FUTURE JET AIRWAYS Auditors Report

Report on the standalone financial statements


We have audited the accompanying standalone financial statements of Jet Airways (India) Limited (‘the Company/), which comprise the balance sheet as at 31 March 2017, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.


Management’s responsibility for the standalone 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 standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditors’ responsibility


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


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


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


An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.


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


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2017 and its profit and its cash flows for the year ended on that date.


Emphasis of Matters


We draw attention to the following matters in the Notes to the standalone financial statements:


a) Note 32 to the standalone financial statements which explains that the accounting impact of Scheme of Merger (‘the Scheme’) approved by shareholders and by the Honourable High Court of Judicature at Bombay on 20 October 2016, enabling the merger of Jet Lite (India) Limited, wholly owned subsidiary (“subsidiary company”) which has negative net worth, with the Company, with effect from 1 April 2015. Pending receipt of Ministry of Civil Aviation approval and filling of the scheme with the ROC, no adjustment of the scheme has been given effect in the statement of profit and loss and the loans and advances given to its subsidiary company are carried at their carrying amount.


b) Note 42 to the standalone financial statements regarding preparation of the standalone financial statements on going concern basis for the reasons stated therein. The appropriateness of assumption of going concern is dependent upon realisation of the various initiatives undertaken by the Company and/or the Company’s ability to raise requisite finance/ generate cash flows in future to meet its obligations, including financial support to its subsidiary companies.


Our opinion is not qualified in respect of the above matters.


Report on Other Legal and Regulatory Requirements


1. As required by the Companies (Auditors Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of section 143(11) of the Act, we give in the “Annexure A”, a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.


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


(e) the matters described under the Emphasis of Matters paragraph above, in our opinion, 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 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017, from being appointed as a director in terms of Section 164 (2) of the Act;


(g) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and


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


i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 33 to the standalone financial statements;


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


iii. There were no amounts required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2017; and


iv. The Company has provided requisite disclosures in the standalone financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8 November, 2016 of the Ministry of Finance, during the period from 8 November, 2016 to 30 December, 2016. Based on audit procedures performed and the representations provided to us by the management, we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. Refer Note 44 in the standalone financial statements.


Annexure-A to the Independent Auditors’ Report - 31 March 2017


With reference to the Annexure A referred to in Independent Auditors’ Report to the members of the Company on the standalone financial statements for the year ended 31 March 2017, we report:


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


(b) The Company has a programme of verification of fixed assets to cover all the items in phased manner, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its fixed assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification.


(c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.


(ii) As explained to us, the inventory has been physically verified during the year by the management other than inventory lying with third party. In our opinion, the frequency of verification is reasonable. In respect of inventory lying with third party, we have relied on the confirmations obtained by the management from such entities. The discrepancies noticed on verification between the physical stock and the book records were not material.


(iii) In our opinion and according to information and explanations given to us the Company has granted unsecured loans to its wholly-owned subsidiary covered in the register maintained under Section 189 of the Act. The Company has not granted any loans, secured or unsecured to firms, limited liability partnership, body corporate or other parties covered in the register maintained under section 189 of the Act. In respect of such loan to its wholly owned subsidiary:


(a) Terms and conditions of unsecured loan granted to its wholly-owned subsidiary is not prejudicial of the interest of the Company.


(b) Loan given till 31 March 2014 is interest free and loan given thereafter is interest bearing and is repayable in the financial year 2019-2020.


(c) There is no overdue amount for more than ninety days in respect of the unsecured loans granted.


(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees or securities granted in respect of which provisions of Section 185 and 186 of the Act are applicable to the Company.


(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits as per the directions issued by the Reserve Bank of India from the public in accordance with relevant provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3 (v) of the Order is not applicable to the Company.


(vi) As informed to us by the management, the Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services/activities 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 Employees’ State Insurance, Sales Tax, duty of customs, Value Added tax, profession tax and other material statutory dues have generally been regularly deposited with the appropriate authorities except in few cases with respect to provident fund, income tax (tax deducted at source including interest) and service tax where the delays ranged from 20 days to 59 days.


According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, duty of customs, cess and other material statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable except in respect of interest on service tax of Rs.6,342 lakhs for the period 2012-13 to 2014-15.


(c) According to the information and explanations given to us, there are no material dues of duty of excise, sales tax and value added tax which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of Income Tax, Service Tax and Duty of Customs have not been deposited by the Company on account of disputes:




















Name of the statute



Nature of dues



Period to which the amount relates



Forum where dispute is pending



Amount not deposited account of demand (Rs. in lakhs)



IATT Rules, 1989



IATT Interest & Penalty*



2003-04



Delhi High Court



321





















































































Customs Act 1962



Custom Duty



2010-2011 to 2013-2014



Commissioner of Customs (Appeals)



9



Customs Act 1962



Custom Duty



2007-2008 to 2014-2015



Commissioner of Customs



2,114



Customs Act 1962



Custom Duty*



2006-2007 to 2013-2014



CESTAT



814



Finance Act 1994



Service Tax



2003-2004 to 2005-2006



Supreme Court of India



361



Finance Act 1994



Service Tax*



2002-2003 to 2013-2014



CESTAT



39,235



Finance Act 1994



Service Tax



2002-2003 to 2014-2015



Commissioner of Central Excise



46,170



Finance Act 1994



Service Tax*



2012-2013 to 2013-2014



Commissioner of Central Excise (Appeals)



52



Income Tax Act 1961



Income Tax



2008-2009



Commissioner of Income Tax (Appeals)



3



Income Tax Act 1961



Income Tax



2002-03 and 2008-09



ITAT



332



Income Tax Act 1961



Income Tax



2006-2007



Bombay High Court



233



Income Tax Act 1961



Income Tax



2006-2007 to 2015-2016



Commissioner of Income Tax



1,427



* Amount paid/deposit for IATT interest and penalty Rs.105 lakhs, service tax (CESTAT) ’ 576 lakhs, service tax (commissioner of Central Excise (Appeals) Rs.2 lakhs and custom duty (CESTAT) Rs.11 lakhs.


(viii) In our opinion and according to the information and explanations given to us, there have been no defaults in the repayment of dues to financial institutions, banks and debenture holders during the year. The Company did not have dues relating to any loan or borrowing from government during the year.


(ix) In our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of term loans during the year for the purpose for which they were raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments).


(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit, nor have we been informed of any such case by the management.


(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.


(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company as prescribed under section 406 of the Act. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company.


(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the standalone financial statements as required by the applicable Accounting Standards.


(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.


(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.


(xvi) According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. Accordingly, paragraph 3 (xvi) of the Order is not applicable to the Company.


For B S R & CO. LLP For CHATURVEDI & SHAH


Chartered Accountants Chartered Accountants


(Firm’s Registration No: 101248W/W-100022) (Firm’s Registration No. 101720W)


Bhavesh Dhupelia Parag D. Mehta


Partner Partner


Membership No. 042070 Membership No. 113904


Place : Mumbai


Date : 30 May, 2017

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