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Interglobe Aviation Ltd.

BSE: 539448 Sector: Services
NSE: INDIGO ISIN Code: INE646L01027
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OPEN 1075.00
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VOLUME 30507
52-Week high 1520.00
52-Week low 891.10
P/E 28.61
Mkt Cap.(Rs cr) 41,747
Buy Price 1086.00
Buy Qty 35.00
Sell Price 1086.95
Sell Qty 32.00
OPEN 1075.00
CLOSE 1085.75
VOLUME 30507
52-Week high 1520.00
52-Week low 891.10
P/E 28.61
Mkt Cap.(Rs cr) 41,747
Buy Price 1086.00
Buy Qty 35.00
Sell Price 1086.95
Sell Qty 32.00

Interglobe Aviation Ltd. (INDIGO) - Auditors Report

Company auditors report

To The Members of InterGlobe Aviation Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of InterGlobeAviation Limited ("the Company") which comprise the Balance Sheet as at 31March 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 yearthen ended and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "standalone Ind AS financialstatements").

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant Rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's 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 auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31 March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear 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 give in "Annexure A" a statement on thematters 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 bestof 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 theCompany so far as it appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss(including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act read with relevantrules issued thereunder;

e) On the basis of written representations received from the directors as on 31 March2017 taken on record by the

Board of Directors none of the directors is disqualified as on 31 March 2017 frombeing 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 financialreporting of the Company the operating effectiveness of such controls refer to ourseparate Report in "Annexure B"; and

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 in our opinionand 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 standalone Ind AS financial statements - Refer Note 31 to the standaloneInd AS financial statements;

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

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

iv. The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016.

Based on audit procedures performed and relying on the management representation wereport that the disclosures are in accordance with books of account maintained by theCompany and as produced to us by the Management - Refer Note 40 to the standalone Ind ASfinancial statements.

Annexure A referred to in our Independent Auditor's Report to the members of InterGlobeAviation Limited on the standalone Ind AS financial statements for the year ended 31 March2017

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

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of two years exceptfor aircraft and spare engines which are verified on an annual basis. In our opinionthis periodicity of physical verification by management is reasonable having regard to thesize of the Company and the nature of its assets. In accordance with this programmecertain fixed assets were physically verified during the year. As informed to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us the Company does nothave 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 havebeen physically verified by the management during the year. In our opinion the frequencyof such verification is reasonable. For stocks lying with third parties at the year-endwritten confirmations have been obtained. According to the information and explanationsgiven to us the procedures for physical verification of inventories followed by themanagement during the year are reasonable and adequate in relation to the size of theCompany and the nature of its business. The discrepancies noticed on verification betweenthe physical stocks and the book records were not material and have been properly adjustedin the books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships 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 arenot applicable to the Company.

(iv) According to the information and explanations given to us the Company has notgiven any loan or provided any guarantee or security as specified under section 185 and186 of the Companies Act 2013. Moreover in respect of the investments made by theCompany 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 acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of section 73 to 76 or any other relevant provisions of the Companies Act 2013and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable.

(vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under sub-section (1) of section 148 ofthe 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 ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income tax sales tax service tax duty of customs value added taxes cessand other statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax sales taxservice tax duty of customs value added taxes cess and other statutory dues were inarrears as at 31 March 2017 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us there are no dues ofincome tax service tax sales tax value added tax and duty of customs which have notbeen deposited by the Company with the appropriate authorities on account of any disputeas 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
Revision to the taxable income on account of:
Income-tax Act 1961 a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. - Assessment year (AY) 2007-08 1 High Court of Delhi Commissioner of
AY 2008-09 2 Income Tax (Appeals)
AY 2009-10 3 [CIT(A)]
b) Disallowance of certain expenses / adjustments.
Revision to the taxable income on account of:
Income-tax Act 1961 a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. 8.66 AY 2010-11 4 Income Tax Appellate Tribunal (ITAT) and CIT(A)
b) Disallowance of certain expenses / adjustments. (Rs.1.30 million deposited under dispute) Revision to the taxable income on account of:
Income-tax Act 1961 a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. 2465.83 AY 2012-13 5 ITAT
b) Disallowance of certain expenses / adjustments.
Revision to the taxable income on account of:
Income-tax Act 1961 a) Tax treatment of certain incentives received by the Company from manufacturers with the acquisition of aircraft and engine. 7337.36 AY 2013-14 6 CIT(A)
b) Disallowance of certain expenses / adjustments. AY 2014-15 6
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 ITAT AO
AY 2015-16 Customs Excise and
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) 2006- 07 to FY 2010-11 ## 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 2012- 13 ## 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
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 Tribunal Ernakulam 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 theloss for the year has been assessed at Rs. 2032.85 million vide appeal effect order dated16 November 2016. Income tax department has filed an appeal to High Court of Delhi dated23 December 2016 for the proposed addition to the taxable income amounting to Rs. 1874.63million for AY 2007-08 which will result in reduction of business loss and unabsorbeddepreciation for AY 2007-08.

In relation to certain disallowance of expenses amounting to Rs. 22.39 million appealis 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 andthe loss for the year has been assessed at

Rs. 3171.43 million vide appeal effect order dated 6 March 2017. Subsequent to currentyear ended 31 March 2017 Income tax department has filed an appeal to High Court of Delhidated 1 May 2017 for the proposed addition to taxable income amounting to Rs. 4714.97million for AY 2008-09.

3 During the current year ITAT has passed favorable order dated 18 November 2016 andthe loss for the year has been assessed at Rs. 2121.80 million vide appeal effect orderdated 21 February 2017. Subsequent to current year ended 31 March 2017 Income taxdepartment has filed an appeal to High Court of Delhi dated 1 May 2017 for the proposedaddition to taxable income amounting to Rs. 4164.13 million for AY 2009-10.

Further disallowance of Rs. 64.38 million was proposed vide re-assessment order dated24 March 2015. The Company has filed an appeal before CIT(A). Out of this reliefamounting to Rs. 33.83 million has been given vide appeal effect order u/s 250/143(3) ofthe Income Tax Act 1961 dated 22 February 2016.

4 The additional taxable income amounting to Rs.3569.11 million for AY 2010-11 wasproposed vide order dated 15 March 2013 by assessing officer. During the previous yearended 31 March 2016 CIT(A) has passed an order dated 20 January 2016 proposing additionsto the tune of Rs. 726.60 million. The Company has filed anappeal to ITAT for proposedadditions to taxable income.

Further addition of Rs. 50.97 million was proposed by assessing officer under section147 of the Income tax Act 1961 vide re-assessment order dated 27 January 2016 andaccordingly 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. 6070.11 million for AY 2012-13 wasproposed vide assessment order dated 25 March 2015 by assessing officer. During thecurrent year CIT(A) has passed an order dated 22 March 2017 which further proposedadditional taxable income amounting of Rs. 4904.78 million and accordingly abovementioned demand has arisen. The Company is in the process of filing an appeal beforeITAT.

6 The additional taxable income amounting to Rs.14218.26 million and Rs.12538.26million for AY 2013-14 and AY 2014-15 respectively was proposed by assessing officer videorder dated 6 December 2016 and accordingly above mentioned demand has arisen. TheCompany has filed an appeal to CIT(A) against the same. The company has obtained a stay ofdemand for AY 2013-14 and AY 2014-15 till 31 December 2017 or disposal of appeal whicheveris 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 andon the basis of our examination of the records of the Company the Company has notdefaulted in repayment of loans or borrowings to banks or financial institutions. Furtherno loans or borrowings were taken from government and there were no debentures issuedduring the year or outstanding as at 31 March 2017.

(ix) In our opinion and according to the information and explanations given to us andon the basis of our examination of the records of the Company during the current andprevious year the Company has utilized all the money raised by way of initial publicoffer for the purpose for which they were raised. There was a delay in utilization of Rs.4925.31 million due to obtaining requisite approvals. The same has been utilized duringthe current year. Moreover the term loans taken by the Company have been applied for thepurposes for which they were raised.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to information and explanations given to us and on the basis of ourexamination of the records of the Company the managerial remuneration has been providedand 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 anidhi 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 andon the basis of our examination of the records of the Company the transactions with therelated parties are in compliance with sections 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the standalone Ind AS financialstatements as required by the accounting standards.

(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe 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 enteredinto any non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

Annexure B to the Independent Auditor's Report of even date on the standalone Ind ASfinancial statements of InterGlobe Aviation Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial reporting of InterGlobe Aviation Limited("the Company") as of 31 March 2017 in conjunction with our audit of thestandalone Ind AS financial statements of the Company for the date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancialcontrols based on the internal control over financial reporting criteriaconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance

Note and the Standards on Auditing issued by ICAI and deemed to be prescribed undersection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence controls overfinancial about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining year ended on that an understanding of internalfinancial controls over financial reporting assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of thestandalone

Ind AS financial statements whether due to fraud or error. bytheCompany We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Company's internal financial controls system over financialreporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial under the Companies controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

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