2013-14, the Holding Company entered into a “Share Purchase Agreement” dated 20th December 2013 to acquire 74% of the outstanding equity shares of L&T BAHL from L&T Urban Infrastructure Limited (“LTRL”) and 26% from EIH limited (“EIH”), for aggregate purchase consideration of Rs 2.00 crore.

The Holding Company changed the name of L&T BAHL to Bangalore Airport Hotel Limited (BAHL) which was approved by the Ministry of Corporate Affairs on 14th March 2014. Thus, BAHL is a 100% subsidiary of the Company w.e.f 20th December 2013. BAHL’s principal activity is constructing, operating and maintaining of hotel at the KIA. BAHL has entered into a hotel operating agreement with the Indian Hotels Company Limited to operate its upper upscale five star hotel under “Taj” brand with effect from 5th December 2014.

2 Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these consolidated financial statements.

2.1 Basis of preparation of consolidated financial statements

The consolidated financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting except for certain financial instruments which are measured at fair values and comply with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (‘ICAI’), and the provisions of the Companies Act, 2013 (“the Act”). The consolidated financial statements are prepared in Rupees in crores unless otherwise stated.


Notes to the consolidated financial statements

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2.2 Principles of consolidation

The consolidated financial statements include the financial statements of BIAL and its 100% subsidiary BAHL.

The financial statements of the Holding Company and its wholly owned and controlled subsidiary have been combined on a line-by-line basis by adding together the book values of all items of assets, liabilities, incomes and expenses after eliminating all material inter-company balances/transactions.

The consolidated financial statements are prepared using uniform accounting policies for similar transactions and other events in similar circumstances.

2.3 Use of estimates

The preparation of consolidated financial statements in conformity with the Generally Accepted Accounting Principles (“GAAP”) in India requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of income and expenses of the year, assets and liabilities and disclosures relating to contingent liabilities as of the date of the Consolidated financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

All assets and liabilities have been classified as current or non-current as per the Group’s normal operating cycle and other criteria set out in the Schedule III of the Act.

2.4 Revenue recognition

Revenue from airport operations are recognised on accrual basis, net of service tax, applicable discounts and collection charges, when services are rendered and it is probable that an economic benefit will be received, which can be quantified reliably.

Aeronautical Revenue (net of credit notes) includes revenue from all regulated charges levied at the KIA, i.e., landing fees, parking and housing fees, passenger service fee (facilitation component) and user development fees at the rates prescribed by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing, housing and parking charges are recognised, when such services are provided. Passenger service fees - facilitation component and user development fees are recognised in respect of each embarking passenger at a specified rate. Passenger service fees - security component collected as per MoCA / AERA orders are not recognised as revenue of the Group since the same is collected in a fiduciary capacity.

Non-Aeronautical Revenue means all revenue streams other than Aeronautical Revenue. The same consists of (i) revenue from concessions, which includes retail, fuel throughput charges, cargo handling charges, flight catering charges, aerobridge charges and ground handling charges; (ii) landside traffic charges; (iii) rents and land leases; (iv) information communication technology services; (v) food and beverage concessions; (vi) utility charges; and (vii) other non-aviation related charges.

Interest is recognised using the time proportion method based on rates implicit in the transaction. Award fees and tender fees are recognised on an accrual basis in accordance with the terms of the relevant arrangement. Utility charges includes power and water charges which are recovered from users of such utilities and are adjusted against the relevant expenses.



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2.5 Tangible fixed assets and depreciation

Tangible fixed assets are stated at their original cost of acquisition less accumulated depreciation. The cost includes cost of subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned.

Advances paid towards acquisition of fixed assets, outstanding at each reporting date are shown under capital advances. The cost of fixed assets not ready for its intended use on such date is disclosed as Capital work-in-progress. The cost mainly comprises material cost and other incidental and ancillary charges necessary for the asset to be ready to use. Till the date of asset is ready to use, no depreciation is computed on the amount classified as Capital work-in-progress.

Depreciation is provided on a Straight Line Method (‘SLM’) over the useful lives of the assets estimated by the management. Depreciation for assets purchased / sold during a period is proportionately charged.

Pursuant to this policy, the rates of depreciation determined by the Management are as set out below:

Class of Asset Rate of depreciation per annum*

Building 3.33%-5%

Engineering structures 3.33%-5%

Plant and machinery 4.75%-16.21%

Office equipment 10.34%-25%

Computers 16.21%-25%

Furniture and fixtures 6.33%-10%

Vehicles 9.5%-20%

*For these class of assets, based on Management’s internal assessment, the Management believes that the useful lives as given above best represent the period over which Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Act. Further, the Airport Economic Regulatory Authority (‘AERA’) in its order dated 10 June 2014 has mentioned that that it has separately initiated the process to issue a notification on useful lives for airport specific assets based on the Part B of Schedule II of the Act (Also refer Note 27(c)).

2.6 Intangible assets and amortisation

Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

Computer software licenses are capitalised on the basis of costs incurred to acquire and bring to use the specific software. Operating software is capitalised and amortised along with the related fixed asset. Other software is amortised, on a straight line method, over a period of three to five years based on Management’s assessment of useful life.

The Group had incurred certain legal and other expenses during the construction period towards various agreements, viz. Concession Agreement, Communication, Navigation and Surveillance and Air Traffic Management (CNS/ ATM) Agreement, Operations and Management Services Agreement, State Support Agreement and Land Lease Agreement which are capitalised as ‘Intangibles – Others’ and are amortised over a period of seven or thirty years.



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The amortisation period and method used for intangible assets are reviewed at each period end.

2.7 Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which these are incurred.

2.8 Lease accounting

Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset are classified as operating leases. Operating lease payments are recognised as an expense in the Consolidated Statement of Profit and Loss on a straight line basis over the lease term. The lease term is the non - cancellable period for which the lessee has agreed to take the asset on lease together with any additional periods for which the lessee has the option to continue the lease, only in case this option is reasonably expected to be exercised at the time of inception of the lease, with or without any further payment.

2.9 Foreign currency transactions

The Group is exposed to foreign currency transactions including foreign currency expenses and payables. With a view to minimize the volatility arising from fluctuations in currency rates, the Group enters into foreign exchange forward contracts and other derivative instruments. Additionally, the Group enters into interest rate derivatives to minimise its interest costs.

Foreign exchange transactions are recorded in Indian rupees using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Consolidated Statement of Profit and Loss for the year.

Monetary assets and liabilities denominated in foreign currencies as at the reporting date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the Consolidated Statement of Profit and Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are accounted for using the guidance in Accounting Standard (‘AS’) 11, ‘The effects of changes in foreign exchange rates’. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and purpose of the contract, either the contracts are recorded based on the forward rate/ fair value at the reporting date, or based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium or discount at the inception is amortised as income or expense over the life of the contract.

The Group has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements.



88

In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the Consolidated Statement of Profit and Loss upon the occurrence of the hedged transaction.

To designate a forward contract as an effective hedge, the Management objectively evaluates and evidences with appropriate evidences and appropriate supporting documents at the inception of each contract and subsequently whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Consolidated Statement of Profit and Loss.

2.10 Inventory

Inventory consists of spares for machineries, which are charged to the Consolidated Statement of Profit and Loss as and when they are consumed. The inventories are valued using the weighted average cost method.

2.11 Retirement and other Employee Benefits

Defined contribution plans

The Group has defined contribution plans (where Group pays pre-defined amounts and does not have any legal or informal obligation to pay additional sums) for post employment benefits namely Provident Fund, and the Group’s contributions thereto are charged to Consolidated Statement of Profit and Loss every year. The Group’s contributions to State plan, namely, Employee Pension Scheme, 1995, is charged to Consolidated Statement of Profit and Loss every year.

Defined benefit plans

The Group’s gratuity benefit scheme is a defined benefit plan administered by the Life Insurance Corporation. The Group’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Group’s obligation under the plan is performed annually by a qualified actuary using the Projected Unit Credit Method.

The Group recognises all actuarial gains and losses arising from defined benefit plans immediately in the Consolidated Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expenses in the Consolidated Statement of Profit and Loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in Consolidated Statement of Profit and Loss on a straight-line basis over the average period until the benefits become vested. The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

Compensated absences

Compensated absences are accrued based on an actuarial valuation as at the reporting date, carried out by an independent actuary using the Projected Unit Cost Method. The Group accrues for the expected cost of short term compensated absences in the period in which the employee renders service.



89

2.12 Concession fee

The Concession fee is computed as a percentage of gross revenue pursuant to the terms and conditions of the Concession Agreement for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bengaluru and is recognised in the Consolidated Statement of Profit and Loss.

2.13 Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The current income tax charge is determined in accordance with the relevant provisions of the Income-tax Act, 1961 applicable to the Group.

Deferred tax charge or credit are recognised for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and the profit as per the financial statements. Deferred tax in respect of timing difference which originate during the tax holiday period but reverse after the tax holiday period is recognised in the year in which the timing difference originate. For this purpose, the timing differences which originate first are considered to be reversed first. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each reporting date and written down or written up to reflect the amount that is reasonably/virtually certain to be realised.

In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Group is allowed to avail credit equal to the excess of Minimum Alternate Tax (‘MAT’) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.14 Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit/loss after tax, attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Group did not have any potentially dilutive equity shares outstanding during the year.

2.15 Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the reporting date. The provisions are measured on an undiscounted basis.



90

2.15 Provisions and contingent liabilities (continued)

Onerous Contracts

A contract is considered as onerous when the expected economic benefits to be derived by the Group from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

Contingencies

The disclosure of contingent liability is made when, as a result of obligating events, there is a possible obligation or a present obligation that may, but probably will not, require outflow of resources. Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognised when it is probable that a liability has been incurred, and the amount can be estimated reliably. No provision or disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation where the likelihood of outflow of resources is remote.

2.16 Impairment of assets

The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Consolidated Statement of Profit and Loss. If at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised.

2.17 Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Group are segregated.

2.18 Cash and cash equivalents

Cash and cash equivalents comprise cash and cash on deposit with banks and financial institutions. The Group considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.



91

3 Share capital (in rupees crore, except as otherwise stated)


Equity shares

Authorised

700,000,000 (Previous year: 700,000,000) equity shares of Rs 10 each 700.00 700.00

Issued, subscribed and fully paid up

384,600,000 (Previous year: 384,600,000) equity shares of Rs 10 each

384.60 384.60

384.60 384.60

a Reconciliation of shares outstanding at the beginning and at the end of the reporting year:


Equity shares

At the commencement of the year 384,600,000 384,600,000

Number of shares issued during the year - -

At the end of the year 384,600,000 384,600,000

b Rights, preferences and restrictions attached to the equity shares

The Company has a single class of equity shares having par value of Rs 10 per share. Accordingly, all equity shares rank equally with regards to dividends and share in the Company’s residual assets. Each holder of equity shares is entitled to one vote per share. The Company can declare and pay dividends. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. No dividends have been declared by the Company till date.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c Particular of shareholders holding more than 5% shares of a class of shares

Name of the shareholders As at 31 March 2016 As at 31 March 2015 No. of shares % held No. of shares % held

Bangalore Airport & Infrastructure Developers Private Limited 165,378,000 43 165,378,000 43

Siemens Project Ventures GmbH, Germany 99,996,000 26 99,996,000 26

Karnataka State Industrial and Infrastructure Development Corporation Limited (KSIIDC) 49,997,997 13 49,997,997 13

Airports Authority of India 49,998,000 13 49,998,000 13

Flughafen Zurich AG, Switzerland 19,230,000 5 19,230,000 5

4 Reserves and surplus (in rupees crore)


Hedge reserve [Refer note 35] At the commencement of the year 0.10 0.27 Additions during the year (0.48) (0.17) At the end of the year (0.38) 0.10 Surplus in the Consolidated Statement of Profit and Loss At the commencement of the year 467.15 391.94 Add: Profit for the year 437.36 75.21 At the end of the year 904.51 467.15

Total 904.13 467.25



92

5 Long-term borrowings (in rupees crore)


Secured loan

From banks:

Rupee term loans * 1,307.26 1,565.34

Foreign currency term loan ** 44.51 83.69

1,351.77 1,649.03

Unsecured loan

From other parties:

State financial support (Base amount) *** 272.25 272.25

State financial support (Contingent amount) *** 60.25 60.25

332.50 332.50

1,684.27 1,981.53

* In March 2005, the Company had entered into a loan agreement with the ICICI Bank with a clause which specified the right with the rupee lender to assign, novate or transfer the loan. Based on the same, the loan had been assigned by ICICI Bank to the various banks on various dates. Under this agreement, the Company had availed Indian currency term loan of Rs 1,229.21 crore. The rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all of the Company’s immovable properties located in the State of Karnataka; on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in thirty equal quarterly installments which commenced from 31 October 2010. The interest rate on the above loan ranges from 9 percent to 13 percent p.a. payable at the end of each month. The Company has repaid 22 principal installments till 31 March 2016.

Includes term loan taken by BAHL from YES Bank of Rs 305 crore which is secured by an exclusive charge by way of hypothecation of all movable and immovable assets of the Company both present and future including all the assets of the upcoming hotel project, mortgage of leasehold rights on the hotel project land and building. The loan is further secured by pledge of 30% of BIAL’s holding in BAHL and negative lien for the remaining 70% shares. YES Bank Base rate (“”Base rate””) plus spread of 1.69% p.a. interest rate will be reset on mutually agreeable terms to maintain total returns rate equivalent to then prevailing Base Rate plus spread @ 2.75% p.a. The principal amount of the loan is repayable in forty four equal quarterly installments from 13 December 2014.

In December 2012, the Company had entered into another rupee loan agreement with ICICI Bank and Axis Bank for an amount of Rs.1,100 crore. This agreement specifies the right of these rupee lenders to assign, novate or transfer the loan. Based on this, the banks have novated the loans to various other banks on various dates. This rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in fifty two quarterly installments commencing from 31 December 2013 (1% till quarter ended 31 March 2014; 1.5% till quarter ended 31 March 2015 and 2% thereon till quarter ended September 2026). The interest rate on the above loan is presently at 11.75% p.a., payable at the end of each month. The Company has repaid 10 principal installments till 31 March 2016.

The Company has also entered into a rupee loan agreement with ICICI Bank and Export Import Bank of India for an amount of Rs 160 crore on 29 March 2016. This term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The Company has not yet drawn the loan amount.

** The Company availed a foreign currency term loan of USD 5 crore (Rs 207.64 crore) from ICICI Bank Limited under a facility agreement. The foreign currency term loan is secured by way of a first ranking mortgage and charge with the Security Trustee in respect of all of the Company’s movable and immovable properties and assets (both, present and future); borrower’s right under each project documents; interest in all licenses, permits, approvals, assignments, concessions, easements and consents; all revenue and receivables; insurance contracts; letter of credit, guarantee or performance bonds issued in favour of the Company and hypothecated to the Security Trustee (acting for the benefit of the lenders), pari passu with the rupee term loan. The principal amounts are repayable in thirty equal quarterly installments commenced from 31 October 2010. The interest rate as per agreement is 6 months USD LIBOR rate plus 150 basis points. The interest is paid on half yearly installments on 31 January and 31 July every year respectively. The Company has repaid 22 principal installments till 31 March 2016.



93

5 Long-term borrowings (continued)

*** The Company had entered into a State Support Agreement (hereinafter ‘SSA’) [for the development, construction, operation and maintenance of KIA] with the Government of Karnataka (GoK) on 20 January 2005 (as amended on 20 June 2006) whereby GoK, subject to other terms, would make available to the Company over the project period, Rs 272.25 crore (‘Base amount’) and Rs 77.75 crore (‘Contingent amount’), which is to be used exclusively towards financing of the ‘base project cost’ and ‘project contingency’ respectively. The amounts, being interest free, are repayable in twenty equal half yearly installments commencing from 30 April 2018.

The Management would identify/ recommend and the Board of Directors would consider and approve such expenditure as can be categorized/ financed under project contingency. The SSA stipulates the mechanism for obtaining funding from GoK for such project contingency amounts.

6 Deferred tax liability [Refer note 27(c)]

(in rupees crore)


Excess of depreciation/ amortisation on fixed assets allowed under

the Income Tax Act, 1961 over depreciation/amortisation as per books 175.49 158.70

175.49 158.70

7 Other long-term liabilities

(in rupees crore)



For purchase of fixed assets 9.18 1.40

Security deposits from service providers, right holders, etc. 117.13 97.34

Concession fee payable (Refer note below) 217.29 171.33

343.60 270.07

The Company has entered into a Concession Agreement (hereinafter ‘CA’) with the Ministry of Civil Aviation, Government of India on 5 July 2004 (as amended on 20 November 2006, to include scope of re-design) whereby the Government of India has granted to the Company exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of KIA [excluding the right to carry out the reserved activities as per CA or to provide Communication and Navigation Surveillance/ Air Traffic Management (CNS/ ATM) services, which are required to be provided by AAI] for an initial period of 30 years (and renewable for a further period of 30 years subject to stipulated conditions) from the date of commencement of commercial operations of air traffic and has provided for the payment of a concession fee by the Company.

The concession fee for the first ten financial years shall be payable in twenty equal half-yearly installments and first such installment being due and payable on 30 June and second of such installment being due and payable on 31 December (‘Reference Date’) on the eleventh financial year after the AOD. For the rest of the term, the installment shall be payable on the Reference Date falling thereafter.

8 Long-term provisions (in rupees crore)



Gratuity [Refer note 30(a)] 0.63 1.78

0.63 1.78

9 Short-term borrowings

(in rupees crore)


Secured loan

Working capital overdraft from bank# 10.00 -

10.00 -



94

In April 2015, the Company was granted a working capital overdraft facility from Canara Bank with an overall credit limit of Rs 50 crores. In March 2016, the Company availed an overdraft of Rs 10 crores from this facility. The same is secured by way of a mortgage on movable properties including plant and machinery, tools and accessories along with other movable assets, and all receivables, inventories, operating cash flow and other current assets (both, present and future). The principal amount of the overdraft facility is repayable on demand from the date of availment. The applicable interest rate is Base rate plus 0.80% p.a. payable at the end of each month.

10 Trade payables (in rupees crore)


Dues to micro and small enterprises [Refer note 37] 0.27 2.10

Others 71.32 69.62

71.59 7.72

11 Other current liabilities

(in rupees crore)


Book overdraft 2.99 0.21

Current maturities of long-term borrowings

From banks:

Rupee term loans 258.09 256.19

Foreign currency term loan 44.18 41.68

Interest accrued but not due on borrowings 6.63 7.94

Security deposits from service providers, right holders, etc. 14.50 3.39

Income received in advance 1.94 0.23

Deferred revenue 0.18 0.15

Accrued salaries and benefits 18.98 13.34

Other payables

For purchase of fixed assets* 54.42 92.52

Withholding and other taxes payable 3.69 2.47

Mark-to-market loss on forward and options contracts 0.93 0.17

Other liabilities 10.82 7.80

417.35 426.09

*The Group is carrying an accrual aggregating Rs 0.30 crore (Previous year: Rs 11.64 crore) as at 31 March 2016 towards the Terminal expansion and Apron, Rs 4.03 crore towards Terminal 2 (Previous year: Nil) and Rs 6.96 crore (Previous year: Rs 8.86 crore) towards other sustaining projects based on the terms of the contract, purchase orders raised, and the best estimate of the Management as the final bills are yet to be received from the vendors as at the period end. The Company is of the view that the provision has been created based on the best estimates and will approximate the actual liability to be settled.

12 Short-term provisions (in rupees crore)



Compensated absences 8.33 7.30

Provision for tax (net of advance tax) 7.91 0.76

16.24 8.06



95

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14 Long-term loans and advances (Unsecured, considered good unless otherwise stated)

(in rupees crore)


Capital advances 38.94 11.52

Deposits with government authorities 11.61 9.49


Minimum alternate tax credit entitlement [Refer note 27(b)] 188.27 93.18

Advance tax (net of provision) 33.20 56.22

Amount recoverable from Passenger Service Fee (Security Component)

Account [Refer note 26] 51.88 45.71

324.18 216.40

15 Other non-current assets (in rupees crore)


Other bank balances

Non-current portion of bank deposits* (Refer note 33) - 3.09

- 3.09

*Bank deposit amounting Rs Nil (Previous year: Rs 3.09) being fixed deposit placed as security with bank against a guarantee.

16 Inventories (in rupees crore)



Food, beverages and other supplies 1.59 -

18.77 16.72

17 Trade receivables

(in rupees crore)


Receivables outstanding for a period exceeding six months from the date they became due for payment



Considered doubtful 1.87 -

10.78 3.59

Other receivables



69.01 65.47

Total receivables 79.79 69.06

Less: Provision for doubtful debts (1.87) -

77.92 69.06



97

18 Cash and bank balances (in rupees crore)


Cash and cash equivalents






270.62 186.26

Other bank balances

Deposit accounts (due to mature within 12 months of reporting date)* 27.14 21.95

27.14 21.95

297.76 208.21

* Bank deposits amounting to Rs 13.65 crore (Previous year: Rs 13.65 crore) being fixed deposit placed as security with bank against a guarantee.

19 Short-term loans and advances

(Unsecured, considered good unless otherwise stated)



Prepaid expenses 14.75 12.16

Mark-to-market gain on forward and options contracts 16.95 17.45

Others 0.40 0.27

Service tax credit receivable 7.88 5.80

Balance with government authorities - 0.12


40.58 36.16

20 Other current assets

(Unsecured, considered good unless otherwise stated)

(in rupees crore)


Interest accrued but not due on fixed deposits 2.29 1.94

Unbilled revenue 39.59 30.70

41.88 32.64

21 Revenue from operations (in rupees crore)


Sale of services

Aeronautical revenue 705.69 581.31

Non-aeronautical revenue (Refer note 32) 422.04 334.20

1,127.73 915.51



98

22 Other income (in rupees crore)


Interest from banks 16.19 16.83

Interest on refund of income tax 4.56 -

Profit on sale of fixed assets (net) 0.06 -

Tender fees 0.02 0.30

Miscellaneous income 0.48 0.22

21.31 17.35

23 Employee benefits (in rupees crore)


Salaries, bonus and allowances 98.62 87.92

Contribution to provident and other funds [Refer notes 30(a) and 30(b)] 6.31 6.29

Staff welfare expenses 2.77 3.79


109.83 99.67

24 Finance costs (in rupees crore)


Interest expense

Rupee term loan* 155.87 183.02

Foreign currency term loan* 9.22 12.96

Other borrowing costs 3.65 1.30

168.74 197.28

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 2.86 crore (Previous year: Rs 2.87 crore) [Refer note 26].

The exchange difference to the extent considered as an adjustment to borrowing costs is Rs Nil (Previous year: Rs Nil).

25 Other expenses (in rupees crore)


Rent

Land lease ** 11.79 6.35

Others 0.31 0.39

Rates and taxes 13.36 27.17

Insurance 2.09 2.02

Power and water* 41.40 38.00

[Net of recovery Rs 23.56 crore (Previous year: Rs 19.39 crore)]

Repairs and maintenance to buildings 18.68 26.04



99

Repairs and maintenance to machinery and others 38.54 28.65

Consumption of stores and spares 7.00 6.13

Concession fee 45.96 37.31

Legal and professional 3.53 3.62

Technical consultancy 6.70 6.61

Operations and management services fee 2.65 15.05

Advertisement 3.61 3.72


Communication [Net of recovery Rs 0.02 crore (Previous year: Rs 0.01 crore)]* 0.29 0.23

Contributions towards Corporate Social Responsibility [Refer note 40] 1.16 -

Printing and stationery 0.32 0.43

Exchange loss (net) 0.22 0.18

Loss on sale of fixed assets (net) - 0.02


Miscellaneous 1.27 1.56

210.93 214.53

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 1.24 crore (Previous year: Rs 0.95 crore) [Refer note 26]. Balance recoveries are made from other Trade Concessionaires at the Airport.

** Land lease agreement

The Company has entered into a Land Lease Agreement (LLA) with KSIIDC on 20 January 2005 whereby, for the purposes of KIA, KSIIDC has leased to the Company approximately 3,884 acres of land situated within Devanahalli Taluk and Bengaluru North Taluk. A Land Lease Deed (LLD), which supersedes the LLA (containing the same clauses as the LLA) has been signed between the aforesaid parties and registered with the local authority on 30 April 2005. The term of the LLD is concurrent with the term of the CA.

The land, valued at Rs 175 crore (referred to as ‘site cost’), carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

Out of the additional land of approximately 133 acres that KSIIDC had to acquire and lease to the Company as per the LLD, KSIIDC has handed over land aggregating to approximately 124 acres. The Company has entered into an additional Land Lease Deed (LLD) with KSIIDC on 31 December 2011. This additional land valued at Rs. 36.78 crore carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

The Company has entered into arrangements for sub-lease of land to concessionaires for purposes of aeronautical and non-aeronautical activities.



100

26 Passenger Service Fee

Passenger Service Fee (PSF) collected from the departing passengers has two components, viz. Facilitation component (FC) and Security component (SC). As per orders issued by Ministry of Civil Aviation (‘MoCA’) from time to time, PSF (SC) collections are held by the Holding Company in fiduciary capacity for the Government of India and are deposited in an escrow bank account maintained for meeting security related expenses. As per the Airports Economic Regulatory Authority (‘AERA’) tariff order dated 10 June 2014, effective 1 July 2014, the PSF collected from the departing passengers will only include the SC. The FC of the PSF is merged along with the user development fee as per the Tariff Order.

The following is the Memorandum Account relating to PSF (SC) for which the books are maintained separately. The balances/transactions do not form part of the Group’s books of account.

(in rupees crore)

Income and Expenditure Account for the Year ended 31 March 2016 Year ended 31 March 2015

Income

PSF (SC) (net of service tax) 123.06 98.91

Other income 0.72 123.78 0.63 99.54

Expenditure 117.09 114.34

Excess of income over expenditure transferred to PSF (SC) Fund 6.69 (14.80)

(in rupees crore)

Balance Sheet As at 31 March 2016 As at 31 March 2015

Assets

Fixed assets (net of accumulated depreciation) 18.26 20.29

Current assets and advances 35.98 29.57

Trade receivables 17.39 20.04

Cash and bank balances



Deposit accounts 18.58 19.59 7.78 7.86

91.22 77.76

Liabilities

Book overdraft - 0.08

Payable to the Holding Company* 51.88 45.71

Current liabilities and provisions 14.59 13.91

PSF (SC) fund 24.75 18.06

91.22 77.76

* The amount is payable by PSF(SC) to the Holding Company and will be paid when sufficient funds are available in the PSF(SC) account or after meeting the security related expenditure.

The following capital and revenue expenditure have been transferred/ debited to PSF (SC) Account by the Holding Company and included in the above balances:

(in rupees crore)


Interest on bank loans relating to the security assets 2.86 2.87Other security related expenditure 1.24 0.95



101

26 Passenger Service Fee (continued) The Holding Company had received observations from the Comptroller and Auditor General of India (‘CAG’) during the

audit for the years 2010-2011, stating that the airport perimeter wall costing Rs 9.53 crore should not form a part of the PSF(SC) books based on Ministry of Civil Aviation (‘MoCA’) SOP and clarification dated 5 July 2010. The Holding Company had replied to the CAG stating that the general clarification by MoCA in July 2010, stated that the 16 April 2010 order shall be applicable prospectively and should not be applied retrospectively and accordingly no adjustment is required to be carried out. The CAG had also sent their comments to the MoCA for the audit for the year 2010-2011 in the month of March 2012 with a copy of the same to the Holding Company. During the audit for the year 2011-2012, the CAG had sought the latest position on this issue. The Holding Company had once again justified the treatment of expenditure on the airport security wall as security related expenditure.

In June 2013, the Holding Company received a communication from MoCA in relation to the audit for the year 2011-12, which did not request for further comments on the issue related to treatment of expenditure on the security wall as security related expenditure. The CAG has during the audit for years 2012-2013 and 2013-2014 also did not request for any further information on the aforesaid expenditure on airport security wall. Accordingly, the Holding Company has retained the security related capital assets (including perimeter wall) in the books of PSF (SC).

During the earlier year, the Holding Company has received an order from MoCA dated 18 February 2014 directing the Holding Company to reimburse all capital expenditure incurred out of the PSF(SC) within a period of one month together with the interest accrued. The Holding Company has filed a writ petition with the High Court of Karnataka seeking a stay on MoCA’s order. The Honourable High Court has granted an interim stay on the said order. The Honourable High Court has also granted MoCA time to file their objections in the matter.

The tax expense of the PSF(SC) books for the current year amounting to Rs 2.98 crore has not been considered in the tax computation of the Holding Company for the current year. The same has been adjusted with the PSF(SC) fund balance as at 31 March 2016 in the books of PSF (SC). During the previous year, the tax loss of the PSF(SC) amounting to Rs 5.14 crore has been adjusted with the total income of the Holding Company. During the current year, the Holding Company has also transferred PSF(SC) tax for the financial year 2012-13 amounting to Rs 1.73 crores as per the MoCA SOP.

27 Taxation and Depreciation(a) The Finance Act, 2001 had introduced, with effect from assessment year 2002-03 (effective 1 April 2001), detailed

Transfer Pricing regulations for computing taxable income and expenditure from ‘international transactions’ between ‘associated enterprises’ on an ‘arm’s length’ basis. The Finance Act, 2012 extended the transfer pricing provisions to specified domestic transactions (SDTs) along with the International transactions. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an ‘accountant’ within the due date of filing the Return of Income.

For the year ended 31 March 2015, the Holding Company had undertaken a study to comply with the regulations for which the prescribed certificate of the Accountant has been obtained and that did not envisage any additional tax liability. For the year ended 31 March 2016, the Holding Company is in the process of undertaking a study to comply with the said regulations.

(b) The Holding Company has opted to claim deduction under Section 80-IA of the Income Tax Act, 1961(“IT Act”) on the entire income effective year ended 31 March 2013, and had also claimed Minimum alternate tax (“MAT”) credit under Section 115JAA of the IT Act aggregating Rs 90.67 crore upto 31 March 2013.

The MAT credit asset aggregating to Rs 90.67 crore as at 31 March 2013, was based on the projected future profits of the Holding Company from the real estate and other businesses which may not be eligible for a deduction under Section 80-IA of the IT Act; which is supported by the Land lease agreement, which gives the Holding Company the right to use the land parcel for various Non-Airport activities for a period of 30 years from the Airport opening date (i.e. 23 May 2008), which the Holding Company is committed to undertake. The Management believed that there will be sufficient future taxable profits to utilise the aforementioned MAT credit entitlement within the stipulated period prescribed as per the provisions of the IT Act.

As per the provisions of the IT Act, the Holding Company can avail and set off these MAT credits against normal tax within a stipulated period of ten years from the year of availment. Further, as per the prescribed accounting regulations, MAT can be recognised only if there is convincing evidence that the Holding Company would be in a position to set off the carried forward MAT in future years. As at 31 March 2014, in the absence of convincing evidence of profits emanating from the non-eligible 80-IA businesses, the Management decided to write down the MAT credit entitlement aggregating to Rs 71.06 crore which was availed upto 31 March 2012 as the same was to be utilised within the tax holiday period or else it would have lapsed.

The Management believes that the Holding Company would generate sufficient profits which will be subject to normal tax in the post-tax holiday period (effective 1 April 2022) and has retained the MAT credit recognised from the financial year ended 31 March 2013 onwards aggregating to Rs 188.27 crore (including Rs 95.09 crore availed for the current year). (Also refer Note 14).



102

27 Taxation and Depreciation (continued)

c) The Holding Company, in the previous year, accounted for depreciation using useful life based on their internal assessment which is different with useful lives specified in Part C of Schedule II of the Act. The Holding Company computed and accounted for deferred tax amounting to Rs 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013 (“the Act”).

The Airports Economic Regulatory Authority (‘AERA’) of India’s Order No 08 / 2014-15 dated 10 June 2014 which is specific to the Holding Company, mentioned that they have initiated the process to issue a notification on the useful lives for airport specific assets as per Part B of Schedule II of the Act. Accordingly, the Holding Company continues to follow the useful lives of fixed assets in line with the earlier financial years based on Management’s assessment. The circular resolution which approved the revised useful lives which were in line with the useful lives of fixed assets as per Part C of Schedule II of the Act as mentioned above was cancelled during the Board of Directors meeting held on 4 August 2014.

Pending notification of such useful lives of fixed assets by AERA, the Holding Company would continue to follow the useful lives of fixed assets as per the exiting accounting policy and as at 31 March 2016 has also accounted for the deferred tax based on the current useful lives of fixed assets amounting to Rs 175.49 crore after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22. The Management would change the useful lives of the fixed assets and record adjustments related to depreciation, book value of fixed assets and the consequential impact on taxes including deferred tax computation arising out of temporary timing differences on account of depreciation post notification of useful lives by AERA as per Part B of Schedule II of the Act as aforesaid.

The Holding Company has furnished the required disclosure as part of the accounting policy that the useful lives of fixed assets followed by the Holding Company are different from the useful lives of fixed assets prescribed in Part C of Schedule II of the Act.

(d) The Holding Company had received a demand order dated 21 November 2013 from Anneswara Gram Panchayat to pay property tax amounting to Rs 19.50 crore for the period 2010-2014. Further, during the year the Holding Company has received a demand order dated 21 October 2014 from Bettakotte Gram Panchayat for Rs 2.04 crore for the period 2010-2013 and 2014-2015 as per Karnataka Panchayat Raj Act, 1993.The Holding Company has paid the property tax for the financial year 2013-2014 for all the Panchayats amounting to Rs 7.20 crore. Further, the Holding Company had written to the Government of Karnataka seeking a waiver/reduction for the period 2010-2013. The Holding Company has not received any demand order from the other Panchayats for the earlier years except as stated above. The Holding Company based on the prescribed rates has accounted for the property tax for the earlier years and 2015-16 as at 31 March 2016 based on the best estimate of the liability.

(e) The Holding Company had received a demand order dated 10 March 2016 from Bangalore International Airport Area Planning Authority (hereinafter referred to as “BIAAPA”) to pay tank rejuvenation cess amounting to Rs 4.94 crore for the current year.The Holding Company based on the prescribed rates has accounted for the liability for the current year based on the order received from BIAAPA. Furthermore, the Holding Company’s Management believes that this is a one time cess and no further liability needs to be booked for the prior years.

28 Contingent liabilities and commitments (To the extent not provided for)

Contingent liabilities: (in rupees crore)


Claims against the Holding Company not acknowledged as debts - 0.36

a) The Holding Company had issued Bank Guarantee to Customs authorities aggregating Rs 2.72 crore (Previous year: Rs 2.72 crore) with respect to grant of project import license to extend concessional rate of duty for import of certain eligible equipments for use in KIA Terminal 1 Expansion project. Further, BAHL has issued Bank Guarantee to Director General of Foreign Trade (DGFT) aggregating to Rs 10.93 crore (Previous year: Rs 10.93 crore) with respect to import of goods under Export promotion Capital Goods scheme.

(b) The Holding Company has filed an application to get itself impleaded as one of the aggrieved party against an appeal filed by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs 2.13 crore (Previous year: Rs 2.13 crore).

(c) The Income Tax Department had filed an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of Development Costs to overseas promoters by the Holding Company. The Holding Company had earlier paid the TDS amount of Rs. 5.94 crore in 2005-2006



103

(Previous year: Rs 5.94 crore) under protest before getting the relief from ITAT. This was refunded to the Holding Company along with interest of Rs 0.90 crore in 2008-2009 (Previous year: Rs 0.90 crore) as a result of favourable ITAT order. The High Court heard the case on 1 July 2014 and remanded it back to Tribunal for reconsideration. The Income Tax Tribunal resumed the case on 7 January 2015 and had posted the matter for further hearing on 16 February 2016, post which the next hearing will be held in due course.

(d) The Holding Company has received demand orders from Commissioner of Service tax for the periods 2005-2009, 2009-2010, 2010-2011 and October 2009 to March 2012 for payment of service tax of Rs 3.19 crore as a recipient of service towards reimbursement of salary costs to Zurich Airport (Previous year: Rs 3.19 crore). The interest and penalty as per the above demand orders till 31 March 2016 amounts to Rs 3.72 crore (Previous year: Rs 3.14 crore) and Rs 3.67 crore (Previous year: Rs 3.52 crore) respectively. Further, show cause notices have been issued for period 2012-2013 for a sum of Rs 0.29 crore (net of payment made amounting to Rs 1.18 crore) (Previous year: Rs 0.29 crore (net of payment made amounting to Rs 1.18 crore)) and April 2013 to September 2014 for a sum of Rs 0.54 crore on the same account and few other matters respectively. These payments relate to salaries of expatriates who were seconded to the Holding Company. The Holding Company has preferred an appeal against demand orders before the Custom, Excise and Service Tax Appellate Tribunal (“CESTAT”) and has challenged the show cause notice which is not confirmed by a formal demand as at the reporting date. During the previous period, the Holding Company has obtained stay orders from the CESTAT on the demand orders in original and presently awaiting disposal on merits. The Holding Company has challenged the demands based on the judicial precedence on the matter and is confident of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the Holding Company which cannot be treated as services received by the Holding Company. In the management’s view, Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by Expatriate Remuneration Reimbursement Agreement between the Holding Company and Zurich Airport. Furthermore, the Holding Company’s management is of the view that the Holding Company has accounted these payments as salaries and discharged appropriate tax deducted at source as the economic employer of the said expatriates.

(e) The Holding Company received an Income-tax assessment order for AY 2010-11 in March 2013 from Deputy Commissioner of Income Tax, Bengaluru with a net demand of Rs.15.59 crore (Previous year: Rs 15.59 crore). During the previous year, the Holding Company preferred Rectification and Appeal before Commissioner of Income Tax (Appeals) and successfully obtained partial relief at the appellate stage. The net demand was reduced to Rs. 2.66 crore which was fully covered by the pre-deposit and refunds due to the Holding Company from the Department. The Holding Company approached the Income Tax Appellate Tribunal (“ITAT”) for the balance relief and the department has also challenged the Commissioner of Income Tax (Appeals) Order. The case was admitted by the ITAT on 5 February 2015 and is posted for next hearing on 9 June 2016.

(f) For dispute with MoCA relating to capital expenditure incurred out of the PSF(SC) books and details regarding the writ petition filed by the Holding Company on which interim stay has been granted by the High Court of Karnataka (Refer note 26). Any quantification of final outcome of the matter cannot be currently determined.

The Holding Company is not carrying provisions for all the above mentioned amounts in its books of account, as the Holding Company is confident of successfully litigating the matters.

Commitments: (in rupees crore)


Estimated amount of unexecuted capital contracts (net of advances) 555.53 112.43

Other commitments * 22.59 -

* Pertains to open forward exchange contracts aggregating Rs 22.59 crore (Previous year: Rs Nil).

29 Auditors’ remuneration (included in legal and professional expenses)

(in rupees crore)


Statutory audit (including limited reviews) 0.38 0.34

Others (including certification and other fees) 0.19 0.13

0.57 0.47

Reimbursement of out-of-pocket expenses 0.01 0.01



104

30 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below:

a) Defined Benefit Plan

The Group provides for gratuity, a defined benefit plan (the gratuity plan) to its employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee’s last drawn salary and years of employment with the Group.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

(in rupees crore)


Obligations at the beginning of the year 6.36 4.41



Actuarial loss on obligations 0.38 1.04


Obligations at the end of the year 8.07 6.36

Change in the plan assets

(in rupees crore)


Plan asset at the beginning of the year 4.58 2.91

Expected return on plan assets 0.44 0.28

Actuarial gain/ (loss) 0.02 (0.05)

Contribution 2.82 1.88


Plan asset at the end of the year 7.44 4.58

Reconciliation of present value of obligation and fair value of plan assets

(in rupees crore)


Fair value of plan assets at the the end of the year (7.44) (4.58)

Present value of defined benefit obligation at the end of the year 8.07 6.36

Liability recognised in the balance sheet 0.63 1.78

Classified as:

Long-term provisions 0.63 1.78

Short-term provisions - -

Total 0.63 1.78

Expense recognised during the year:

(in rupees crore)




Expected return on plan assets (0.44) (0.28)

Actuarial loss 0.36 1.09

Total 1.67 2.16



105

30 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below (continued): Assumptions


Discount rate per annum 7.85% 7.95%

Salary escalation rate 7% 7%

Expected rate of return on plan assets 8.0% 8.0%

Attrition rate Age 21-44:2% Age 21-44:2%

Age 45-59:1% Age 45-59:1%

Ceiling limit of Gratuity 0.10 0.10

Amounts for the current year and the previous four years are as follows: (in rupees crore)

Particulars As at 31 March 2016 31 March 2015 31 March 2014 31 March 2013 31 March 2012

Defined benefit obligations 8.07 6.36 4.41 4.26 3.08

Plan assets (7.44) (4.58) (2.91) (1.87) -

Surplus/ (deficit) (0.63) (1.78) (1.50) (2.39) (3.08)

Experience adjustment on plan liabilities 0.29 0.09 (0.13) (0.37) (0.09)

Experience adjustment on plan assets 0.02 (0.05) (0.04) 0.07 -

The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

b) Defined Contribution Plan

The Group has contributed Rs 5.79 crore (gross of amount transferred to Capital work-in-progress) towards provident fund during the year (Previous year: Rs 5.56 crore).

31 Segment Reporting

The Holding Company is in the business of operations of the Airport at Bengaluru. Further, BAHL is engaged in the business of Construction, Operating and Maintaining of Hotel within the premises of Kempegowda International Airport. The Group primarily operates in one geographical segment i.e. India. Therefore, there are no reportable secondary segments. The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenues and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other items which are not specifically allocable to individual segments as the underlying services are used interchangeably, are apportioned to the segments on an appropriate basis. Segment assets and segment liabilities are categorised based on items that are individually identifiable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis.

Particulars BIAL BAHL

31 March 2016 31 March 2015 31 March 2016 31 March 2015

Segment revenue 1,149.03 932.67 0.01 0.19

Segment profit after tax 437.61 75.31 (0.25) (0.10)

Segment assets 3,541.33 3,383.09 466.57 386.71

Segment liabilities 2,398.23 2,600.66 320.93 317.28

Capital expenditure: Fixed assets 32.82 74.73 - -

Capital work-in-progress 152.48 150.37 72.82 106.32



106

32 Related party

List of related parties:

Name of the party Description of relationship

Siemens Project Ventures GmbH, Germany Enterprises which exercise significant influence over the Group

Bangalore Airport & Infrastructure Developers Private Limited Enterprises which exercise significant influence over the Group

Mr. G V Sanjay Reddy Key Management Personnel

Orbit Tours and Travels Private Limited Enterprises in which directors have significant influence

GVK Projects & Technical Services Limited (GVKPTSL) Enterprises in which directors have significant influence

GVK Power & Infrastructure Limited Enterprises in which directors have significant influence

Airport Authority of India Shareholders having substantial interest

PT GVK Services Indonesia Enterprises in which directors have significant influence

The details of amounts due to or due from related parties as at 31 March 2016 and 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature As at As at 31 March 2016 31 March 2015

GVK Projects & Technical Services Limited. Trade payables - 4.20

Orbit Tours and Travels Private Limited Trade payables 0.04 -

Siemens Project Ventures GmbH, Germany Trade payables 0.01 0.08

Airports Authority of India Trade receivables 3.07 0.30

The details of related party transactions entered into by the Group for the year ended 31 March 2016 and 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature of transaction Year ended Year ended 31 March 2016 31 March 2015

G.V. Sanjay Reddy Remuneration 7.02 3.40

Orbit Tours and Travels Private Limited Travelling and conveyance 1.73 -

GVK Projects & Technical Services Limited Travelling and conveyance and Technical consultancy - 5.95

Siemens Project Ventures GmbH, Germany Travelling and conveyance 0.37 0.62

Airports Authority of India Non-aeronautical revenue 2.77 2.33

33 Reconciliation of bank deposits

(in rupees crore)


Bank deposits with original maturity of 3 months or less included under

‘Cash and cash equivalents’ 227.71 170.04

Bank deposits due to mature within 12 months of the reporting date included under

‘Other bank balances’ 27.14 21.95

Bank deposits/balances due to mature after 12 months of the reporting date

included under ‘Other non-current assets’ - 3.09

Total 254.85 195.08



107

34 Leases

Operating lease

(in rupees crore)


Rent* 0.31 0.63

*The Group has entered into leasing arrangements for office and residential premises, which are generally cancellable in nature. Such leases are generally for a period ranging from eleven to one hundred eight months with options for renewal against increased rent, and premature termination of agreement with notice periods ranging between one to six months.The same also includes rent for expatriates which is included as a part of employee benefit expense. During the current year, the lease for office premises were cancelled before the end of the lease term.

The amount of lease rentals towards cancellable operating leases for office premises is Rs Nil (Previous year: Rs 0.05 crore towards cancellable operating lease).

Sub-lease of land to concessionaires:

The Group has entered into agreements for sub-lease of approximately 3.18 acres, with three concessionaires/ airline operators to use the land for commercial operations. The agreements provide for transfer of land back to the Group along with the buildings constructed by the concessionaires/ airline operators, at the end of the sub-lease term which ranges from seven to fifteen years. The Group has recognised revenue of Rs 3.94 crore (Previous year: Rs 3.63 crore) as part of Non-aeronautical revenue (Also refer note 21).

35 Derivatives

AS 30 and unhedged foreign currency exposure

As at 31 March 2016, the Group has outstanding forward contracts amounting to USD 0.26 crore (Rs 17.19 crore) (Previous year: (USD Nil), GBP 0.06 crore (Rs 5.40 crore) (Previous year: GBP Nil). These derivative instruments have been entered to hedge highly probable forecasted payables.

The Group has unhedged foreign currency exposure of Rs 0.15 crore (Previous year: Rs 2.67 crore) for payables as at reporting date:

As at 31 March 2016 As at 31 March 2015

Particulars Foreign Currency Amount Amount (Rs) Foreign Currency Amount Amount (Rs)

EUR 0.01 0.13 0.02 1.26

CHF 0.01 0.02 0.01 0.64

USD - - 0.01 0.77

Total 0.02 0.15 0.04 2.67

The Group has applied the principles of AS 30, as per announcement by ICAI except to the extent such principles of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006.

In accordance with the principles of AS 30, those derivative instruments (comprising foreign currency forward contract and swap) which qualify for cash flow hedge accounting have been fair valued as at reporting date and the resultant exchange gain/(loss) as at the year-end aggregating Rs 0.38 crore (Previous year: Rs 0.10 crore) has been accounted in Hedge reserve (Also refer note 4).

Currency and interest rate swaps

The Group has also designated the original dollar-denominated foreign currency borrowing amounting to USD 3.00 crore (Rs 162.09 crore) (Previous year: USD 3.00 crore), along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument to hedge its interest rate risk on future interest payments in USD from floating rate risk on USD Loan. The exchange gain on the above has been recorded in the Consolidated Statement of Profit and Loss amounting to Rs. 0.73 crore (Previous year: Rs 0.91 crore).



108

36 Earnings per share

(in rupees crore, except as otherwise stated)


Nominal value of equity shares (Rs) 10 10

Weighted average number of equity shares outstanding – Basic and Diluted 384,600,000 384,600,000

Profit after tax for the year considered for the calculation of

basic and diluted earnings per share 437.36 75.21

Earnings per share – Basic and diluted (Rs) 11.37 1.96

37 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondences with its customer the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable of such enterprises as at 31 March 2016 has been made in the standalone financial statements based on information received and available with the Holding Company. The dues to such enterprises which have provided goods and services to the Holding Company and which qualify under the definition of Micro and Small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 is stated as under:

(in rupees crore)

Particulars 31 March 2016 31 March 2015

(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year:

Principal 0.26 2.09

Interest 0.01 0.01

(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, (the Act) along with the amount of the payment made to the supplier beyond the appointed day during each accounting year 0.60 7.77

(iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the said Act - -

(iv) The amount of interest accrued and remaining unpaid on 31 March 2016 in

respect of principal amount settled during the year 0.01 0.63

(v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Act - -

The above information has been determined to the extent such parties have been identified by the Holding Company, which has been relied upon by the auditors.

38 BAHL During the year 2013-14, the Holding Company entered into a “Share Purchase Agreement” dated 20 December 2013 to acquire 74% of the outstanding equity shares of L&T BAHL from L&T Urban Infrastructure Limited (“LTRL”) and 26% from EIH limited (“EIH”), for aggregate purchase consideration of Rs 2.00 crore. Thus, BAHL is a 100% subsidiary of the Holding Company w.e.f 20 December 2013.

The Holding Company changed the name of L&T BAHL to Bangalore Airport Hotel Limited (BAHL) which was approved by the Ministry of Corporate Affairs on 14 March 2014.

The net worth of the BAHL on the acquisition date was Rs 2.00 crore which was acquired for a purchase consideration of Rs 2.00 crore. Accordingly, the same did not result in goodwill or capital reserve on the acquisition date in the consolidated financial statements of the Group.

39 The Holding Company is governed by the Airports Economic Regulatory Authority of India (‘AERA’). The tariffs for the Aeronautical services is determined by AERA on the basis of the revenue requirement for a control period in relation to Aeronautical services which will cover the expected cost of providing the regulated service, including a fair return on the investment in the regulated operations i.e. Regulatory Asset Base. As per the AERA Order No 08 / 2014-15 dated 10 June 2014 applicable to the Holding Company, the aeronautical revenues covered as a part of the rate regulation primarily include the User development fee, Landing fees, Parking fees, Housing fees, Fuel throughput charges, etc.



109

AERA has approved the rates to be charged for the services mentioned above for the current control period i.e. 1 April 2011 to 31 March 2016 with effect from 1 July 2014. AERA at the end of the control period will true up various variables which primarily include adjustments to Regulatory asset base, Operational cost, Aggregate required revenue from 40% shared revenue till to a Single till, number of passengers and the depreciation on the airport assets. The Institute of Chartered Accountants of India has issued the “Guidance note on Accounting for Rate Regulated activities” which is applicable with effect from 1 April 2015. The Guidance note requires the Holding Company to estimate the regulated revenue and consequently account for the Regulatory asset or a Regulatory liability based on the guidance provided by the Regulator which determines the fees to be charged by the Holding Company for the Regulated services. Adjustment to the rates will be carried out at the end of the control period to determine the revised rates to be charged for the next control period basis the difference between the estimates used for the Tariff determination with the actuals to be considered.

The Management of the Holding Company is of the view that the below mentioned uncertainties pertaining to the Regulatory decisions will not enable the Holding Company to determine the regulated revenue and consequently the regulatory asset or regulatory liability to be accounted as at 31 March 2016 as a reliable estimate of the amount of the obligation cannot be determined:

• AERA has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act;

• The Holding Company has contested the AERA’s tariff order in AERAAT Tribunal. The Holding Company has made the submission of tariff proposal on 30% Shared Revenue till (SRT) whereas AERA has used a methodology where the tariff determination will ultimately result in a Single Till.

• There exists a precedence where MoCA has directed AERA to approve a 30% SRT in case of another Greenfield Airport from a retrospective date.

The above factors will impact the true up amount to the Regulated revenue and the consequent impact on the Regulatory asset or liability which is required to be estimated and accounted as at 31 March 2016.

40 Corporate Social Responsibility

As per the Section 135 of the Act, the Board shall ensure that the Holding Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy.

Hence, the Holding Company falls within the ambit of Section 135 of the Act and hence required to contribute the amount stipulated under the aforesaid provisions of the Act. During the current year, the Holding Company has spent Rs 1.16 crores (Previous year : Nil). However, the gross amount required to be spent by the Holding Company during the year was Rs 3.50 crore (Previous year: 3.16 crore). During the year, the Holding Company had initiated renovation programs to the schools of the nearby villages. However, due to time involved in selection of programs, process of identification of contractors and approvals from local authorities to execute the program, the Holding Company was not able to spend the eligible amount prior to the year end.

(in rupees crore)

Particulars In Cash Yet to be paid in cash Total

i. Construction / Acquisition of any assets 0.85 0.31 1.16

ii. Purposes other than (i) above - - -

Total 0.85 0.31 1.16


S Sethuraman Managing Director Director Partner (DIN:00005282) (DIN : 02849971) Membership number: 203491

Place: Chennai Director Chief Financial Officer Date: 22 April 2016 (DIN:06689221)




110

Form AOC - I

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in Rs.)

1 Sl. No. : 012 Name of the subsidiary : Bangalore Airport Hotel Limited3 Reporting period for the subsidiary concerned, if differ-

ent from the holding company’s reporting period.: Not Applicable

4 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of for-eign subsidiaries.

: (INR) Indian Rupee

5 Share capital

i) Authorised Capital : INR 75,00,00,000ii) Paid up Capital : INR 72,00,00,000

6 Reserves and surplus : INR (70,12,89,219)7 Total assets : INR 543,07,35,9548 Total Liabilities : INR 543,07,35,9549 Investments : -NIL-10 Turnover : -NIL-11 Profit before taxation : INR (24,77,109)12 Provision for taxation : -NIL-13 Profit after taxation : INR (24,77,109)14 Proposed Dividend : -NIL-15 % of shareholding : 100%

Information:

a. Names of subsidiaries which are yet to commence op-erations

: Bangalore Airport Hotel Limited.

b. Names of subsidiaries which have been liquidated or sold during the year.

: -NIL-


Attachment to the financial statements

111

Part “B”: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Compa-nies and Joint Ventures - Not Applicable

for and on behalf of the Board of Directors ofBangalore International Airport Limited

Managing Director(DIN: 00005282)

Director(DIN: 02849971)

Director(DIN: 06689221)

Chief Financial Officer

Place : Bengaluru Date : 22nd April 2016

Company Secretary


Attachment to the financial statements

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