Your Directors ("Board of Directors" or the "Board") are pleased topresent the seventeenth Annual Report of InterGlobe Aviation Limited ("yourCompany" or "we") along with the financial statements for the year endedMarch 312020 ("FY 2020"). Wherever required the consolidated performance ofyour Company and its subsidiary has also been provided.
1. Financial Results
The standalone and consolidated financial highlights of your Company's operations aresummarised below:
|Particulars || |
| ||FY 2020 ||FY 2019 ||FY 2020 ||FY 2019 |
|Revenue from operations ||357560.01 ||284967.72 ||357560.01 ||284967.72 |
|Other Income ||15355.09 ||13245.98 ||15362.42 ||13249.36 |
|Total Income ||372915.10 ||298213.70 ||372922.43 ||298217.08 |
|Profit / (Loss) before tax ||(2556.69) ||(1473.78) ||(2750.89) ||(1490.47) |
|Current Tax ||(91.30) ||(15.24) ||(8.21) ||- |
|Deferred tax credit/ (charge) ||311.21 ||3061.49 ||277.51 ||3051.82 |
|Profit / (Loss) after tax (PAT) ||(2336.78) ||1572.47 ||(2481.59) ||1561.35 |
|Other Comprehensive Income net of tax ||10.99 ||1.34 ||11.00 ||1.34 |
|Total Comprehensive Income ||(2325.79) ||1573.81 ||(2470.59) ||1562.69 |
|Earnings per equity shares of the face value of Rs.10 each || || || || |
|Basic (Rs.) ||(6.07) ||4.09 ||(6.45) ||4.06 |
|Diluted (Rs.) ||(6.07) ||4.09 ||(6.45) ||4.06 |
2. Company's Performance
On a consolidated basis the total income for FY 2020 was Rs. 372915.10 millionhigher by 25.05% over previous year's income of Rs. 298213.70 million. Your Companyreported a net loss of Rs. 2336.78 million for FY 2020 against a PAT of Rs. 1572.47million for the previous year.
On a standalone basis the income for FY 2020 was Rs. 372922.43 million higher by25.05% over the previous year's income of Rs. 298217.08 million. Your Company reported anet loss of Rs. 2481.59 million for FY 2020 as against a PAT of Rs. 1561.35 million forthe previous year.
3. Performance of Agile Airport Services Private Limited ("Agile" or"Subsidiary Company")
Agile is a wholly owned subsidiary of your Company and is engaged in the business ofproviding ground handling services at various airports in India. Agile commencedoperations in September 2018. The total income of Agile for FY 2020 was Rs. 3516.69million higher by 335.34% over the previous period's income of Rs. 807.80 million. ThePAT was Rs. 144.81 million indicating a growth of 1202.25% over PAT of Rs. 11.12 millionfor FY 2019. Pursuant to Section 129(3) of the Companies Act 2013 as amended ("theAct") read with Rule 5 of the Companies (Accounts) Rules 2014 as amended astatement containing the salient features of the financial statement of the SubsidiaryCompany in form AOC -1 is annexed to the consolidated financial statements and is given atpage number 256 of the Annual Report.
In compliance with the provisions of Section 136 of the Act the audited financialstatements of the Subsidiary Company is uploaded on the Investor Relations section of thewebsite of your Company at www.goindigo.in.
4. Operational Performance
Your Company operated 1674 peak daily flights and carried over 75 million passengersduring FY 2020.
In March 2020 the COVID-19 pandemic developed rapidly into a global crisis forcing theGovernment of India to enforce a lockdown of all economic activities (discussed in detailseparately below - Impact of COVID-19). Prior to the lockdown your Company operatedscheduled services to 86 destinations including 24 international destinations with afleet of 262 aircraft consisting of 123 A320 CEOs 100 A320 NEOs 14 A321 NEOs and 25ATRs. During FY 2020 your Company inducted 45 net aircraft to the fleet of which 42 werefuel efficient A320 / A321NEO family aircraft powered by Pratt and Whitney("P&W") GTF engines.
Based on data published by the Directorate General of Civil Aviation ("DGCA"or "the regulator") for On-Time Performance ("OTP") at key metrocities your Company was ranked number 1 in the month of March 2020 with an OTP of86.78%. Your Company continued to be the leading airline in terms of OTP with an averageOTP of 79.81% at the key metro cities in FY 2020. In addition based on data compiled byOAG for OTP your Company was ranked as one of the best airlines for the third consecutiveyear amongst the top 20 mega airlines globally. Your Company was the only Indian airlineto have made it to this prestigious list.
Your Company achieved a technical dispatch reliability of 99.85% and a flightcancellation rate of 1.10% in FY 2020.
Your Company's A320 / A321NEO aircraft are fitted with P&W GTF engines. During FY2020 the DGCA issued directives to all airline operators using P&W engines to replaceunmodified P&W engines with modified engines. To meet this directive your Company hasbeen working closely with P&W to ramp up spare engine supply and expect to replacethem within the timelines provided.
In FY 2020 your Company has also executed support agreements with CFM InternationalS.A. ("CFM") for an efficient and hassle-free entry into service for theadditional NEO aircraft fitted with the LEAP engine provided by CFM.
Your Company presently performs maintenance activities of its A320 fleet at a hangar atTerminal 1D Delhi which is a one-bay hangar. As per the new master plan of DIAL yourCompany needs to vacate this hangar. In light of this your Company is constructing twonew hangars one in Delhi (DEL) and one in Bengaluru (BLR). These hangars shall enable usto meet the growing maintenance requirements for our fleet in an effective manner.
Your Company constantly reviews all internal processes to make the customer experiencefriendly hassle-free and more efficient. To achieve operational excellence your Companyhas launched cost-saving initiatives such as awareness campaigns on fuel-efficienttechniques and working with the regulatory authorities on airspace optimization with aclear focus on safety and standards.
Further in FY 2020 your Company went through another successful IATA (InternationalAir Transport Association) Operational Safety Audit without any significant comments.Senior leaders of your Company continue to be engaged in formation of new regulations forthe aviation industry.
Impact of COVID-19
In the last quarter of FY 2020 the outbreak of COVID-19 created a pandemic whichimpacted the whole world. As the pandemic developed into a global crisis economies acrossthe world witnessed a sharp decline in growth. The airline industry was significantlyimpacted as countries started going into a lockdown placing an embargo on internationalflights all of which resulted in a slowdown in demand.
The Government of India declared a national lockdown with effect from March 25 2020which continued till May 31 2020. However the Government of India permitted a phasedresumption of domestic operations from May 25 2020. As a consequence of the lockdownyour Company's entire fleet was grounded resulting in a passenger revenue loss for 61days. Consequently your Company's performance in the first 2 months of Q4 of FY 2020 wasnullified by a sharp reduction in air travel from the beginning of March 2020 whichultimately came to a complete halt on March 25 2020.
We also sought early approvals by the Ministry of Civil Aviation ("MCA") andDirector General of Civil Aviation ("DGCA") to operate flights for medicalrelief passenger relief and cargo. We are working towards more aircraft to be approvedfor cargo operations not limited to medical supplies and essential supplies. We ferried atotal of 18239 kgs of cargo for the period March 25 2020 to March 312020 and a total of839600 kgs of cargo during the period starting April 01 2020 to May 19 2020.
It is difficult to estimate the length and severity of the reduction in demand due toCOVID-19. However your Company expects that Q1 of FY 2021 is likely to be severelydepressed on revenues given that for most of the period till May 24 2020 the country wasunder a lockdown and there was almost no air travel within the country. Given that thereare uncertainties involved in reviving customer confidence domestically State Governmentscoming out with their own restrictions on flying no clarity on commencement and demandfor international travel your Company expects that the results for FY 2021 are likely tobe severely impacted.
At this time your Company's priority is to ensure safety of its customers andemployees. To gain confidence of its customers your Company has introduced a number ofmeasures as part of our new standard operating procedures which will enable us to minimisethe impact of the virus and also help build customer confidence. Some of these proceduresinclude spray cleaning of the aircraft on every arrival increased frequency of deepcleaning of the aircraft including wiping of all touch points such as tray tables armrests seat belts lavatory doors and overhead nozzles mandatory masks onboard placinghand sanitizers at various places in the aircraft and discontinuance of meal services.
All our aircraft are preserved in "Flight Ready Conditions" which calls forperiodic maintenance checks (weekly bi-weekly and monthly) for quick return to service.All ground support equipments i.e. buses ramps ladders etc. are also being sanitisedand maintained regularly. Your Company has also put in place a detailed check mechanism touse virus resistant sanitisers. To secure the health of the staff working at the frontline your Company has provided them with personal protective equipments such as maskssuits caps etc.
Your Company is continuously conducting e-learning and virtual trainings which havebeen approved by the regulator to its front-line personnel to ensure that their licensesremain valid. Your Company is preparing its staff for the "New Normal".
In short your Company's endeavour is to reinforce customer confidence to fly with itby safeguarding their health and safety.
Your Company has taken actions to mitigate the effect of COVID-19 on its businessincluding cost reduction and steps to preserve cash and improve its overall liquidityposition. Some of the steps include replacing older CEO aircraft with more cost-efficientNEOs putting on hold all discretionary expenses deferring certain capital expenditureand various employee related cost measures such as salary cuts leave without pay etc.
Although there are uncertainties due to the pandemic your Company had a strong cashposition as of March 31 2020 and expects to meet its ongoing cash obligations as relatesto its lease rentals debt repayments and other financial obligations.
For a detailed analysis of the operational performance of your Company please refer tothe Management Discussion and Analysis Report forming a part of the Annual Report.
Considering the cash flow position and the loss your Company posted for FY 2020 theBoard has not recommended any dividend on the equity shares of your Company.
Your Company had adopted 'InterGlobe Aviation Limited - Dividend Distribution Policy'in compliance with Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI LODR Regulations"). This sets out theparameters and factors to be considered by the Board in determining the distribution ofdividend to its shareholders and / or retaining profits of your Company. This policy isuploaded on the Investor Relations section of the website of your Company at www.goindigo.in.
6. Amount to be carried to reserves
Your Directors do not propose to transfer any amount to the reserves.
7. Complaint filed by the Promoter of your Company with the Securities and ExchangeBoard of India ("SEBI") and the MCA
During FY 2020 your Company has received communications from the SEBI the MCA and thestock exchanges requesting your Company to provide comments and/or information regardingsome complaints and representations made by and on behalf of Mr. Rakesh Gangwal theChinkerpoo Family Trust and Ms. Shobha Gangwal (promoters and/or members of the promotergroup of your Company) (collectively the "RG Group") commencing with a letterdated July 08 2019 sent to such authorities. The complaints and representations relateto among other things certain Related Party Transactions entered into by your Companywith InterGlobe Enterprises Private Limited and Mr. Rahul Bhatia promoters of yourCompany (the "IGE Group") the RG Group's requisition for convening anextraordinary general meeting for the shareholders to consider resolutions recommendingadditional procedures to be incorporated in your Company's Policy of dealing with RelatedParty Transactions applicable to Related Party Transactions with the IGE Group and theappointment of an independent woman director to your Company's Board of Directors. YourCompany has responded to all the communication sent by concerned authorities within theprescribed timelines and there are no pending information requests.
8. Arbitration Proceedings filed with the London Court of international Arbitration
During FY 2020 the IGE Group submitted a Request for Arbitration dated October 012019 to the London Court of international Arbitration under the Shareholders' Agreementdated April 23 2015 (as amended on September 17 2015) (the "ShareholdersAgreement") executed between inter-alia the IGE Group the RG Group and yourCompany. in the arbitration proceedings the IGE Group has sought certain reliefs againstthe RG Group including in relation to compliance with the Shareholders Agreement and yourCompany's Articles of Association ("Articles") as well as damages. Your Companyhas been named as a respondent in the arbitration proceedings on the basis that it is anecessary and proper party. However currently no monetary claim has been made or anycompensation sought from your Company. The arbitral tribunal has been constituted.
9. Utilisation of institutional Placement Programme Proceeds
During FY 2018 your Company had successfully completed an institutional PlacementProgramme ("IPP") under Chapter VIII - A of the SEBI (issue of Capital andDisclosure Requirements) Regulations 2009 as amended pursuant to which 33578421equity shares having a face value of Rs. 10 each were allotted/ allocated at an issueprice of Rs. 1130 per equity share consisting of fresh issue of 22385614 equity sharesand an offer for sale of 11192807 equity shares by the selling shareholders.
The proceeds from the IPP amounted to Rs. 24796.69 million (net of Company's share offresh issue related expenses which has been adjusted against the Securities PremiumReserve). As on March 31 2020 the entire IPP proceeds were utilised by your Company forthe purpose set out in the prospectus on "Use of Proceeds" viz. acquisition ofaircraft purchase of ground support equipments repayment / prepayment of debt includingfinance leases for aircraft and general corporate purposes.
10. Employee Stock Option Scheme
Pursuant to the approval of the shareholders of your Company on June 25 2015 yourCompany had adopted 'InterGlobe Aviation Limited - employee Stock Option Scheme 2015'("Scheme") which was amended on September 07 2016. Under the Scheme yourCompany grants share-based benefits to the eligible employees with a view to attract andretain the best talent and encouraging employees to align their individual performanceswith Company's objectives and promoting increased participation towards growth of yourCompany. Your Company confirms that the Scheme is in compliance with the provisions ofSEBI (Share Based employee Benefits) Regulations 2014 as amended.
During FY 2020 the Nomination and Remuneration Committee allotted 389441 equityshares upon exercise of 389441 stock options by the employees under the Scheme. Further53000 stock options were granted to an eligible employee in accordance with the termsspecified in the Scheme. No employee has been granted stock options equal to or exceedingone percent of the issued capital of your Company at the time of grant.
The disclosure in compliance with SEBI (Share Based Employee Benefits) Regulations2014 as amended is uploaded on the investor Relations section of the website of yourCompany at www.goindigo.in.
11. increase in Share Capital
Pursuant to the allotment of 389441 equity shares of Rs. 10 each upon exercise ofstock options by the eligible employees under the Scheme the issued subscribed and paidup share capital of your Company increased from 384406838 equity shares to 384796279equity shares of Rs. 10 each aggregating to Rs. 3847.96 million during the year.
12. Related Party Transactions
All transactions entered into by your Company with its related parties during FY 2020were in the ordinary course of business and on an arms' length basis.
in FY 2020 your Company had not entered into any arrangement / transaction withrelated parties which could be considered material and required the approval of the Board.Accordingly the disclosure of related party transactions in form AOC -2 as required underSection 134(3)(h) of the Act is not applicable.
During FY 2020 the Board approved and adopted a modified 'InterGlobe Aviation Limited- Policy on dealing with Related Party Transactions' in compliance with Regulation 23 ofthe SEBI LODR Regulations which lays down procedures to be followed by your Company inrelation to transactions to be entered into by your Company with its related parties. Thetransactions entered by your Company with its related parties were in compliance with theabove stated policy and are in the best interest of your Company. This Policy has beenuploaded on the investor Relations section of the website of your Company at www.goindigo.in.
For further details of related party transactions please refer to note number 34 ofthe notes forming a part of the financial statements attached to the Annual Report
13. Amendment in the Articles
In compliance with the provisions of Section 14 and other applicable provisions of theAct read with the Rules made thereunder Article 17.1 of the Articles of your Company wasamended to increase the maximum number of Directors of your Company from six (6) to ten(10) with the approval of the shareholders of your Company in the Annual General Meeting("AGM") on August 27 2019.
An extraordinary general meeting of the shareholders of your Company was held onJanuary 29 2020 on the requisition dated December 24 2019 made by the RG Groupcollectively holding 36.64% of the paid up capital of your Company to consider andapprove amendments in the Articles by deleting Articles 1.6 to 1.15 (Transfer of Equityshares) 1.16 to 1.20 (Acquisition of shares) and 2A (Other provisions on equity shares)by way of a special resolution. However the special resolution to approve amendment inthe Articles could not be passed in the absence of requisite support.
14. Details of Directors and Key Managerial Personnel
Pursuant to the provisions of Section 149 161 and other applicable provisions of theAct and the SEBI LODR Regulations and on the recommendation of the Nomination andRemuneration Committee the Board appointed Ms. Pallavi Shardul Shroff as an AdditionalDirector on the Board as an Independent Director with effect from September 19 2019 tohold office for a term of five consecutive years i.e. up to September 18 2024 subjectto the approval of the shareholders. As per Section 161 of the Act Ms. Shroff will holdoffice till the ensuing AGM and is eligible for appointment as a Director of your Company.Ms. Shroff is the Managing Partner of Shardul Amarchand Mangaldas & Co. with over 38years of extensive experience. Ms. Shroff is a member of the Competition Law ReviewCommittee constituted by the Government of India. She appears regularly in the SupremeCourt and High Courts of India and in arbitrations mediations and international legaldisputes. She is also a Director on the Boards of several prestigious companies. For adetailed profile of Ms. Shroff please refer to the Notice of AGM.
The Board also appointed Dr. Venkataramani Sumantran as an Additional Director on theBoard as an Independent Director with effect from May 28 2020 to hold office for a termof five consecutive years i.e. up to May 27 2025 on the recommendation of theNomination and Remuneration Committee subject to the approval of the shareholders inaccordance with the provisions of Section 149 161 and other applicable provisions of theAct and the SEBI LODR Regulations. As per Section 161 of the Act Dr. Sumantran will holdoffice till the ensuing AGM and is eligible for appointment as a Director of your Company.Dr. Sumantran has been an industry leader technocrat academic and author having livedand worked in the USA Europe and Asia through a career spanning over 35 years. He is theChairman of Celeris Technologies since 2014 a strategic advisory engaged in the domain ofautos mobility digital transformation aerospace and technologies. For detailed profileof Dr. Sumantran please refer to the Notice of AGM.
The Board is of the opinion that Ms. Shroff and Dr. Sumantran have relevant attributesvast and varied experience and expertise and are persons of integrity for holding theposition of Independent Directors on the Board. Your Company has received requisite noticeunder Section 160 of the Act proposing the appointment of Ms. Pallavi Shardul Shroff andDr. Venkataramani Sumantran as Non- Executive Independent Directors.
The Board had approved the appointment of Mr. Ronojoy Dutta as Whole Time Director(Additional Director) (who was earlier appointed as the Chief Executive Officer("CEO") with effect from January 24 2019) and re-designated him as Whole TimeDirector and CEO of your Company for a period effective from January 27 2020 till January23 2024 or till the date of his employment as the CEO whichever is earlier subject tothe approval of the shareholders. Pursuant to Sections 161 197 and other applicableprovisions of the Act the Board has recommended appointment of Mr. Ronojoy Dutta as WholeTime Director and designating him as Whole Time Director and CEO of your Company for theapproval of the shareholders by special resolution at the ensuing AGM. Your Company hasreceived notice under Section 160 of the Act proposing the appointment of Mr. RonojoyDutta as Whole Time Director of your Company.
Your Company had obtained requisite prior security clearance approval from the Ministryof Civil Aviation for the appointment of Ms. Pallavi Shardul Shroff Dr. VenkataramaniSumantran and Mr. Ronojoy Dutta.
Ms. Rohini Bhatia Non-Independent Non-Executive Director retires by rotation andbeing eligible offered herself for reappointment at the ensuing AGM.
The notice convening the AGM includes the proposal for re-appointment and appointmentof Directors as stated above.
Mr. Aditya Pande joined as the Chief Financial Officer of your Company with effect fromSeptember 16 2019 in place of Mr. Rohit Philip (erstwhile Chief Financial Officer) whoresigned with effect from September 15 2019.
Your Company has received declarations from all Independent Directors confirming thatthat they meet the criteria of independence as laid down under Section 149 of the Act andRegulations 16 & 25 of the SEBI LODR Regulations and complied with the Code forIndependent Directors prescribed in Schedule IV of the Act. The Independent Directors haveregistered themselves with the data bank maintained by Indian Institute of CorporateAffairs (IICA). In terms of Section 150 of the Act read with Rule 6(4) of the Companies(Appointment & Qualification of Directors) Rules 2014 the Independent Directors arerequired to undertake online proficiency self-assessment test conducted by the IICA withina period of one (1) year from the date of inclusion of their names in the data bankunless exempted. The said online proficiency selfassessment test will be undertaken by theIndependent Directors of the Company as applicable within the prescribed timelines.
None of the Directors of your Company is disqualified to act as a Director underSection 164 of the Act.
15. Number of meetings of the Board
The Board met eleven times during the year under review. The details of meetings of theBoard and attendance of the Directors at each meeting are given in the CorporateGovernance Report which forms a part of the Report.
16. Committees of the Board
As on March 312020 the Board had the following five committees:
i. Audit Committee
ii. Nomination and Remuneration Committee
iii. Risk Management Committee
iv. Corporate Social Responsibility Committee
v. Stakeholders' Relationship Committee
The details of the composition terms of references and number of committee meetingsheld during the year under review and the attendance of the committee members at eachmeeting are given in the Corporate Governance Report which forms a part of the AnnualReport.
17. Board Evaluation
The Board evaluated its own performance and the performance of the Board Committeesthe Chairman and all Directors including Independent Directors. The evaluation was aimedat improving the effectiveness of all these constituents and enhancing their contributionto the functioning of the Board. This evaluation was carried out based on discussionsamong the Directors. Separately the Board has engaged the services of an expertconsultant to undertake a detailed evaluation exercise. This is expected to provideadditional insights that will lead to increased Board effectiveness.
18. Remuneration Policy
The Board had adopted 'InterGlobe Aviation Limited - Nomination and RemunerationPolicy' in compliance with Section 178 of the Act and Regulation 19(4) read with Part D ofSchedule II to the SEBI LODR Regulations for identification selection and appointment ofDirectors Key Managerial Personnel and Senior Management of your Company. The policy laysdown the process and parameters for the appointment and remuneration includingrecommendation on remuneration of the key managerial personnel and other senior managementand the criteria for determining qualifications positive attributes and independence of adirector. This Policy is uploaded on the Investor Relations section of the website of yourCompany at www.goindigo.in.
19. Risk Management
The Board has constituted a Risk Management Committee to frame implement and monitorthe risk management plans for your Company. The Committee is responsible for monitoringand reviewing the risk management plans and ensuring their effectiveness. The AuditCommittee has an additional oversight in the areas of financial risks and controls. YourCompany has implemented an Enterprise Risk Management framework ("ERMframework") based on the guiding principles of risk management. It is an integralpart of decision-making for the organisation and is dynamic in nature undergoingcontinuous improvement. The ERM Framework follows an annual process of setting objectivesidentifying key risks on an ongoing basis developing a mitigation and action plan andmonitoring of leading indicators and planning gaps.
The Committee is responsible for systematically reviewing and updating the riskmanagement calendar based on certain risks becoming more important during the year. TheCommittee meets once a quarter to discuss identified relevant risks like unfavorable fuelprice unfavorable forex movement infrastructure shortfall reputation damage inadequatepilot supply in market cyber threat and IT system continuity adverse regulatory changesand litigation labour relations and talent flight major aviation incident and groundingof fleet and any other new risk as identified by the Management since the previousCommittee meeting. A note on key risks of your Company is given in the ManagementDiscussion and Analysis Report which forms a part of the Annual Report.
20. Corporate Social Responsibility
The Board has constituted a Corporate Social Responsibility Committee ("CSRCommittee") in compliance with Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014 as amended. The CSR Committeecomprised Ms. Rohini Bhatia (Chairperson) Dr. Anupam Khanna and Mr. Anil Parashar. YourCompany has adopted a policy on Corporate Social Responsibility ("CSR Policy")to undertake the activities as set out in Schedule VII of the Act. The CSR Policy isuploaded on the Investor Relations section of the website of your Company at www.goindigo.in.
A brief note regarding your Company's initiatives with respect to Corporate SocialResponsibility is given in Annexure - A of this Report in the prescribed format. As a partof your Company's Policy the CSR funds are released to the partner organisations intranches and every tranche is released only after 90% of the previous tranche has beenspent and programme milestones have been achieved. However in FY 2020 a few of ourpartner organisations could not spend the money and therefore your Company did not paythe planned amount. Further as a part of our CSR governance and control systems theimplementing organisations and projects are identified after a thorough due diligenceprocess. The fund transfer to few planned implementing organisations could not beinitiated due to their inability to complete final agreements prevented by the pandemic.These factors affected our overall spend.
The details pertaining to the composition terms of reference and number of meetingsheld during the year and the attendance of the CSR Committee members at each meeting aregiven in the Report on Corporate Governance which forms a part of the Annual Report.
21. Statutory Auditors
The erstwhile Statutory Auditors of your Company B S R & Co. LLP CharteredAccountants (Firm Registration no. 101248W/ W-100022) were appointed at the AGM held onSeptember 08 2014 for a term of five consecutive years from the conclusion of the 11thAGM till the conclusion of the 16th AGM of your Company. Accordingly they heldoffice till the conclusion of the 16th AGM of your Company held on August 272019.
S.R. Batliboi & Co. LLP (Firm Registration no. 301003E/E300005) were appointed asthe Statutory Auditors of your Company at the 16th AGM held on August 27 2019for a term of five consecutive years from the conclusion of the 16th AGM tillthe conclusion of the 21st AGM of your Company in accordance with theprovisions of Section 139 of the Act. The Statutory Auditors have submitted a certificateas required under Section 139(1) of the Act confirming that they meet the criteriaprovided in Section 141of the Act.
The Report given by the Statutory Auditors on the standalone financial statements andthe consolidated financial statements of your Company for FY 2020 forms a part of theAnnual Report. The Reports do not contain any qualification reservation or adverse remarkor disclaimer made by the Statutory Auditors except an observation that the remunerationpaid to the Whole Time Director and Chief Executive Officer of your Company for FY 2020is in excess of the limits prescribed within provisions of Section 197 read with ScheduleV to the Act by Rs. 155.82 million. This is subject to the approval of the shareholders.
22. Secretarial Auditors
Sanjay Grover & Associates a firm of practicing Company Secretaries (FirmRegistration no. P2001DE052900) ("Secretarial Auditors") carried out thesecretarial audit in compliance with the Act and the Rules made thereunder the SEBI LODRRegulations and other applicable regulations as prescribed by SEBI Foreign ExchangeManagement Act 1999 as amended and other laws specifically applicable to your Company.The Secretarial Audit Report in form MR-3 for the financial year under review is attachedto this Report as Annexure-B. The Report does not contain any qualification reservationor adverse remark or disclaimer made by the Secretarial Auditors except that (i) yourCompany was required to appoint one independent woman director on the Board w.e.f. April012019 in accordance with Regulation 17(1)(a) of the SEBI LODR Regulations. However anindependent woman director was appointed w.e.f. September 19 2019 and
(ii) the remuneration paid to the Whole Time Director and Chief Executive Officer dueto the inadequacy of the profits in FY 2020 is subject to the approval of theshareholders.
The previous Articles of your Company capped the number of Directors on the Board atsix. In order to ensure compliance of Regulation 17 of the SEBI LODR Regulations relatingto the appointment of an independent woman director alteration of Articles was necessary.The shareholders at their AGM held on August 27 2019 approved the alteration in theArticles to increase the maximum number of Directors from its strength of six (6) to ten(10) on the recommendation of the Board. After obtaining the approval of theshareholders the Board appointed Ms. Pallavi Shardul Shroff as an IndependentNonExecutive Director (Additional Director) w.e.f. September 19 2019. With theappointment of Ms. Shroff the composition of the Board of Directors of your Company is incompliance with Regulation 17 of the SEBI LODR Regulations.
In compliance with Regulation 24A of the SEBI LODR Regulations read with SEBI circularno. CIR/CFD/CMD1/27/2019 dated February 08 2019 the Secretarial Auditors have alsoissued Annual Secretarial Compliance Report for FY 2020.
23. Non-applicability of maintenance of cost records
The Central Government has not prescribed the maintenance of cost records under Section148(1) of the Act and the Rules thereunder with respect to your Company's nature ofbusiness.
24. Whistleblower Policy / Vigil Mechanism
Your Company has adopted a Whistleblower Policy and has a vigil mechanism in place fordirectors senior management and employees of the Company and its subsidiary to reportconcerns about unethical behaviour actual or suspected fraud instances of leak ofUnpublished Price Sensitive Information ("UPSI") or violations of your Company'sCode of Conduct.
The Policy is extended to suppliers contractors and other stakeholders to enable themto report their concerns about unethical behaviour misconduct violation or legal orimproper practices actual or suspected fraud by a Company official without any fear ofunfair treatment (including loss of business). The Policy provides for adequate safeguardsagainst victimization of whistleblowers and provides for direct access to the Chairpersonof the Audit Committee in exceptional circumstances. The Audit Committee oversees theimplementation of the Policy. The Audit Committee on a quarterly basis reviews thestatus of complaints summary of findings and action taken in accordance with the Policy.
During FY 2020 your Company has updated its Policy to comply with SEBI (Prohibition ofInsider Trading) Regulations 2015 as amended ("SEBI PIT Regulations") toinclude UPSI as a subject matter that can be reported by whistleblowers. Any instance ofleak or suspected leak of UPSI can now also be reported through your Company's vigilmechanism which is uploaded on the Investor Relations section of the website of yourCompany at www.goindigo.in.
25. Disclosure under Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 as amended ("POSH Act")
Your Company has a zero-tolerance policy towards cases of sexual harassment atworkplace reported by or against its employees as well as consultants traineesapprentices temporary and contractual staff. Your Company has adopted a robust policy on'Prevention of Sexual Harassment at Workplace' to deal with such matters. All employeesare sensitized about the Policy from time to time. Your Company has constituted anInternal Complaints Committee with the Chairperson being a female member from our seniormanagement team. Your Company also conducts awareness programs for employees on thePolicy and has awareness posters with details of how to report a complaint along withthe details of the Internal Complaints Committee members which are displayed across allour working locations. The Internal Complaints Committee ensures that all cases reportedare resolved in a timely manner in accordance with the POSH Act.
During FY 2020 36 complaints were received by your Company. As on March 31 2020 31complaints out of the total complaints reported were resolved after complying with dueprocess and 5 complaints were under investigation. Your Company has also submitted theannual return to the local authority in compliance with the POSH Act.
26. Internal Financial Control and their adequacy
Your Company has an adequate Internal Financial Control (IFC) system which ensures thatthe transactions are authorised recorded and reported correctly. The Board has adoptedpolicies and procedures for ensuring:
orderly and efficient conduct of its business including adherence to Company'spolicies;
safeguarding of its assets;
prevention and detection of frauds and errors;
accuracy and completeness of the accounting records;
timely preparation of reliable financial information.
27. Public Deposits
Your Company has not accepted deposits from the public falling within the ambit ofSection 73 of the Act and the Rules made thereunder.
28. Particulars of loans Investments and Guarantees
The particulars of loans investments and guarantees as on March 31 2020 covered underSection 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules2014 as amended and Regulation 34(3) read with Schedule V of the SEBI LODR Regulationsare given at note numbers 6 and 7 of the notes in the standalone financial statementswhich forms a part of the Annual Report.
29. Material changes and commitments affecting the financial position of your Companybetween the end of the financial year and the date of this Report
Other than as stated elsewhere in this Report there are no material changes andcommitments affecting the financial position of your Company between the end of thefinancial year and the date of this Report.
30. Management Discussion and Analysis Report
The Management Discussion and Analysis Report on Company's operational performanceindustry trends and other required details prepared in compliance with Regulation 34 ofthe SEBI LODR Regulations forms a part of the Annual Report.
31. Report on Corporate Governance
In compliance with the provisions of Regulation 34 of the SEBI LODR Regulations readwith Schedule V of these Regulations the Report on Corporate Governance together with acertificate from the Secretarial Auditors regarding compliance of conditions of CorporateGovernance forms a part of the Annual Report.
A certificate from the Whole Time Director & Chief Executive Officer and ChiefFinancial Officer of your Company in terms of the SEBI LODR Regulations inter-aliaconfirming the correctness of the financial statements and cash flow statements adequacyof the internal control measures and reporting of matters to the Audit Committee alsoforms a part of the Annual Report.
32. Business Responsibility Report
In compliance with the provisions of Regulation 34 of the SEBI LODR Regulations readwith SEBI Circular no. CIR/CFD/ CMD/2015 dated November 04 2015 the BusinessResponsibility Report of your Company for FY 2020 describing the various initiativesundertaken from an environment social and governance perspective forms a part of theAnnual Report.
33. Extract of Annual Return
In compliance with Section 92(3) and Section 134 (3)(a) of the Act and Rules madethereunder the extract of Annual Return in Form MGT 9 is attached as Annexure - C to thisReport and is also uploaded on the Investor Relations Section of the website of yourCompany at www.goindigo.in.
34. Significant material orders passed by the Regulators Courts and Tribunals
There are no significant material orders passed by the Regulators Courts or Tribunalsimpacting the going concern status of your Company and its operations in future.
35. Awards and Recognitions
During FY 2020 your Company received multiple awards and recognition. Some of thesignificant awards are listed below:
Awarded for 'Customer Service Domestic & International Operations andBusiness growth' for the second year in the row and maiden award for 'Cargo Airline of theYear (Domestic)' by Bangalore International Airport Limited (BIAL)
Awarded 'Best Low-Cost Airline in Central Asia and India' at the SKYTRAX WorldAirline Awards for the tenth time in a row
Ranked as one of the best airlines in terms of OTP for the third consecutiveyear amongst the top 20 mega airlines globally
Awarded 'Best Domestic Airline' by the Federation of Indian Chambers of Commerceand Industry
Awarded 'Best Conversational Brand - Online' at Sammie Awards 2019
Awarded 'Companies with Great Managers Award' by People Business in partnershipwith The economic Times
Awarded 'Best Safety Partner' by Delhi International Airport Limited (DIAL)
Awarded 'Safety Champion' in Hazard Reporting for the Year 2019 by DelhiInternational Airport Limited (DIAL)
Our Learning academy - 'ifly' has won six accolades for best practices inLearning and Development at the TISS LEAPVAULT Chief Learning Officer (CLO) Awards by theTata Institute of Social Sciences
Awarded 'Best Customer Services' Award and the 'Fastest Baggage Delivery' Awardby Kannur International Airport Limited (KIAL)
36. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Act the Board to the best of its knowledge andability confirms that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of your Company at the end of the financial year and of the profitand loss of your Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of your Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by your Company andthat such internal financial controls are adequate and were operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
37. Particulars of employees
The statement of disclosure of remuneration under Section 197(12) of the Act read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended is given in Annexure - D forming a part of this Report. The informationas per Rule 5(2) and Rule 5(3) of the above mentioned Rules pertaining to the names of topten employees and other particulars of employees is provided in a separate annexure.However as per the provisions of Section 136(1) of the Act and the Rules thereunder theReport and the financial statements are being sent to the shareholders excluding theaforesaid annexure. Any shareholder interested in obtaining a copy of the same may writeto the Company Secretary at the Registered Office of your Company.
None of the employees listed in the Annexure is related to any Director of yourCompany.
38. Transfer of unpaid / unclaimed dividend to Investor Education and Protection Fund
There was no unpaid / unclaimed dividend for the past years. The provisions of Section125 of the Act do not apply to your Company.
39. Reporting of Fraud
The Auditors of your Company have not reported any instances of fraud committed in yourCompany by its officers or employees as specified under Section 143(12) of the Act.
40. Conservation of Energy Technology Absorption
Your Company persistently strives to run its operations more efficiently to reduce itsfuel consumption and thus emissions. This endeavor entails your Company's continuouscommitment towards conservation of energy and motivates it to embrace newer technologicaladvances.
Your Company has incorporated policies for conservation of fuel and imparted trainingprocedures to flight crew and aircraft maintenance engineers including flight and groundprocedures for fuel conservation. Your company ensures an adequate fuel for sectorsafter evaluating various traffic trends thus avoiding any additional/ unnecessary fuelupliftment has installed software for accurate flight planning which provides accuratemaps and most efficient flight path restricting use of auxiliary power units employingcontinuous descent approaches and economy cruise speeds minimising aircraft weight byremoving unnecessary equipment and optimising engine settings for take-off and climb. YourCompany has sought to reduce the weight of the aircraft by selecting lighter seats and bychoosing not to have in-flight entertainment system. Your Company has further reduced theaircraft weight by equipping the entire fleet with Electronic Flight Bags (EFB) andremoving paper manuals weighing 25kg from each Airbus aircraft.
Your Company has also adopted fuel policies designed to reduce costs on the groundincluding the use of the EcoPower Engine Wash process for our engines the use of groundequipment in place of aircraft auxiliary power units which consumes more fuel use ofsingle engine for taxing on ground and other engineering/operations protocols. Thesepolicies are all designed to optimise fuel consumption reduce carbon footprint andthereby finally reducing costs.
Your Company continues to explore feasibility to use ground vehicles on cleaneralternative fuels like CNG/ electricity to reduce carbon emissions at airports whereverfeasible. Further in its endeavor to promote various fuel conservation measures yourCompany is evaluating innovative statistical data driven solutions for climb and descentfuel optimization.
Majority of the A320 aircraft delivered to us since September 2008 use InternationalAero Engines SelectOne engines. These engines use various technological advancements toreduce aircraft fuel consumption as compared to previous IAE engines. Your Company's fleetof aircraft includes A320 NEO aircraft which are up to 15% more fuel efficient than thecurrent A320 without sharklet aircraft. In the last one year 100 in service A320 NEOaircraft have operated 185460 flights thereby reducing carbon emissions by 298 Kilotons.During FY 2020 you Company has operated 25 ATR 72-600 turboprop aircraft which are morefuel efficient than jet aircraft to operate on regional routes.
41. Compliance with Secretarial Standards on Board and General Meetings
Pursuant to the provisions of Section 118 of the Act your Company has complied withthe applicable provisions of the Secretarial Standards issued by the Institute of CompanySecretaries of India and notified by the MCA.
42. Foreign exchange earnings and outgo
The details of foreign exchange earnings and outgo for FY 2020 are set out below:
|Particulars ||Amount (Rs. in million) |
|Foreign exchange earnings ||45447.11 |
|Foreign exchange outgo ||151734.16 |
The Board is grateful for the continuous patronage of our valued customers and remainscommitted to being on-time and delivering a courteous and hassle-free experience at everystep. The Board acknowledges and appreciates the relentless efforts of the employees whohave worked together as a team in achieving commendable business performance year on year.
Your Company also takes this opportunity to express its appreciation for the supportand co-operation extended by the Governments both Central and State RegulatoryAuthorities Investors Bankers and other stakeholders.
| || ||On behalf of the Board of Directors of |
| || ||InterGlobe Aviation Limited |
| ||Meleveetil Damodaran ||Ronojoy Dutta |
| ||Chairman ||Whole Time Director and Chief Executive Officer |
| ||DIN: 02106990 ||DIN: 08676730 |
|Date: June 3 2020 || || |
|Place: Gurgaon || || |