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Disclosure in auditor’s report explanatory

Independent Auditor's Report

To the Membersof InterGlobe Aviation Limited

Report on the Financial Statements

We have audited the accompanying financial statements of InterGlobe Aviation Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2015, 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  financialstatements 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 adequateaccounting recordsin 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 andestimates that are reasonable and prudent; and design, implementation and maintenance of adequateinternal financial controls, that were operating effectively for ensuringthe accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement, whetherdue to fraud or error.

 Auditor's Responsibility

Our responsibility is to express an opinion onthese financial statements based on our audit.

We have taken into accountthe provisions of the Act, the accounting and auditing standards and matters which are required to be includedin the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about theamounts and the disclosuresinthe financial statements. The procedures selected depend on the auditor's judgment, includingthe assessment of the risks of materialmisstatement of the financialstatements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal financial control relevant to the Company'spreparation of the financialstatements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon whether the Companyhas in place an adequateinternal financial controls system over financial reporting and the operating effectiveness of such controls.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 obtainedis 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 2015, 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, 2015 (‘the Order’), issued by the Central   Government of India in terms of Section 143 (11) of the Act, based on the comments in the auditor’s report of the Company, we give in the Annexure 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, 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)             In our opinion, there are no matters, which may have an adverse effect on the functioning of the Company.

 

f)              On the basis of the written representations received from the directors as on 31 March 2015 taken  on  record  by  the  Board  of  Directors,  none  of the  directors  is disqualified as  on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

 

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 financialposition in its financial statements Refer Note 2.28 tothe 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 B S R & Co. LLP

Chartered Accountants

Firm registration number: 101248W / W–100022      

   
  Place: Gurgaon

Date: 4 September 2015  

Jiten Chopra

Partner

Membership number: 092894

Annexure to the Independent Auditor’s Report

The Annexure referred to in our Independent Auditor’s Report to the members of the Companyfor the year ended 31 March 2015. We report that:

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

(b)     The Companyhas a regular programme of physicalverification of its fixed assets by which allfixed assets are verified in a phased manner over a period of two years except for aircraft which are verified on an annual basis. In accordance with this programme, certain fixed assets were physically verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion,this periodicity of physicalverification is reasonable having regard to the size of the Company and the natureof its assets. As informed to us, no material discrepancies were noticed on such verification.

(ii) (a)  Inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.    

 (b)      In our opinion and 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.  

 (c)  The Company is maintaining proper records of its inventories. 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) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of paragraph 3 (iii) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Company’s specialised requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of itsbusiness with regard to purchase ofinventories and fixed assets and with regard to the sale of goods and services. We have neither observed nor have been informed of any instances of major weakness in the internal control system during the course of our audit.

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

(vi)  According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 148 of the Act, for any of the services rendered by the Company.

(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, wealth tax, service tax, duty of customs, value added taxes, cess and other material 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, wealth tax, sales tax, service tax, duty of customs, value added taxes, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b)   According to the information and explanations given to us, there are no dues of income tax, service tax, sales tax, wealth tax, value added tax, duty of customs and cess which have not been deposited by the Company with the appropriate authorities on account of any dispute as at 31 March 2015, 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:

A.Y 2007–08 (1)

Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeals)

a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine.

b) Disallowance of certain expenses, provision, depreciation and certain adjustments made.

Income–tax Act, 1961

Demand raised under section 201(1) and 201 (1A) of Income– tax Act, 1961.

1.02

AY 2007–08

Income Tax Officer

Income–tax Act, 1961

Revision to taxable income on account of :

0.2

AY 2008–09, AY 2009–10 (2)

Commissioner of Income–tax (Appeals)

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 account of:

AY 2010–11 (3)

Commissioner of Income–tax (Appeals)

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

Revision to taxable income on account of :

1,543.30

AY 2012–13(4)

Commissioner of Income–tax (Appeals)

a) Disallowances of certain expenses; and

b) Tax treatment of certain incentives received bythe Company from themanufacturers with the acquisition of aircraft and engine.

Income–tax Act, 1961

Demand raised under section 201(1) and 201 (1A) of Income –tax Act, 1961. (Rs.7.84 million deposited under dispute)

142.48

AY 2010–11

Income Tax Appellate Tribunal

Income–tax Act, 1961

Demand raised under section 201 (1A) of Income –tax Act, 1961. (Rs.5.07 million deposited under dispute)

20.99

AY 2011–12

Income Tax Appellate Tribunal

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

Demand raised under section 201(1A) of the Income Tax Act, 1961.

3.25

AY 2012–13, AY 2013–14

Commissioner of Income–tax

Income–tax Act, 1961

Demand raised under section 201(1A) of the Income Tax Act, 1961. (Rs.4.20 million deposited under dispute for AY 2013–14)

0.19

AY 2013–14

Commissioner of Income–tax (Appeals), Assessing Officer

Income–tax Act, 1961

Demand raised under section 201(1A) of the Income Tax Act, 1961 (Rs.11.41 million deposited under dispute)

22.78

AY 2012–13

Commissioner of Income–tax (Appeals)

Income–tax Act, 1961

Demand raised under section 201(1) / 201(1A) of the Income Tax Act, 1961. (Rs.1.25 million deposited under dispute)

1.25

AY 2013–14

Assessing Officer

Income–tax Act, 1961

Demand raised under section 201(1) / 201(1A) of the Income Tax Act, 1961

15.84

AY 2013–14, AY 2014–15 and AY 2015–16

Income Tax Appellate Tribunal, Commissioner of Income–tax (Appeals), Assessing Officer

Finance Act, 1994 (Service Tax)

Demand raised on account of:
a) Non–payment of Service tax on Excess Baggage Charges
b) Wrong availment of credit during the period output was not taxable/ exempt
c) Short payment of Service tax on expenditure in foreign currency

52.58

AY 2005–2006 to AY 2010–2011

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994 (Service Tax)

Demand raised on account of:

a) Non–payment of Service tax on Excess Baggage Charges.
b) Short payment of Service tax on expenditure in foreign currency.

6.05

AY 2011–2012

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994 (Service Tax)

Demand against non–payment of Service tax on expenditure in foreign currency. (Rs. 0.7 million deposited)

1.68

AY 2011–12

Customs, Excise and Service Tax Appellate Tribunal

The Customs Act, 1962

Demand raised for custom duty on the aircraft engines reimported by the Company

240.60

AY 2011–12, AY 2012–13

Customs, Excise and Service Tax Appellate Tribunal

Tamil Nadu VAT Act,2006

Demand raised on account of short payment of value added tax on food items sold

10.28

AY 2015–16

Joint Commissioner of Commercial Taxes

       

(1) The proposed revision to taxable income amounting to Rs. 1,874.63 million for AY 2007–08, will result in reduction of business loss and depreciation.  As of 31 March 2015, the Company does not have accumulated business loss and unabsorbed depreciation

       

(2) The proposed revision to taxable income amounting to Rs. 1,655.78 million for AY 2008–09 and Rs. 3,830.83 million for AY 2009–10, will result in reduction of business loss and depreciation.  As of 31 March 2015, the Company does not have accumulated business loss and unabsorbed depreciation

         

(3) The tax liability on the revised taxable income due to proposed revision amounting to Rs. 3,569.11 million was lower than the minimum alternate tax paid by the Company on book profits as assessed under section 115 JB of Income Tax Act, 1961. Accordingly, there is no additional tax demand mentioned in the order.

(4) 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. Subsequent to year end, 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.

  (c) According to the information and the explanations given to us, the requirements relating to Investor education and protection fund is not applicable to the Company.

(viii)                  The Company does not have any accumulated losses at the end of the financialyear and has not incurred cash losses in the financial year and in theimmediately preceding financial year.

(ix)                      In our opinion and according to the information and the explanations given to us, the Company has not defaulted in repayment of dues to any banks or financial institutions during the year. The Company did not have any outstanding debentures during the year.

(x)                        According to the information and the explanations given to us, the Company has not given any guarantee for loans taken by othersfrom banks or financial institutions.

(xi)                      In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

(xii)                    According to the information and explanations given to us, certain instances of fraud on the Company have been observed during the year. As informed, these frauds represent possible fraudulent bookings of tickets through credit cards amounting to Rs. 4.65 million, which we are informed are being pursued. As explained to us, the entire amount outstanding against the above has been written–off in the books of account as at the year end based on management's assessment of recoverability of the outstanding amount. According to the information and explanations given to us, no other fraud on or by the Company was noticed or reported during the course of our audit.

                                                                 

 

 
  For B S R & Co. LLP

Chartered Accountants

Firm registration number: 101248W / W–100022      

   
  Place: Gurgaon

Date: 4 September 2015  

Jiten Chopra

Partner

Membership number: 092894

   
   
   

 

 

Disclosure relating to quantitative details of fixed assets

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

Disclosure relating to physical verification and material discrepancies of fixed assets

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 which are verified on an annual basis. In accordance with this programme, certain fixed assets were physically verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

Disclosure of physical verification of inventories at fixed intervals

Inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

Disclosure of procedure followed for physical verification of inventories

In our opinion and 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.

Disclosure about maintenance of inventory records and material discrepancies

The Company is maintaining proper records of its inventories. 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.

Disclosure in auditors report relating to loans

The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of paragraph 3 (iii) of the Order are not applicable to the Company.

Disclosure in auditors report relating to any material fraud reported during period

According to the information and explanations given to us, certain instances of fraud on the Company have been observed during the year. As informed, these frauds represent possible fraudulent bookings of tickets through credit cards amounting to Rs. 4.65 million, which we are informed are being pursued. As explained to us, the entire amount outstanding against the above has been written–off in the books of account as at the year end based on management's assessment of recoverability of the outstanding amount. According to the information and explanations given to us, no other fraud on or by the Company was noticed or reported during the course of our audit.

Disclosure in auditors report relating to internal control system

In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchase of certain items of inventories and fixed assets are for the Company’s specialised requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. We have neither observed nor have been informed of any instances of major weakness in the internal control system during the course of our audit.

Disclosure in auditors report relating to maintenance of cost records

According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 148 of the Act, for any of the services rendered by the Company.

Disclosure in auditors report relating to accumulated losses

The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

Disclosure in auditors report relating to default in repayment of financial dues

In our opinion and according to the information and the explanations given to us, the Company has not defaulted in repayment of dues to any banks or financial institutions during the year. The Company did not have any outstanding debentures during the year

Disclosure in auditors report relating to guarantee given

According to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

Disclosure in auditors report relating to term loans used for purpose other than for purpose they were raised

In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

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