Mar 31, 2023
Report on the Audit of the Standalone Finoncioi Statements Opinion
We have audited the accompanying standalone financial statements of InterGlobe Aviation Limited ("the Company"), which comprise the Balance sheet as at March 31,2023, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended ("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 March 31,2023, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Company in accordance with the ''Code of Cthics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of ethics. 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.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2023. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Recognition of Passenger Revenue (refer note 22 to the standalone financial statements) |
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The Company recognises passenger revenue on flown basis i.e., when the service is rendered. Moreover, fees charged for cancellation of flight tickets is recognised as revenue on rendering of the said service. Further, the company recognises revenue from unexercised rights of customers which are non-refundable in nature, based on past trends in proportion to the pattern of rights exercised by the customer. The determination of passenger revenue to be recognised for each flight requires complex IT systems and involves high volume of transactions. We identified revenue recognition as a key audit matter because passenger revenue is one of the Company''s key performance indicators, it involves complicated IT systems that handle large |
Our procedures included, but were not limited to the following: ⢠assessed that the revenue recognition policy is in line with Ind AS 115 ''Revenue from Contracts with Customers''; ⢠involved our IT specialist to assist in assessing the design, implementation and operating effectiveness of management''s general IT controls and key application controls over the Company''s IT systems and third- party systems (assessed the assurance report, i.e., the SSAE 16 report and bridge letter, attesting the appropriateness and effectiveness of the internal control system established by the service provider) which govern revenue recognition, and key manual internal controls over passenger revenue recognition, including controls related to estimation of trends in respect of unused tickets and testing of preventive controls over unauthorised override; |
Key audit matters |
How our audit addressed the key audit matter |
volumes of transaction data and includes exchange of information |
⢠performed tests of details such as tested revenue and collection |
with industry systems and partner airlines and the judgement |
reconciliations of Company''s records with reports generated from |
required by management in determining the unexercised rights of |
third party systems, tested manual journal entries posted into |
passengers, all of which give rise to an inherent risk that revenue |
relevant revenue accounts in the sub-ledger and general ledger |
could be recorded in the incorrect period or at incorrect amount. |
which met specified risk-based criteria; ⢠analysed the terms related to passenger tickets and obtained data supporting Company''s historical expiry trend in respect of unused passenger tickets and tested a sample of ticket documents from the source data to ascertain timing of the recognition they were recorded and evaluated the judgements used in determining the timing of the recognition of revenue from unexercised rights of passengers; ⢠performed tests to verify that the timing of passenger revenue recognition was appropriate. |
Lease accounting, incentives and corresponding tax implications (refer note 17.b to the standalone financial statements) |
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The Company operates certain new and used aircraft under lease |
Our audit procedures included but were not limited to: |
arrangements. |
⢠tested that the Company''s accounting policies are in compliance |
For determination of the appropriate lease accounting under |
with requirements of Ind AS 116, including consideration of |
Ind AS 116, basis classification of leases, sale and leaseback |
exemptions; |
transactions, and corresponding tax treatment, the Company has |
⢠assessed the design, implementation and operating effectiveness |
considered the substance of the transaction rather than just the |
of management''s key internal controls over process for identifying |
legal form including among other factors, treatment of receipt of |
lease contracts, or contracts which contain leases, related |
non-refundable incentives in connection with acquisition of new aircrafts. |
incentives and accounting thereof; ⢠tested the completeness of the data in the aircraft lease master |
We considered lease accounting, of aircraft and other leases |
by validating the key terms of the aircraft acquisition and leases |
(including the corresponding tax treatment), as a key audit |
agreements (including modifications) and assessed management |
matter due to significant judgement required in the assumptions and estimates used to determine the Right of Use (ROU) asset and lease liability, viz assessment of lease term (including modification terms), determination of appropriate incremental borrowing rate, treatment of non-refundable incentives received in connection with the acquisition of the aircrafts and other assets in ROU, componentisation of the ROU asset, and the tax treatment |
judgements used in determining the classification of leases; ⢠performed tests of details to examine the inputs used for determining right of use assets and lease liabilities related to lease contracts with underlying lease agreements including related incentives received and performed computation checks on the amount of lease liability and the right to use, tracing of the same to bank statements, credit notes, underlying contracts/ |
of incentives involves a significant degree of management judgement in interpreting the various relevant rules, regulations |
documents; |
and practices. |
⢠assessed the inputs used for determination of the incremental borrowing rate including, assessment of lease term by reference to the underlying lease contracts and market data; ⢠engaged our internal tax specialists to assess Company''s assumptions, critical judgements made by management on the tax treatment of incentives, which impacted their estimations of the provisions required for open tax assessments and for other years, basis the favourable ITAT special bench orders received by the Company, opinions given by third party tax advisors. ⢠assessed the disclosures in respect of the tax position in Note 31 to the standalone financial statements. |
Key audit matters |
How our audit addressed the key audit matter |
Aircraft Maintenance Obligations (refer note 18 to the standalone financial statements) |
|
The Company operates aircraft which are owned or held under lease arrangements and incurs liabilities for maintenance costs in respect of aircraft leased during the term of the lease. These arise from legal and contractual obligations relating to the condition of the aircraft when it is returned to the lessor. At each reporting date, the calculation of the maintenance provision includes a number of variable factors and assumptions including: likely utilisation of the aircraft; the expected cost of the heavy maintenance check at the future date it is expected to occur; the condition of the aircraft engine, contractual return conditions. Given the involvement of inherent level of management judgement required as a result of the complex and subjective element around these variable factors and assumptions in order to quantify the provision amounts, we have identified this as a key audit matter. |
Our audit procedures to assess aircraft maintenance provisions included but were not limited to the following: ⢠assessed the design, implementation and operating effectiveness of the management''s internal controls over the maintenance process including accounting for maintenance provisions for aircraft held under operating leases; ⢠assessed the provision recorded and key assumptions adopted by management in estimating the provisions and any changes therein, and reviewed the terms of the operating leases, compared assumptions to contract terms and the Company''s maintenance cost experience; ⢠obtained information about the utilisation pattern by reference to the expected future maintenance event dates from Company''s appropriate personnel and assessed the consistency of the provisions with the engineering department''s assessment of the condition of aircraft, based on underlying engine borescope inspections and results, analysis of historical flight hours, estimate of the cost of maintenance work to historic invoices; |
⢠assessed the provision by ensuring that all significant return condition obligations included in aircraft lease contracts have been considered; ⢠performed sensitivity analysis around the key assumptions. |
Information Other than the Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2023 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 ("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 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity 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 Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2023 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended 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 31 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;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
iv. a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned
or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only w.e.f. April 1,2023, reporting under this clause is not applicable.
For S.R. Batliboi & Co. LLP Chartered Accountants
ICAI Firm Registration Number: 301003â¬/â¬300005
per Sanjay Vij Partner
Membership Number: 095169 UDIN: 23095169BGXZZD4832
Place of Signature: Gurugram Date: May 18, 2023
Mar 31, 2022
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of InterGlobe Aviation Limited ("the Company"), which comprise the Balance sheet as at March 31 2022, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended ("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 March 31,2022, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. 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.
We draw attention to Note 46 to the standalone financial statements, which describes the possible effects of uncertainties relating to COVID-19 pandemic on the Company''s operations and results as assessed by the management. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Recognition of Passenger Revenue (refer note 22 to the standalone financial statements) |
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The Company recognises passenger revenue on flown basis i.e. when the service is rendered. Moreover, fees charged for cancellation of flight tickets is recognised as revenue on rendering of the said service. Further, the company recognises revenue from unexercised rights of customers which are non-refundable in nature, based on past trends in proportion to the pattern of rights exercised by the customer. The determination of passenger revenue to be recognised for each flight requires complex IT systems and involves high volume of transactions. We identified revenue recognition as a key audit matter because passenger revenue is one of the Company''s key performance indicators, it involves complicated IT systems that handle large volumes of transaction data and includes exchange of information with industry systems and partner airlines and the judgement required by management in determining the unexercised rights of passengers, all of which give rise to an inherent risk that revenue could be recorded in the incorrect period or at incorrect amount. |
Our procedures included, but were not limited to the following: ⢠assessed that the revenue recognition policy is in line with Ind AS 115 ''Revenue from Contracts with Customers''; ⢠involved our IT specialist to assist in assessing the design, implementation and operating effectiveness of management''s general IT controls and key application controls over the Company''s IT systems and third- party systems (assessed the assurance report, the SSA⬠16 report, attesting the appropriateness and effectiveness of the internal control system established by the service provider) which govern revenue recognition, and key manual internal controls over passenger revenue recognition, including controls related to estimation of trends in respect of unused tickets and testing of preventive controls over unauthorised override; ⢠performed tests of details such as tested revenue and collection reconciliations of Company''s records with reports generated from third party systems, tested manual journal entries posted into relevant revenue accounts in the sub-ledger and general ledger which met specified risk-based criteria; ⢠analysed the terms related to passenger tickets and obtained data supporting Company''s historical expiry trend in respect of unused passenger tickets and tested a sample of ticket documents from the source data to ascertain timing of the recognition they were recorded and evaluated the judgements used in determining the timing of the recognition of revenue from unexercised rights of passengers; ⢠performed tests to verify that the timing of passenger revenue recognition was appropriate. |
Lease accounting, incentives and corresponding tax implications (refer note 17.b to the standalone financial statements) |
|
The Company operates certain new and used aircraft under lease arrangements. For determination of the appropriate lease accounting under Ind AS 116, basis classification of leases, sale and leaseback transactions, and corresponding tax treatment, the Company has considered the substance of the transaction rather than just the legal form including among other factors, treatment of receipt of non-refundable incentives in connection with acquisition of new aircraft. We considered lease accounting, of aircraft and other leases (including the corresponding tax treatment), as a key audit matter due to significant judgement required in the assumptions and estimates used to determine the Right of Use (ROU) asset and lease liability, viz assessment of lease term (including modification terms), determination of appropriate incremental borrowing rate, treatment of non-refundable incentives received in connection with the acquisition of the aircrafts and other assets in ROU, componentisation of the ROU asset, and the tax treatment of incentives involves a significant degree of management judgement in interpreting the various relevant rules, regulations and practices. |
Our audit procedures included but were not limited to: ⢠tested that the Company''s accounting policies are in compliance with requirements of Ind AS 116, including consideration of exemptions; ⢠assessed the design, implementation and operating effectiveness of management''s key internal controls over process for identifying lease contracts, or contracts which contain leases, related incentives and accounting thereof; ⢠tested the completeness of the data in the aircraft lease master by validating the key terms of the aircraft acquisition and leases agreements (including modifications) and assessed management judgements used in determining the classification of leases; ⢠performed tests of details to examine the inputs used for determining right of use assets and lease liabilities related to lease contracts with underlying lease agreements including related incentives received and performed computation checks on the amount of lease liability and the right to use, tracing of the same to bank statements, credit notes, underlying contracts/ documents; |
Key audit matters |
How our audit addressed the key audit matter |
⢠assessed the inputs used for determination of the incremental borrowing rate including, assessment of lease term by reference to the underlying lease contracts and market data; ⢠engaged our internal tax specialists to assess Company''s assumptions, critical judgements made by management on the tax treatment of incentives, which impacted their estimations of the provisions required for open tax assessments and for other years, basis the favourable ITAT special bench orders received by the Company, opinions given by third party tax advisors, settlements being made by the Company under Vivad se Vishwas scheme for certain years; ⢠assessed the adequacy of the disclosures in respect of the tax position in Note 31 to the standalone financial statements. |
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Aircraft Maintenance Obligations (refer note 18 to the standalone financial statements) |
|
The Company operates aircraft which are owned or held under lease arrangements and incurs liabilities for maintenance costs in respect of aircraft leased during the term of the lease. These arise from legal and contractual obligations relating to the condition of the aircraft when it is returned to the lessor. At each reporting date, the calculation of the maintenance provision includes a number of variable factors and assumptions including: likely utilisation of the aircraft; the expected cost of the heavy maintenance check at the future date it is expected to occur; the condition of the aircraft engine, contractual return conditions. Given the involvement of inherent level of management judgement required as a result of the complex and subjective element around these variable factors and assumptions in order to quantify the provision amounts, we have identified this as a key audit matter. |
Our audit procedures to assess aircraft maintenance provisions included but were not limited to the following: ⢠assessed the design, implementation and operating effectiveness of the management''s internal controls over the maintenance process including accounting for maintenance provisions for aircraft held under operating leases; ⢠assessed the adequacy of the provision recorded and key assumptions adopted by management in estimating the provisions and any changes therein, and reviewed the terms of the operating leases, compared assumptions to contract terms and the Company''s maintenance cost experience; ⢠obtained information about the utilisation pattern by reference to the expected future maintenance event dates from Company''s appropriate personnel and assessed the consistency of the provisions with the engineering department''s assessment of the condition of aircraft, based on underlying engine borescope inspections and results, analysis of historical flight hours, estimate of the cost of maintenance work to historic invoices; ⢠assessed the adequacy of the provision by ensuring that all significant return condition obligations included in aircraft lease contracts have been considered; ⢠performed sensitivity analysis around the key assumptions. |
Impact of COVID-19 on impairment of non-financial assets (refer note 46 to the standalone financial statements) |
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During the current year, due to significant impact of COVID-19 on the business operations of the Company, impairment indicators were identified on the investments in non-financial assets, namely PPE and ROU. As a result, an impairment assessment was required to be performed. There was uncertainty in estimating the recoverable amount of the PPE and ROU, which principally arose from the inputs used in both forecasting and discounting future cash flows. Furthermore, the value in use is highly sensitive to changes in these inputs. The determination of the recoverable amount of the PPE and ROU was one of the key judgmental areas in preparing the financial statements due to a combination of the significance of the ROU and PPE and involved management making estimates and judgements that are critical to the outcomes of these inputs and the inherent uncertainty in the assumptions supporting the recoverable amount of these assets, hence impact of COVID-19 on the impairment of non-financial assets, has been determined to be a key audit matter. |
Our audit procedures included but were not limited to: ⢠obtained management''s most recent financial results forecasts and liquidity analysis underlying their impairment assessment and tested the integrity of the forecasts, including mathematical accuracy; ⢠together with our valuation specialists, inspected management''s most recent forecasts and assessed the underlying assumptions/ calculations, the assumed duration of the disruption, having considered information on capacity, passenger load factors and expected growth rates from recent industry sources; ⢠assessed potential changes in key drivers with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable; ⢠assessed the most recent forecasts with the management of the entity to understand Company''s and the Board''s views on impairment of the non-financial assets; ⢠assessed the adequacy of the disclosures made in the Standalone financial statements. |
Information Other than the Standalone Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 ("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 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity 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 Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31,2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2022 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31,2022 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended 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 31 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;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
iv. a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned
or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures that were considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. No dividend has been declared or paid during the year by the Company.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003C/C300005
per Sanjay Vij
Partner
Membership Number: 095169
UDIN: 22095169AJOYQA1189
Place of Signature: Gurugram
Date: May 25, 2022
Mar 31, 2021
To the Members of InterGlobe Aviation Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of InterGlobe Aviation Limited ("the Company"), which comprise the Balance sheet as at March 31 2021, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended ("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 March 31, 2021, its loss including other comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. 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.
We draw attention to Note 42 to the standalone financial statements, which describes the possible effects of uncertainties relating to COVID-19 pandemic on the Company''s operations and results as assessed by the management. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31,2021. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
Recognition of Passenger Revenue (refer note 21 to the standalone financial statements) |
||
The Company recognises passenger revenue on flown |
Our procedures included, but were not limited to the following: 1 |
|
basis i.e. when the service is rendered. Moreover, fees |
⢠|
assessed that the revenue recognition policy is in line with |
charged for cancellation of flight tickets is recognised |
115 ''Revenue from Contracts with Customers''; |
|
as revenue on rendering of the said service. Further, |
⢠|
involved our IT specialist to assist in assessing the design, |
the company recognises revenue from unexercised |
implementation and operating effectiveness of management''s |
|
rights of customers which are non-refundable in nature, |
general IT controls and key application controls over the |
|
based on past trends in proportion to the pattern of |
Company''s IT systems and third- party systems (assessed |
|
rights exercised by the customer. |
the assurance report attesting the appropriateness and |
|
The determination of passenger revenue to be |
effectiveness of the internal control system established by |
|
recognised for each flight requires complex IT systems |
the service provider (the SSfl⬠16 report and bridge letters)) |
|
and involves high volume of transactions. |
which govern revenue recognition, and key manual internal controls over passenger revenue recognition, including |
|
We identified revenue recognition as a key audit |
controls related to estimation of trends in respect of unused |
|
matter because passenger revenue is one of the |
revenue documents and testing of preventive controls over |
|
Company''s key performance indicators, it involves |
unauthorised override; |
|
complicated IT systems that handle large volumes of |
⢠|
performed tests of details such as tested revenue and |
transaction data and includes exchange of information |
collection reconciliations of Company''s records with reports |
|
with industry systems and partner airlines and the |
generated from third party systems, tested manual journal |
|
judgement required by management in determining |
entries posted into relevant revenue accounts in the sub- |
|
the unexercised rights of passengers, all of which give |
ledger and general ledger which met specified risk-based |
|
rise to an inherent risk that revenue could be recorded |
criteria. |
|
in the incorrect period or at incorrect amount. |
⢠|
analysed the terms related to passenger tickets and obtained data supporting Company''s historical expiry trend in respect of unused revenue documents and tested a sample of revenue documents from the source data to ascertain timing of the recognition they were recorded and evaluated the judgements used in determining the timing of the recognition of revenue from unexercised rights of passengers. |
⢠|
performed tests to verify that the timing of passenger revenue recognition was appropriate; |
Lease accounting, incentives and corresponding tax imp |
lications (refer note 16.b to the standalone financial statements) |
The Company operates certain new and used aircraft under lease arrangements. For determination of the appropriate lease accounting under 116, basis classification of leases, sale and leaseback transactions, and corresponding tax treatment, the Company has considered the substance of the transaction rather than just the legal form including among other factors, treatment of receipt of non-refundable incentives in connection with acquisition of new aircrafts. We considered lease accounting, of aircraft and other leases (including the corresponding tax treatment), as a key audit matter due to significant judgement required in the assumptions and estimates used to determine the Right of Use (ROU) asset and lease liability, viz assessment of lease term (including modification terms), determination of appropriate incremental borrowing rate, treatment of nonrefundable incentives received in connection with the acquisition of the aircrafts and other other assets in ROU, componentisation of the ROU asset, and the tax treatment of incentives involves a significant degree of management judgement in interpreting the various relevant rules, regulations and practices. |
Our audit procedures included but were not limited to: ⢠tested that the Company''s accounting policies are in compliance with requirements of 116, including consideration of exemptions; ⢠assessed the design, implementation and operating effectiveness of management''s key internal controls over process for identifying lease contracts, or contracts which contain leases, related incentives and accounting thereof; tested the completeness of the data in the aircraft lease master , by validating the key terms of the aircraft acquisition and leases agreements (including modifications) and assessed management judgements used in determining the classification of leases, ⢠performed tests of details to examine the inputs used for determining right of use assets and lease liabilities related to lease contracts with underlying lease agreements including related incentives received and performed computation checks on the amount of lease liability and the right to use, tracing of the same to bank statements, credit notes, underlying contracts/documents; |
⢠assessed the inputs used for determination of the incremental borrowing rate including, assessment of lease term by reference to the underlying lease contracts and market data; |
|
⢠engaged our internal tax specialists to assess Company''s assumptions, critical judgements made by management on the tax treatment of incentives, which impacted their estimations of the provisions required for open tax assessments and for other years, basis the favourable ITAT orders received by the Company, opinions given by third party tax advisors, settlements being made by the Company under Direct Tax Vivaad se Vishwas scheme for certain years; |
|
⢠assessed the adequacy of the disclosures in respect of the tax |
Aircraft Maintenance Obligations (refer note 17 to the |
>tandalone financial statements) |
The company operates aircraft which are held |
Our audit procedures to assess aircraft maintenance provisions |
under lease arrangements and incurs liabilities for maintenance costs in respect of aircraft leased during |
included but were not limited to the following: |
the term of the lease. |
⢠assessed the design, implementation and operating |
effectiveness of the management''s internal controls over the |
|
These arise from legal and contractual obligations |
maintenance process including accounting for maintenance |
relating to the condition of the aircraft when it is returned to the lessor. |
provisions for aircraft held under operating leases; |
⢠assessed the adequacy of the provision recorded and key |
|
At each reporting date, the calculation of the |
assumptions adopted by management in estimating the |
maintenance provision includes a number of variable |
provisions and any changes therein, and reviewed the terms |
factors and assumptions including: likely utilisation |
of the operating leases, compared assumptions to contract |
of the aircraft; the expected cost of the heavy maintenance check at the future date it is expected to |
terms and the Company''s maintenance cost experience; |
occur; the condition of the aircraft engine, contractual |
⢠obtained information about the utilisation pattern by |
return conditions. |
reference to the expected future maintenance event dates |
from Company''s appropriate personnel and assessed |
|
Given the involvement of inherent level of management |
the consistency of the provisions with the engineering |
judgement required as a result of the complex and |
department''s assessment of the condition of aircraft, based |
subjective element around these variable factors |
on underlying engine borescope inspections and results, |
and assumptions in order to quantify the provision |
analysis of historical flight hours, estimate of the cost of |
amounts, we have identified this as a key audit matter. |
maintenance work to historic invoices; ⢠assessed the adequacy of the provision by ensuring that all significant return condition obligations included in aircraft operating lease contracts have been considered; ⢠performed sensitivity analysis around the key assumptions; |
Impact of COVID-19 on impairment of non-financial assets (refer note 42 to the standalone financial statements) |
|
During the current year, due to significant impact of COVID-19 on the business operations of the Company, impairment indicators were identified on the investments in non-financial assets, namely PP⬠and ROU. As a result, an impairment assessment was required to be performed. There was uncertainty in estimating the recoverable amount of the PP⬠and ROU, which principally arose from the inputs used in both forecasting and discounting future cash flows. Furthermore, the value in use is highly sensitive to changes in these inputs. The determination of the recoverable amount of the PP⬠and ROU was one of the key judgmental areas in preparing the financial statements due to a combination of the significance of the ROU and PP⬠and involved management making estimates and judgements that are critical to the outcomes of these inputs and the inherent uncertainty in the assumptions supporting the recoverable amount of these assets, hence impact of COVID-19 on the impairment of non-financial assets, has been determined to be a key audit matter. |
Our audit procedures included but were not limited to: ⢠obtained managementâs most recent financial results forecasts and liquidity analysis underlying their impairment assessment and tested the integrity of the forecasts, including mathematical accuracy. ⢠together with our valuation specialists, inspected managementâs most recent forecasts and assessed the underlying assumptions/calculations, the assumed duration of the disruption, having considered information on capacity, passenger load factors and expected growth rates from recent industry sources. ⢠assessed potential changes in key drivers with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. ⢠assessed the most recent forecasts with the management of the entity to understand Companyâs and the Boardâs views on impairment of the non-financial assets. ⢠assessed the adequacy of the disclosures made in the Standalone Financial Statements. |
Information Other than the Financial Statements and Auditor''s Report Thereon
The Companyâs Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone financial statements and our auditorâs report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2021 and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs 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 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity 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 Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31,2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2021 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls of the Company with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(g) According to the information and explanation given by the management and as stated in note 43 which provides shareholders'' approval relating to managerial remuneration, we report that remuneration paid or provided to its only whole time director and Câ¬O, for the year ended March 31,2021 within the limits and in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended 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.30 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;
iii. There were no amounts which were required to be transferred, to the Investor Education and Protection Fund by the Company
For S.R. Batliboi & Co. LLP Chartered Accountants
ICAI Firm Registration Number: 301003â¬/â¬300005
per Sanjay Vij Partner
Membership Number: 095169 UDIN: 21095169AAAABT9810
Place of Signature: Gurugram Date: June 5, 2021
Mar 31, 2018
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of InterGlobe Aviation Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and summary of the significant accounting policies and other explanatory information (hereinafter referred to as âstandalone Ind AS financial statementsâ).
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs, profit and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone Ind AS financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS 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 of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We are also responsible to conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entityâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditorâs report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditorâs report. However, future events or conditions may cause an entity to cease to continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 2018 and its profits and other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
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, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act;
e) On the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act;
f) With respect to the adequacy of the internal financial controls with reference to standalone Ind AS financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ; and
g) With respect to the other matters to be included in the Auditorâs 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 Ind AS financial statements - Refer Note 30 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company; and
iv. The disclosures in the standalone Ind AS financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018. However, amounts as appearing in the audited Standalone Ind AS financial statements for the period ended 31 March 2017 have been disclosed-Refer Note 38 to the standalone Ind AS financial statements.
Annexure A referred to in our Independent Auditorâs Report to the members of InterGlobe Aviation Limited on the standalone Ind AS financial statements for the year ended 31 March 2018
(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 two years except for aircraft and spare engines, which are verified on an annual basis. In our opinion, this periodicity of physical verification by management is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were physically verified during the year. As informed to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us, the Company does not have any immovable properties. Accordingly, paragraph 3(i)(c) of the Order is not applicable.
(ii) Inventories, except for goods-in-transit and stocks lying with third parties have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. According to the information and explanations given to us, the procedures for physical verification of inventories followed by the management during the year are reasonable and adequate in relation to the size of the Company and the nature of its business. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly adjusted in the books of account.
(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 Companies Act, 2013. Accordingly, the provisions of paragraph 3 (iii) of the Order are not applicable to the Company.
(iv) According to the information and explanations given to us, the Company has not given any loan, or provided any guarantee or security as specified under section 185 and 186 of the Companies Act, 2013. Moreover, in respect of the investments made by the Company, requirements of section 186 of the Companies Act, 2013 have been complied with.
(v) As per the information and explanations given to us, the Company has not accepted any deposits as mentioned in the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under. Accordingly, paragraph 3(v) of the Order is not applicable.
(vi) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013, for any of the services rendered or goods sold by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.
(vii) (a) 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, employeesâ state insurance, income tax, sales tax, service tax, goods and services tax, duty of customs, value added taxes, cess and other statutory dues have been 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.
According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income tax, sales tax, service tax, goods and services tax, duty of customs, value added taxes, cess and other statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues of income tax, service tax, goods and services tax, sales tax, value added tax and duty of customs which have not been deposited by the Company with the appropriate authorities on account of any dispute as at 31 March 2018, other than those mentioned as follows:
Name of the Statute |
Nature of the dues |
Amount (Rs. in million) |
Amount paid under protest (Rs. in million) |
Period to which the amount relates |
Forum where dispute is pending |
Income-tax Act, 1961 |
Revision to the taxable income on account of : a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. b) Disallowance of certain expenses / adjustments |
- |
- |
Assessment year (AY) 2007-08 1 |
High Court of Delhi and Commissioner of Income Tax (Appeals) [CIT(A)] |
Income-tax Act, 1961 |
Revision to the taxable income on account of : a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. b) Disallowance of certain expenses / adjustments. |
- |
- |
AY 2008-09 2 AY 2009-10 3 |
High Court of Delhi and Income Tax Appellate Tribunal (ITAT) |
Income-tax Act, 1961 |
Revision to the taxable income on account of: a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. b) Disallowance of certain expenses / adjustments. |
8.66 |
1.30 |
AY 2010-11 4 |
ITAT and CIT(A) |
Income-tax Act, 1961 |
Writ petition filed before High Court of Delhi challenging reopening of assessment on account of: a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. b) Disallowance of certain expenses/ adjustment. |
3,921.14 |
- |
AY 2011-12 5 |
High Court of Delhi |
Income-tax Act, 1961 |
Revision to taxable income on account of : a) Tax treatment of certain incentives received by the Company from the manufacturers with the acquisition of aircraft and engine. b) Disallowance of certain expenses / adjustments. |
5,822.44 |
100 |
AY 2012-13 6 AY 2013-14 7 AY 2014-15 7 |
ITAT |
Income-tax Act, 1961 |
Revision to taxable income on account of : a) Tax treatment of certain incentives received by the Company from the manufacturers with the acquisition of aircraft and engine. b) Disallowance of supplementary lease rental and certain expenses / adjustments. |
2,887.73 |
150 |
AY 2015-16 8 |
CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source |
1.02 |
- |
AY 2007-08 |
Assessing officer (AO) |
Income-tax Act, 1961 |
Tax deducted at source |
142.48 |
7.84 |
AY 2010-11 |
ITAT and CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source |
20.99 |
5.07 |
AY 2011-12 |
ITAT |
Income-tax Act, 1961 |
Tax deducted at source |
22.78 |
11.41 |
AY 2012-13 |
CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source@ |
0.09 |
0.09 |
AY 2013-14 |
ITAT |
Income-tax Act, 1961 |
Tax deducted at source |
0.73 |
0.73 |
AY 2014-15 |
CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source |
13.21 |
- |
AY 2008-09, AY 2009-10, AY 2010-11, AY 2013-14 and AY 201415 |
ITAT and AO |
Finance Act, 1994 (Service tax) |
Service tax and penalty on excess baggage charges and services received from overseas vendors and denial of cenvat credit |
111.21 |
- |
Financial Year (FY) 2006-07 to FY 2010-11 ## |
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh |
Finance Act, 1994 (Service tax) |
Service tax and penalty on services received from overseas vendors |
2.96 |
- |
FY 2005-06 to FY 2009-10 and FY 201011 ## |
CCSTAT, Chandigarh |
Finance Act, 1994 (Service tax) |
Penalty for late payment of Service tax on various expenses incurred for external Commercial Borrowing |
358.56 |
89.64 |
FY 2012-13 to FY 2013-14 |
CCSTAT, Chandigarh |
The Customs Act, 1962 |
Customs duty and penalty on import of aircraft engines |
531.20 |
- |
FY 2011-12 and FY 201213 ## |
CCSTAT, Bangalore |
The Customs Act, 1962 |
Custom duty and penalty on notional freight charges added to the value of Aviation turbine fuel |
6.78 |
2.69 |
August 2012 to May 2015 ## |
CCSTAT, Chennai |
The Customs Act 1962 |
Custom duty and penalty on notional freight charges added to the value of Aviation turbine fuel |
7.18 |
1.07 |
October 2011 to March 2015 ## |
Commissioner of Customs (Appeals), Mumbai |
Kerala Value Added Tax Act, 2003 |
Value Added Tax on sale of goods in International flights® |
0.66 |
0.92 |
FY 2012-13 to FY 2013-14 |
Kerala Value Added Tax Appellate Tribunal |
Central Sales Tax Act, 1956 & Central Sales Tax (Bombay) Rules, 1957 |
Central Sales Tax on sale of goods in international flights in the state of Maharashtra (Credit of Rs. 0.47 million adjusted against demand and Rs. 0.48 million was deposited as part payment by the Company) |
7.85 |
0.48 |
FY 2012-13 |
Joint Commissioner |
Maharashtra Value Added Tax, 2002 |
Denial of Input Tax Credit |
0.17 |
- |
FY 2012-13 |
Joint Commissioner |
Maharashtra Value Added Tax, 2002 |
Tax on sale of goods in international flights and denial of Input Tax Credit (Credit of INR 0.60 million has been adjusted against the demand) |
5.28 |
- |
FY 2013-14 |
Joint Commissioner** |
Mumbai Municipal Corporations Act, 1888 |
Octroi on import/inward movement of aircraft engines and aircraft engine stand@ |
74.39 |
74.39 |
FY 2016-17 |
High court of Mumbai |
Customs Tariff Act, 1975 and The Integrated Goods And Services Tax, 2017 |
Integrated Goods and Services Tax on re-import of aircraft, aircraft engines and certain aircraft parts after repair@ |
1,829.50 |
1,829.50 |
FY 2017-18 |
Commissioner of Customs (Appeals), New Delhi* |
## The demand does not include interest component as it is not specified in order.
* Includes the cases wherein appeal filing is in process.
** The Company is in process of filling appeal to Joint Commissioner.
@ As on 31 March 2018, net outstanding due is Nil.
1 ITAT has passed favorable order dated 18 July 2016 and the loss for the year has been assessed at Rs. 2,032.85 million vide appeal effect order dated 16 November 2016. Income tax department filed an appeal to High Court of Delhi dated 23 December 2016 for the proposed addition to taxable income amounting to Rs. 1,874.63 million for AY 2007-08 which will result in reduction of business loss and unabsorbed depreciation for AY 2007-08. During the current year, the High Court of Delhi vide order dated 7 July 2017 has admitted the departmentâs appeal on taxability of certain incentives.
In relation to certain disallowance of expenses amounting to Rs. 22.39 million, appeal is pending before CIT(A) against order u/s 144/143(3)/263 of the Income Tax Act, 1961.
2 ITAT has passed favorable order dated 18 November 2016 and the loss for the year has been assessed at Rs. 3,171.43 million vide appeal effect order dated 6 March 2017. During the current year, Income tax department filed an appeal to High Court of Delhi dated 1 May 2017 for the proposed addition to taxable income amounting to Rs. 4,714.97 million for AY 2008-09. During the current year, the High Court of Delhi vide order dated 31 October 2017 has admitted the departmentâs appeal on taxability of certain incentives.
The Company has also filed a miscellaneous application before ITAT to adjudicate on disallowances of certain expenses amounting to Rs. 118.50 million.
3 ITAT has passed favorable order dated 18 November 2016 and the loss for the year has been assessed at Rs. 2,121.80 million vide appeal effect order dated 21 February 2017. During the current year, Income tax department has filed an appeal to High Court of Delhi dated 1 May 2017 for the proposed addition to taxable income amounting to Rs. 4,164.13 million for AY 2009-10. During the current year, the High Court of Delhi vide order dated 31 October 2017 has admitted the departmentâs appeal on taxability of certain incentives.
The Company has also filed a miscellaneous application before ITAT to adjudicate on disallowances of certain expenses amounting to Rs. 619.46 million.
4 The additional taxable income amounting to Rs.3,569.11 million for AY 2010-11 was proposed vide order dated 15 March 2013 by assessing officer . During the year ended 31 March 2016, CIT(A) has passed an order dated 20 January 2016 proposing additions amounting to Rs. 726.60 million. The Company has filed an appeal to ITAT for proposed additions to taxable income.
Further, addition of Rs. 50.97 million was proposed by assessing officer under section 147 of the Income tax Act, 1961 vide re-assessment order dated 27 January 2016 and accordingly, above mentioned demand has arisen. The Company has filed an appeal to CIT(A) against order under section 147 of the Income tax Act, 1961.
5 The AO has issued a notice u/s 148 of the Income Tax Act, 1961 for re-opening of assessment, pertaining to AY 2011-12. The Company has filed a writ petition before High Court of Delhi challenging the re-opening of reassessment by AO. The High Court has directed to pass the assessment order stating such order shall not be given effect till further orders. The assessing officer passed an assessment order proposing the additional taxable income amounting to Rs.5,823.48 million vide order dated 29 December 2017 and accordingly, demand amounting to Rs. 3,921.14 million has arisen. The High Court of Delhi has granted stay vide order dated 18 April 2018 till disposal of writ petition by High Court of Delhi.
6 The additional taxable income amounting to Rs. 6,070.11 million for AY 2012-13 was proposed vide assessment order dated 25 March 2015 by assessing officer. CIT(A) has passed an order dated 22 March 2017 which further proposed additional taxable income amounting of Rs. 4,904.78 million. The assessing officer passed rectification order dated 03 October 2017 and accordingly, demand of Rs. 1,154.63 million has arisen. The Company has filed an appeal before ITAT for proposed additions to taxable income. Further, the Company has obtained stay of demand from ITAT for the above mentioned demand.
7 The additional taxable income amounting to Rs.14,218.26 million and Rs.12,538.26 million for AY 2013-14 and AY 2014-15 respectively was proposed by assessing officer vide order dated 6 December 2016. The Company has filed an appeal to CIT(A) and it has passed an order dated 10 October 2017 giving partial relief amounting to Rs. 3,500.35 million and Rs. 2,228.75 million respectively. The assessing officer passed appeal effect order dated 12 February 2018 and accordingly, demand amounting to Rs. 3,381.40 million and Rs. 1,286.41 million respectively has arisen. The Company has filed an appeal before ITAT for proposed additions to taxable income.
The Company has obtained stay of demand from ITAT for a period of six months or disposals of the appeals whichever expire earlier for AY 2013-14 and AY 2014-15. The stay for AY 2013-14 is subject to the condition of paying Rs. 100 million. Subsequently, the Company has paid Rs. 100 million under protest.
8 The additional taxable income amounting Rs. 11,512.08 million for AY 2015-16 was proposed by assessing officer vide order dated 28 December 2017. The Company has filed an appeal before CIT(A) for proposed additions to taxable income.
The Company has obtained stay of demand against such order till 31 August 2018 or disposal of appeal by CIT(A), whichever is earlier, on payment of Rs. 150 million. The Company has paid Rs. 150 million under protest.
(viii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not defaulted in repayment of loans or borrowings to banks or financial institutions. Further, no loans or borrowings were taken from government and there were no debentures issued during the year or outstanding as at 31 March 2018.
(ix) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has utilised the money raised by way of institutional placement programme (âIPPâ), for the purpose for which they were raised. The unutilised funds have been temporarily invested/ deposited in cash and cash equivalents including bank deposits and/or mutual funds. Moreover, the term loans taken by the Company have been applied for the purposes for which they were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to information and explanations given to us and on the basis of our examination of the records of the Company, the managerial remuneration has been provided and paid by the Company in accordance with the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the accounting standards.
(xiv) According to the information and explanation given to us and on the basis of 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 current year. Accordingly, paragraph 3(xiv) of the Order is not applicable.
(xv) According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For B S R & Co. LLP
Chartered Accountants
Firm registration number: 101248W / W-100022
Jiten Chopra
Place: Gurugram Partner
Date: 02 May 2018 Membership number: 092894
Mar 31, 2017
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of InterGlobe Aviation Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as âstandalone Ind AS financial statementsâ).
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant Rules issued thereunder.
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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS 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 of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at 31 March 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
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 (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with relevant rules issued thereunder;
e) On the basis of written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164 (2) of the Act;
f) 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 âAnnexure Bâ; and
g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditorâs) 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 Ind AS financial statements - Refer Note 31 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company; and
iv. The Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on audit procedures performed and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note 40 to the standalone Ind AS financial statements.
Annexure A referred to in our Independent Auditorâs Report to the members of InterGlobe Aviation Limited on the standalone Ind AS financial statements for the year ended 31 March 2017
(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 two years except for aircraft and spare engines, which are verified on an annual basis. In our opinion, this periodicity of physical verification by management is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were physically verified during the year. As informed to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us, the Company does not have any immovable properties. Accordingly, paragraph 3(i)(c) of the Order is not applicable.
(ii) Inventories, except for goods-in-transit and stocks lying with third parties have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. According to the information and explanations given to us, the procedures for physical verification of inventories followed by the management during the year are reasonable and adequate in relation to the size of the Company and the nature of its business. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly adjusted in the books of account.
(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 Companies Act, 2013. Accordingly, the provisions of paragraph 3 (iii) of the Order are not applicable to the Company.
(iv) According to the information and explanations given to us, the Company has not given any loan, or provided any guarantee or security as specified under section 185 and 186 of the Companies Act, 2013. Moreover, in respect of the investments made by the Company, requirements of section 186 of the Companies Act, 2013 have been complied with.
(v) As per the information and explanations given to us, the Company has not accepted any deposits as mentioned in the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under. Accordingly, paragraph 3(v) of the Order is not applicable.
(vi) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013, for any of the services rendered or goods sold by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.
(vii) (a) 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, employeesâ state insurance, income tax, sales tax, service tax, duty of customs, value added taxes, cess and other statutory dues have been 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.
According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income tax, sales tax, service tax, duty of customs, value added taxes, cess and other statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues of income tax, service tax, sales tax, value added tax and duty of customs which have not been deposited by the Company with the appropriate authorities on account of any dispute as at 31 March 2017, other than those mentioned as follows:
Statement of Disputed Tax Dues
Name of the Statute |
Nature of the dues |
Amount (Rs. in million) |
Period to which the amount relates |
Forum where dispute is pending |
Income-tax Act, 1961 |
Revision to the taxable income on account of: |
- |
High Court of Delhi, Commissioner of Income Tax (Appeals) [CIT(A)] |
|
a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. |
||||
b) Disallowance of certain expenses / adjustments. |
||||
Income-tax Act, 1961 |
Revision to the taxable income on account of: |
8.66 |
AY 2010-11 4 |
Income Tax Appellate Tribunal (ITAT) and CIT(A) |
a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. |
||||
b) Disallowance of certain expenses / adjustments. |
||||
(Rs.1.30 million deposited under dispute) |
||||
Income-tax Act, 1961 |
Revision to the taxable income on account of: |
2,465.83 |
AY 2012-13 5 |
ITAT |
a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. |
||||
b) Disallowance of certain expenses / adjustments. |
||||
Income-tax Act, 1961 |
Revision to the taxable income on account of: |
7,337.36 |
AY 2013-14 6 AY 2014-15 6 |
CIT(A) |
a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. |
||||
b) Disallowance of certain expenses / adjustments. |
||||
Income-tax Act, 1961 |
Tax deducted at source |
1.02 |
AY 2007-08 |
Assessing officer (AO) |
Income-tax Act, 1961 |
Tax deducted at source (Rs.7.84 million deposited under dispute) |
142.48 |
AY 2010-11 |
ITAT, CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source (Rs.5.07 million deposited under dispute) |
20.99 |
AY 2011-12 |
ITAT |
Income-tax Act, 1961 |
Tax deducted at source (Rs.4.20 million deposited under dispute for AY 2013-14) |
0.14 |
AY 2013-14 |
CIT(A), AO |
Income-tax Act, 1961 |
Tax deducted at source (Rs.11.41 million deposited under dispute) |
22.78 |
AY 2012-13 |
CIT(A) |
Income-tax Act, 1961 |
Tax deducted at source |
12.76 |
AY 2013-14, AY 2014-15 AY 2015-16 |
ITAT, AO |
Finance Act, 1994 (Service tax) |
Service tax and penalty on excess baggage charges, services received from overseas vendors and denial of CENVAT Credit |
111.21 |
Financial year (FY) 200607 to FY 2010-11 ## |
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh |
Finance Act, 1994 (Service tax) |
Service tax and penalty on services received from overseas vendors |
2.96 |
FY 2005-06 to FY 2009-10 and FY 2010-11 ## |
CESTAT, Chandigarh |
Finance Act, 1994 (Service tax) |
Penalty for late payment of Service tax on various expenses incurred on ECB (Rs. 89.64 million deposited under protest) |
358.56 |
FY 2012-13 to FY 2013-14 |
CESTAT, Chandigarh |
The Customs Act, 1962 |
Customs duty and penalty on import of aircraft engines |
531.20 |
FY 2011-12 and FY 201213 ## |
CESTAT, Bangalore |
The Customs Act, 1962 |
Custom duty and penalty demanded on notional freight charges added to the value of Aviation turbine fuel left in the tank of an aircraft (Rs. 2.69 million has been deposited under protest) |
6.78 |
August 2012 to May 2015 ## |
CESTAT, Chennai |
The Customs Act, 1962 |
Custom duty and penalty demanded on notional freight charges added to the value of Aviation turbine fuel left in the tank of an aircraft |
1.42 |
September 2011 to March 2015 ## |
CESTAT Delhi |
Kerala Value Added Tax Act, 2003 |
Value Added Tax on sale of goods in International flights |
0.66 |
FY 2012-13 to FY 2013-14 |
Kerala Value Added Tax Appellate Tribunal, Ernakulam |
Central Sales Tax Act, 1956 & Central Sales Tax (Bombay) Rules, 1957 |
Central Sales Tax on sale of goods in international flights in the state of Maharashtra |
7.85 |
FY 2012-13 |
Joint Commissioner ** |
Maharashtra Value Added Tax, 2002 |
Input Tax Credit denied |
0.17 |
FY 2012-13 |
Joint Commissioner ** |
1 During the current year, ITAT has passed favourable order dated 18 July 2016 and the loss for the year has been assessed at Rs. 2,032.85 million vide appeal effect order dated 16 November 2016. Income tax department has filed an appeal to High Court of Delhi dated 23 December 2016 for the proposed addition to the taxable income amounting to Rs. 1,874.63 million for AY 2007-08, which will result in reduction of business loss and unabsorbed depreciation for AY 2007-08.
In relation to certain disallowance of expenses amounting to Rs. 22.39 million, appeal is pending before CIT(A) against order u/s 144/143(3)/263 of the Income Tax Act, 1961.
2 During the current year, ITAT has passed favorable order dated 18 November 2016 and the loss for the year has been assessed at Rs. 3,171.43 million vide appeal effect order dated 6 March 2017. Subsequent to current year ended 31 March 2017, Income tax department has filed an appeal to High Court of Delhi dated 1 May 2017 for the proposed addition to taxable income amounting to Rs. 4,714.97 million for AY 2008-09.
3 During the current year, ITAT has passed favorable order dated 18 November 2016 and the loss for the year has been assessed at Rs. 2,121.80 million vide appeal effect order dated 21 February 2017. Subsequent to current year ended 31 March 2017, Income tax department has filed an appeal to High Court of Delhi dated 1 May 2017 for the proposed addition to taxable income amounting to Rs. 4,164.13 million for AY 2009-10.
Further, disallowance of Rs. 64.38 million was proposed vide re-assessment order dated 24 March 2015. The Company has filed an appeal before CIT(A). Out of this, relief amounting to Rs. 33.83 million has been given vide appeal effect order u/s 250/143(3) of the Income Tax Act 1961 dated 22 February 2016.
4 The additional taxable income amounting to Rs.3,569.11 million for AY 2010-11 was proposed vide order dated 15 March 2013 by assessing officer. During the previous year ended 31 March 2016, CIT(A) has passed an order dated 20 January 2016 proposing additions to the tune of Rs. 726.60 million. The Company has filed an appeal to ITAT for proposed additions to taxable income.
Further, addition of Rs. 50.97 million was proposed by assessing officer under section 147 of the Income tax Act, 1961 vide re-assessment order dated 27 January 2016 and accordingly, above mentioned demand has arisen. The Company has filed an appeal to CIT(A) against order under section 147 of the Income tax Act, 1961.
5 The additional taxable income amounting to Rs. 6,070.11 million for AY 2012-13 was proposed vide assessment order dated 25 March 2015 by assessing officer. During the current year, CIT(A) has passed an order dated 22 March 2017 which further proposed additional taxable income amounting of Rs. 4,904.78 million and accordingly, above mentioned demand has arisen. The Company is in the process of filing an appeal before ITAT.
6 The additional taxable income amounting to Rs.14,218.26 million and Rs.12,538.26 million for AY 2013-14 and AY 2014-15 respectively was proposed by assessing officer vide order dated 6 December 2016 and accordingly, above mentioned demand has arisen. The Company has filed an appeal to CIT(A) against the same. The company has obtained a stay of demand for AY 2013-14 and AY 2014-15 till 31 December 2017 or disposal of appeal whichever is earlier.
** The Company is in process of filling appeal to Joint Commissioner.
## The demand does not include interest component as it is not specified in order.
(viii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not defaulted in repayment of loans or borrowings to banks or financial institutions. Further, no loans or borrowings were taken from government and there were no debentures issued during the year or outstanding as at 31 March 2017.
(ix) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, during the current and previous year, the Company has utilized all the money raised by way of initial public offer, for the purpose for which they were raised. There was a delay in utilization of Rs. 4,925.31 million due to obtaining requisite approvals. The same has been utilized during the current year. Moreover, the term loans taken by the Company have been applied for the purposes for which they were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to information and explanations given to us and on the basis of our examination of the records of the Company, the managerial remuneration has been provided and paid by the Company in accordance with the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the accounting standards.
(xiv) According to the information and explanation given to us and on the basis of 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 current year. Accordingly, paragraph 3(xiv) of the Order is not applicable.
(xv) According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For B S R & Co. LLP
Chartered Accountants
Firm registration number: 101248W / W-100022
Jiten Chopra
Place: Gurgaon Partner
Date: 09 May 2017 Membership number: 092894
Mar 31, 2016
We have audited the accompanying financial statements of InterGlobe
Aviation 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 Financial Statements
The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these 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 of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the 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 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 control 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 of the 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 financial
statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 (''the
Order''), issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Act, we enclose in the Annexure
A, a statement on the matters specified in paragraphs 3 and 4 of said
the Order.
2. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;
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 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) On the basis of 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;
f) 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
g) With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 2.28 to the
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.
Annexure A referred to in our Independent Auditor''s Report to the
members of InterGlobe Aviation Limited on the financial statements for
the year ended 31 March 2016
(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 two years except for aircraft and spare engines, which
are verified on an annual basis. In our opinion, this periodicity of
physical verification by management is reasonable having regard to the
size of the Company and the nature of its assets. In accordance with
this programme, certain fixed assets were physically verified during
the year. As informed to us, no material discrepancies were noticed on
such verification.
(c) According to the information and explanations given to us, the
Company does not have any immovable properties. Accordingly, paragraph
3(i)(c) of the Order is not applicable.
(ii) Inventories, except for goods-in-transit and stocks lying with
third parties have been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year-end,
written confirmations have been obtained. According to the information
and explanations given to us, the procedures for physical verification
of inventories followed by the management during the year are
reasonable and adequate in relation to the size of the Company and the
nature of its business. The discrepancies noticed on verification
between the physical stocks and the book records were not material and
have been properly adjusted in the books of account.
(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 Companies Act, 2013.
Accordingly, the provisions of paragraph 3 (iii) of the Order are not
applicable to the Company.
(iv) According to the information and explanations given to us, the
Company has not given any loan, or provided any guarantee or security
as specified under section 185 and 186 of the Companies Act, 2013.
Moreover, in respect of the investments made by the Company,
requirements of section 186 of the Companies Act, 2013 have been
complied with.
(v) As per the information and explanations given to us, the Company
has not accepted any deposits as mentioned in the directives issued by
the Reserve Bank of India and the provisions of section 73 to 76 or any
other relevant provisions of the Companies Act, 2013 and the rules
framed there under. Accordingly, para 3(v) of the Order is not
applicable.
(vi) According to the information and explanations given to us, the
Central Government has not prescribed the maintenance of cost records
under sub-section (1) of section 148 of the Companies Act, 2013, for
any of the services rendered by the Company. Accordingly, para 3(vi) of
the Order is not applicable.
(vii) (a) 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, sales tax, service tax, duty of customs, value added taxes,
cess and other statutory dues have been 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.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees''
state insurance, income tax, sales tax, service tax, duty of customs,
value added taxes, cess and other statutory dues were in arrears as at
31 March 2016 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no dues of income tax, service tax, sales tax, value added tax and
duty of customs which have not been deposited by the Company with the
appropriate authorities on account of any dispute as at 31 March 2016,
other than those mentioned as follows:
Statement of Disputed Tax Dues
Name of the
Statute Nature of the
dues Amount Period to
which Forum where
(Rs. in
million) the amount
relates dispute is
pending
Income-tax
Act, 1961 Revision to the
taxable income
on 1,180.34 A.Y 2007-081 Income Tax
Appellate
account of: AY 2009-10 2 Tribunal (ITAT)
a) Tax treatment
of certain
incentives AY 2010-11 3 Commissioner
of
received by the
Company from Income Tax,
Appeals
manufacturers
with the
acquisition [CIT(A)]
of aircraft and
engine.
b) Disallowance
of certain
expenses /
adjustments.
Income-tax
Act, 1961 Revision to
taxable income on 993.21 AY 2008-09 4 ITAT
account of :
a) Disallowances
of certain
expenses /
adjustments; and
b) Tax treatment
of certain
incentives
received by the
Company from the
manufacturers
with the
acquisition of
aircraft and
engine.
Income-tax
Act, 1961 Revision to taxable
income on - AY 2012-13 5 CIT(A)
account of :
a) Disallowances
of certain expenses;
and
b) Tax treatment of
certain incentives
received by the
Company from the
manufacturers with
the acquisition of
aircraft and engine.
Income-tax
Act, 1961 Tax deducted at
source 1.02 AY 2007-08 Assessing
officer
(AO)
Income-tax
Act, 1961 Tax deducted at
source (Rs. 7.84 142.48 AY 2010-11 ITAT, CIT(A)
million deposited
under dispute)
Income-tax
Act, 1961 Tax deducted at
source (Rs. 5.07 20.99 AY 2011-12 ITAT
million deposited
under dispute)
Income-tax
Act, 1961 Tax deducted at
source (Rs. 4.20 0.19 AY 2013-14 CIT(A), AO
million deposited
under dispute for
AY 2013-14)
Income-tax
Act, 1961 Tax deducted at
source (Rs. 11.41 22.78 AY 2012-13 CIT(A)
million deposited
under dispute)
Income-tax
Act, 1961 Tax deducted at
source 12.00 AY 2013-14,
AY 2014-15, ITAT, CIT(A),
AO
AY 2015-16
Finance Act,
1994 Service tax and
penalty on excess 111.21 FY 2006-07
to
FY 2010-11 Customs,
Excise and
(Service
tax) baggage charges,
services received Service Tax
Appellate
from overseas
vendors and
denial of Tribunal
(CESTAT),
CCNVAT Credit Chandigarh
Finance
Act, 1994 Service tax and
penalty on services 2.96 FY 2005-06 to
FY 2009-10 CESTAT,
Chandigarh
(Service
tax) received from
overseas vendors
and FY 2010-11
Statement of Disputed Tax Dues (Contd.)
Name of the
Statute Nature of the
dues Amount Period to
which Forum where
(Rs. in
million) the amount
relates dispute is
pending
Finance Act,
1994 Penalty for
late payment
of Service 358.56 FY 2012-13
to
FY 2013-14 CESTAT,
Chandigarh
(Service
tax) tax on various
expenses
incurred on
ECB (Rs. 89.64
million
deposited
under protest)
The Customs
Act, Customs duty
and penalty
on import 531.20 FY 2011-12
and
FY 2012-13 CESTAT,
Bangalore
1962 of aircraft
engines
The Customs
Act, Custom duty
and penalty
demanded 6.78 August 2012 to
May 2015 CESTAT,
Chennai
1962 on notional
freight charges
added to the
value of Aviation
turbine fuel
left in the tank
of an aircraft
Kerala Value
Added Value Added
Tax on sale of
goods in 3.07 FY 2012-13
to
FY 2013-14 Assistant
Tax Act,
2003 International
flights Commissioner
(Appeals),
Kerala
1 The proposed addition to taxable income amounting to Rs. 1,874.63
million for AY 2007-08, will result in reduction of business loss and
depreciation of the respective assessment year.
2 The proposed revision to taxable income resulted in additional
taxable income amounting to Rs. 3,830.83 million for AY 2009-10. This
resulted in reduction of the returned business loss and depreciation.
During the current year, CIT (A) has passed an order dated 20 January
2016 which further proposed additional taxable income amounting of Rs.
333.71 million and raised the aforesaid demand. The ITAT has granted
stay against the outstanding demand.
3 The additional taxable income amounting to Rs.3,569.11 million for AY
2010-11 was proposed vide order dated 15 March 2013 and during the
current year, CIT(A) has passed an order dated 20 January 2016
proposing additions to the tune of Rs. 726.60 million. However, the
Company is in appeal before the ITAT against the additions made by
CIT(A). Further, addition of Rs. 50.97 million was proposed vide
re-assessment order dated 27 January 2016 and accordingly, above
mentioned demand has arisen.
4 The additional taxable income amounting to Rs. 1,655.78 million for
AY 2008-09 was proposed, which reduced the returned business loss and
depreciation. During the current year, CIT(A) has passed an order
dated 8 January 2016 which further proposed additional taxable income
amounting of Rs. 3,033.94 million. Due to this addition, above
mentioned demand has arisen. The ITAT has granted stay against the
outstanding demand.
5 The tax liability on the revised taxable income, after the
adjustments/disallowances by the tax authority of Rs. 6,070.11 million,
was more than the minimum alternate tax paid by the Company on book
profits as assessed under section 115 JB of Income Tax Act, 1961.
Accordingly, an assessed tax demand of Rs. 1,543.30 million was raised
on the Company. During the current year, the entire tax demand has been
deleted vide order u/s 154 dated 08 June 2015 on account of MAT credit
adjusted against the total tax payable as per normal provisions of the
Act.
(viii) In our opinion and according to the information and explanations
given to us and on the basis of our examination of the records of the
Company, the Company has not defaulted in repayment of loans or
borrowings to banks or financial institutions. Further, no loans or
borrowings were taken from government and there were no debentures
issued during the year or outstanding as at 31 March 2016.
(ix) In our opinion and according to the information and explanations
given to us and on the basis of our examination of the records of the
Company, the Company has utilized the money raised by way of initial
public offer during the year, for the purposes for which they were
raised, except for delay in utilisation of Rs. 4,925.31 million due to
obtaining requisite approvals, which as informed to us by management
will be received in the first quarter of the next financial year.
Moreover, the term loans taken by the Company have been applied for the
purposes for which they were raised.
(x) According to the information and explanations given to us, no
material fraud by the Company or on the Company by its officers or
employees has been noticed or reported during the course of our audit.
(xi) According to information and explanations given to us and on the
basis of our examination of the records of the Company, the managerial
remuneration has been provided and paid by the Company in accordance
with the provisions of section 197 read with Schedule V to the
Companies Act, 2013.
(xii) According to the information and explanations given to us, the
Company is not a nidhi company. Accordingly, paragraph 3(xii) of the
Order is not applicable.
(xiii) In our opinion and according to the information and explanations
given to us and on the basis of our examination of the records of the
Company, the transactions with the related parties are in compliance
with sections 177 and 188 of the Companies Act, 2013 where applicable
and the details have been disclosed in the financial statements as
required by the accounting standards.
(xiv) According to the information and explanation given to us and on
the basis of 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. Accordingly,
paragraph 3(xiv) of the Order is not applicable.
(xv) According to information and explanations given to us, the Company
has not entered into any non-cash transactions with directors or
persons connected with them. Accordingly, paragraph 3(xv) of the Order
is not applicable.
(xvi) According to the information and explanations given to us, the
Company is not required to be registered under section 45-IA of the
Reserve Bank of India Act, 1934.
For B S R & Co. LLP
Chartered Accountants
Firm registration number: 101248W / W-100022
Jiten Chopra
Place: Gurgaon Partner
Date: 29 April 2016 Membership number: 092894