AIR INDIA CHARTERS LIMITED - AICL - Air India Express

 
AICL

AIR INDIA CHARTERS LIMITED
AICL

                                           CONTENTS

                                                                                       Page No.

1.   Board of Directors                                                                   1

2.   Directors’ Report                                                                    2

3.   Comments of the Comptroller & Auditor General of India                               25

4.   Independent Auditors’ Report                                                         26

5.   Balance Sheet as at 31 March 2015                                                    47

6.   Statement of Profit & Loss for the year ended 31 March 2015                           48

7.   Cash Flow Statement                                                                  49

8.   Notes forming part of the Financial Statements for the year ended 31 March 2015      50
AICL

BOARD OF DIRECTORS (as on 29 DECEMBER 2015)

Shri Ashwani Lohani               Chairman

Shri V. Hejmadi

Dr. (Smt.) Shefali Juneja

Smt. Puja Jindal

SECRETARY

Smt. Aditi Khandekar

AUDITORS

M/s. Kirtane & Pandit
Chartered Accountants
Mumbai.

LEGAL ADVISORS

M/s. Kini & Co.

BANKERS

ICICI Bank
HDFC Bank
State Bank of India
Bank of Baroda
Dena Bank
Bank of India
Indian Overseas Bank

REGISTERED OFFICE

21st Floor, Air India Building,
Nariman Point,
Mumbai 400 021.

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                                        DIRECTORS' REPORT 2014-15

The Directors take pleasure in presenting the 44th Annual Report of the Company together with the Audited
Accounts and Auditor's Report for the year ended 31 March 2015.

INDIAN CIVIL AVIATION SCENARIO

Financial year 2014-15 has been a very satisfactory one for most airlines in India including Air India Express as
                                                                                nd
the year saw progressive decline in fuel rates starting from the middle of the 2 Quarter leading to lower fares
and increased demand. As per the air traffic statistics published by the DGCA, India, the Indian domestic air
market registered growth of about 10.5% in the year 2014, with the domestic passenger traffic rising from about
60.1 million in 2013 to about 66.4 million in 2014 while the international traffic to and from India estimated at
about 46.3 million in 2014-15, also registering a growth of about 9% over the 2013-14 level. In this connection, it
is pertinent to note that the eight countries to which Air India Express operates contribute to about 50% of the
total traffic to and from India. Furthermore, the air market on the routes between the countries served by Air
India Express and India grew at a far higher rate of over 14% in the year 2014-15.

In a forecast report released in 2013, IATA had estimated that the international traffic to and from India would
grow at CAGR of 6.6% between 2013 and 2020. The forecast for the on-line markets of Air India Express upto
2020 was well above the national average, ranging between 7 and 8%. Going by the actual growth seen in
2014-15 and in the current financial year up to August 2015, the traffic growth in these markets could well end
up closer to double digit. Responding to the opportunities presented by the markets between Kerala and
destinations in the Gulf region, the larger Indian private carriers such as Indigo, Jet Airways and Spice jet and
Etihad have commenced competitive direct international flights to the Gulf from Airports in Kerala – Kochi and
Kozhikode effective Winter 2014-15 schedule. They have further added to their presence in these markets in
the Summer 2015 schedule.

Air India Express would be in a position to take advantage of the growing opportunities in the international
markets to / from India with the induction of 6 dry leased aircraft in its fleet. The dry leased aircraft are scheduled
to be delivered to the Airline between March and November 2016.

REVIEW OF PERFORMANCE

For the first time in the history of AICL, the Company has recorded an Operating Profit of Rs. 662.12 crores
(before Revenue Sharing) besides generating a Cash profit of Rs. 172.49 crores (as against a net loss of Rs.
345.32 crores in FY 2013-14) mainly through increased revenue of Rs. 257.01 crores during FY 2014-15. The
company has doubled the Cargo Revenue in the current fiscal over the previous year and also surpassed the
excess baggage revenue by 39.22 % compared to previous year. The Scheduled Services Revenue, before
revenue sharing with AI, increased substantially from Rs. 2,359.45 crores in 2013-14 to Rs. 2,616.46 crores in
2014-15, representing an increase of 10.8%. The total expenditure of the Company was Rs. 2,356.12 crores as
against Rs. 2,412.43 crores for the year 2013-14, representing a decrease of 2.33 %.

The turnaround in the financial performance of the Company may be attributed to more intense asset / resource
utilization, greater operational efficiency, robust demand, lower ATF costs and elimination of lease rentals.

In the year 2014-15 the demand on the routes served by Air India Express was strong enough to enable the
Airline to not only improve the passenger load factor but achieve significant improvement in yield. The
Company has also achieved “Excellent” Grade as per the MoU parameters defined for the year 2014-15.

SUMMARISED FINANCIAL PERFORMANCE
                                                                                   Rupees in crores
        Operating Revenue (before Rev. Sharing)                                            2,621.88
        Operating Expenses                                                                 1,959.76
        Operating Profit (before Revenue Sharing)                                             662.12

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       Operating Revenue (after Revenue Sharing)                                         2,294.82
       Operating Expenses                                                                1,959.76
       Operating Profit (after Revenue Sharing)                                             335.06
       Total Revenue                                                                     2,294.96

       Total Expenses                                                                    2,356.12
       Loss before taxation & Exceptional Items                                             61.16
       Less: Exceptional Items                                                              (0.13)
       Provision for Taxation                                                                    -
       Net Loss                                                                             61.03

Add: Balance brought forward from previous years                                         2,404.90

       Net Loss carried forward                                                          2,465.93

Cash Profit of AICL for 2014-15                                                               172.49

SUMMARISED PHYSICAL / REVENUE PERFORMANCE (FY 2014-15 Vs. FY 2013-14)

                                   APR-MAR 2014-15            APR-MAR 2013-14                 Variance
       ASK (million)                              8,161                      8,121               0.5%
       Carriage (million)                          2.62                       2.72               -3.7%
       RPK (millions)                             6,639                      6,396               3.8%
       Load Factor (%)                          81.4%                       78.8%                3.3%
       Revenue (Rs. Cr.)                          2,560                      2,287              11.9%
       Yield/RPK (Rs)                              3.82                       3.62               5.5%
       RASK (Rs.)                                  3.11                       2.81              10.7%
       Flying Hours                         66,620.63                   67,316.00                -1.0%

SHARE CAPITAL

Authorised Share Capital

As on 31 March 2015, the Authorised Capital of the Company was Rs.800 crores divided into 8 Crores Equity
Shares of Rs.100 each.

Issued, Subscribed and Paid up Share Capital

As on 31 March 2015, the Issued, Subscribed and Paid up Share Capital of the Company was Rs.780 crores
divided into 7.8 Crores Equity Shares of Rs.100 each.

AIRCRAFT FINANCING

As on 31 March 2015, the position of foreign currency borrowing for Aircraft was as under:
                                                                                                  Rupees in Cr.
Total Loan due as on 1April 2014                                                                    2,008.05
Less: Amount repaid during April 2014 to March 2015                                                 (319.48)
Add: Exchange adjustments due to revision in rates of currencies                                       79.13
Balance as on 31 March 2015                                                                         1,767.70

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AIR INDIA EXPRESS OPERATIONS

Fleet Size

As on 31 March 2015 the Airline's fleet strength stood reduced from 21 to 17 B737-800 aircraft, as 4 leased
aircraft were grounded to prepare them for return to the lessors.

Operations

Despite a reduction of nearly 20% in the Airline's fleet size, there was only a marginal (1%) decline in the
number of flying hours in FY 2015. As a result, the average daily utilization of the aircraft on the Airline's fleet
went up sharply from 8.9 hours per day to 10.5 hours per day in Summer 2014 and further to 10.7 hours per
day in the Winter 2013-14 Schedule. The number of weekly services operated by the Airline rose from 159 to
165 round-trip flights/week. With concerted focus on increasing resource utilization and judicious
rationalization of domestic services, the Airline was able to restore the direct services between Mangalore and
Kuwait besides improving the timings / increasing frequency of flights in several of its core markets.

Summer 2014 schedule

Between 1 May and 20 July 2014, Notice to Airmen (NOTAM) issued at Dubai International Airport had resulted
in partial closure of the runway at that airport. Air India Express was able to obtain alternative slots at Sharjah
International Airport and thereby continued its scheduled services from Tiruchirapalli, Amritsar, Lucknow,
Pune, Jaipur and Mangalore.

The Summer 2014 schedule comprised of 149 international flights and 11 domestic flights. The average aircraft
utilization was approximately 10.5 hours per day per aircraft.

Winter 2014 schedule

In the Winter Schedule aircraft rotations were further rationalized so as to increase aircraft utilization and cater
to the traffic demands for direct links / increased frequencies. The notable highlights of the Winter 2013-14
Schedule were as follows:

    l   Kochi/Muscat/Kochi – Frequency of flights increased to 4 flights per week from 3 flights per week.

    l   Trivandrum/Muscat/Trivandrum – Frequency of flights increased to 4 flights per week from 3 flights per
        week.

    l   Mangalore / Abu Dhabi – Muscat/Mangalore - Frequency of flights increased to 4 flights per week from 3
        flights per week.

    l   Mangalore/Doha/Bahrain/Mangalore - These flights have been restructured to operate 2 non-stop
        flights per week between Mangalore and Doha and 3 non-stop flights per week from Mangalore to
        Bahrain extended in round-robin fashion to Kuwait. This schedule initiative helped to meet the
        legitimate and increasingly strident demand for restoring direct air links between Mangalore and
        Kuwait.

    l   Kozhikode / Doha/ Kozhikode – Two additional terminator flights per week in addition to the daily flight
        operated on the Kochi / Kozhikode/Bahrain /Doha / Kozhikode / Kochi route.

    l   Mumbai / Doha / Mumbai – Frequency of flights increased to 4 flights per week from 3 flights per week.

The route-wise breakup of the flights operated by the Airline at the end of the Winter 2014-15 schedule was as
under:

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        Sr.No.         Sector                                                Flights / week
        01             India/Dubai                                                       61
        02             India/Abu Dhabi                                                   21
        03             India/Sharjah                                                     18
        04             India/Abu Dhabi/Muscat                                            04
        05             India/Muscat                                                      15
        06             India/Dammam                                                      04
        07             India/Doha/Bahrain                                                07
        08             India/Doha                                                        08
        09             India/Al Ain                                                      01
        10             India/Salalah                                                     01
        11             India/Kuwait                                                      03
        12             India/Bahrain/Kuwait/India                                        03
        13             India/Singapore                                                   07
        14             India/Kuala Lumpur                                                04
        15             Domestic                                                          08
                       TOTAL                                                            165

On Line Stations

As on 31 March 2015 the online stations were as under:

India            Kozhikode, Kochi, Thiruvananthapuram, Mangalore, Chennai, Tiruchirapalli, Mumbai, Pune,
                 Amritsar, Lucknow, Jaipur.

Foreign          Dubai, Abu Dhabi, Sharjah , Al Ain, Muscat, Salalah, Bahrain, Doha, Kuwait, Dammam,
                 Singapore, Kuala Lumpur.

Capacity offered, PLF, Yields and Revenues

Due to the non-availability of 4 leased aircraft that had been grounded during the last quarter of FY 2013-14, the
schedule in FY 2014-15 was operated with 17 owned B 737 – 800 aircraft. Despite this, the Airline achieved a
nominal increase of 0.5% in the capacity offered as compared to the level achieved in FY 2013-14. However,
there was a marginal decline in the number of passengers carried - 2.62 million in FY 2014-15 as against 2.68
million in FY 2013-14. The decline of about 2.2% in the number of passengers carried was also partially due to
increase in average stage length as some of the capacity deployed on domestic services were moved to
international routes giving rise to a reduction in the number of seats offered although the capacity in terms of
ASK rose marginally by 0.5%.

Favorable market conditions in terms of both demand and supply coupled with improved schedule reliability
and on-time performance enabled the Airline to achieve higher Passenger Load Factor (PLF) and higher yields.
While the PLF increased by 3.3% from 78.8% in 2013-14 to 81.4% in 2014-15; the Yield per RPK rose by 5%

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from Rs. 3.62 to Rs. 3.80. Consequently the passenger revenue including revenues on-line earned through
sales of excess baggage and preferred seats increased by 11.9% from Rs. 2,287 crores achieved in 2013-14 to
Rs. 2,560 crores in 2014-15.

Notable service improvements implemented during the year, include the following:

Launch of call center facility, appointment of representative agents in key foreign markets and introduction of
on-line advance seat reservation facility to passengers.

With unwavering focus on improving productivity and efficiency, the Airline has been able to further improve its
operations / performance during the period April – August 2015 as compared to the results achieved during the
same period last year. The average aircraft utilization has risen to about 11.5 hours per day with no adverse
impact on schedule reliability which has been retained at the high levels of well over 99%. As a result the Airline
has achieved a 9% increase in the capacity offered and a proportionate increase of 9% in passenger revenues.

Aircraft despatch reliability

The aircraft despatch reliability for FY 2014-15 was 99.85%.

HUMAN RESOURCES

Staff Strength

The staff strength as on 31 March 2015 was as under:

       SC                             220
       ST                              92
       OBC                            224
       General                        606
                                      -----------
       TOTAL                          1142
                                      ======

In addition to the above there were 261 employees (Pilots, Engineers and Ground Staff) on deputation from the
holding Company, Air India Limited.

As on 1 January 2015 there was one employee with disabilities in the services of the Company.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Company is taking effective steps for the implementation of the provisions of the Official Language Act and
Rules framed under the Act.

VIGILANCE

During the year under review there was no vigilance case in the Company.

DISCLOSURE OF PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 (2) of
The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is set out in the
Annexure to the Directors' Report.

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COMPLIANCE WITH THE RTI ACT, 2005

During the year 29 cases of requests were received. Out of these, 21 cases were replied to.

COMPLIANCE WITH THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION & REDRESSAL ) ACT, 2013

In line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition &
Redressal) Act, 2013, an Internal Complaints Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees ( permanent, contractual, temporary & trainees) are covered
under this policy.

During the year 2014-15 one complaint of sexual harassment was received on 20 March 2015 and the same
was under consideration of the ICC.

AUDITORS

The Comptroller & Auditor General of India has appointed M/s Kirtane & Pandit, Mumbai as Statutory
Auditors of the Company for the financial year 2014-15.

COMMENTS OF COMPTROLLER AND AUDITOR GENERAL

The Comments of the Comptroller and Auditor General of India under Section 143(6) of the Companies Act,
2013 on the accounts of the Company for the year ended 31 March 2015 are annexed to this report.

CORPORATE GOVERNANCE

A Report on Corporate Governance is annexed at Annexure A.

DIRECTORS' RESPONSIBILITY STATEMENT

(i)     In the preparation of the Annual Accounts, the applicable accounting standards have been followed
        along with proper explanations relating to material departures ;

(ii)    The Directors have selected such accounting policies and applied them consistently and made
        judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state
        of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that
        period;

(iii)   The Directors have taken proper and sufficient care for the maintenance of adequate accounting
        records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of
        the Company and for preventing and detecting fraud and other irregularities ;

(iv)    The Directors have prepared the Annual Accounts on a 'going concern' basis.

ACKNOWLEDGEMENTS

The Board sincerely appreciates the Company's valued customers in India and abroad for using the services of
Air India Express and looks forward to their continued support and confidence.

The Board also gratefully acknowledges the support and guidance received from parent Company viz. Air India
Ltd., various Ministries of the Government of India and the Ministry of Civil Aviation in particular, in Company's

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operations and development plans. The Board expresses their grateful thanks also to the DGCA, Comptroller
and Auditor General of India, the Ministry of Corporate Affairs, the Statutory Auditors, Airports Authority of India,
other Govt. Departments, airlines, agents, Indian Financial Institutions and banks including the EXIM bank of
USA.

                                                                                      For & on behalf of the Board

                                                                                                (Ashwani Lohani)
                                                                                                       Chairman

Place : Delhi

Dated : 14 January 2016

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                                                                                                 ANNEXURE A

REPORT ON CORPORATE GOVERNANCE

1.      BOARD OF DIRECTORS

        As per the Articles of Association of the Company, the number of Directors shall not be less than three
        and not more than fourteen.

        BOARD OF DIRECTORS AS ON 31 MARCH 2015

        Shri Rohit Nandan                     Chairman
        Dr Shefali Juneja                     Director, Ministry of Civil Aviation
        Smt Puja Jindal                       Director, Ministry of Civil Aviation
        Shri S. Venkat                        Director (Finance), Air India Ltd.

        During the year, all meetings of the Board were chaired by the Chairman .The Board met four times
        during the year to periodically review the performance of the Company and to discuss important issues
        which inter alia included Lease Return of ILFC aircraft, Dry Lease of Aircraft, Cabin Crew-Salary &
        Career Progression, Appointment of Key Managerial Personnel & Secretarial Auditor, etc.

        Details regarding the Board Meetings, Annual General Meeting, Directors' attendance thereat,
        Directorships and Committee positions held by the Directors are as under :

        Board Meetings :

        Four Board Meetings were held during the financial year 2014-15 on the following dates:
                            th
        25 June 2014 (194 Meeting)
        25 November 2014 (195th Meeting)
                              th
        06 February 2015 (196 Meeting)
                           th
        27 March 2015 (197 Meeting)

        Particulars of Directors including their attendance at the Board/Shareholders' Meetings during the
        financial year 2014-15

 Name of the         Academic           Attendance           Details of Directorships Memberships
 Director            Qualifications      out of 4 Board       held in other Companies held in Committees
                                        Meetings

Non Executive
Directors
(Ex officio)

Shri Rohit           Post               4                    Chairman & Managing         Member
Nandan               Graduation                              Director                    Audit Committee
CMD –                in History &                            Air India Limited
Air India Ltd.       MBA from                                Part-Time Chairman
                     UK                                      Air India Air Transport
Chairman                                                     Services Ltd.
                                                             Air India Engineering
                                                             Services Ltd.

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    Name of the       Academic          Attendance          Details of Directorships Memberships
    Director          Qualifications     out of 4 Board      held in other Companies held in Committees
                                        Meetings

                                                            Airline Allied Services Ltd
                                                            Hotel Corporation of
                                                            India Ltd.
                                                            Air India SATS Airport
                                                            Services Pvt. Ltd.

                                                            Director
                                                            Air Mauritius Limited
                                                            Air Mauritius Holdings
                                                            Limited

Shri S Venkat         B.Com,FCA,        3                   Director                      Member
Director –            FCWA,FCS&                             Air India Ltd                 Audit Committee
Finance               CPA(US)                               Air India Air Transport
Air India Ltd.                                              Services Ltd
                                                            Air India Engineering
                                                            Services Ltd
                                                            Airline Allied Services Ltd
                                                            Hotel Corporation of
                                                            India Ltd
                                                            Air India SATS Airport
                                                            Services Pvt Ltd

Dr Shefali Juneja     M.A M(Phil)       1                   Airline Allied Services       Chairman
Director,             Phd.                                  Ltd.                          Audit Committee
Ministry of Civil
Aviation

Smt Puja Jindal       Post              4                   Director                      Member
Director,             Graduate                              Airline Allied Services       HR Committee
Ministry of Civil                                           Ltd.
Aviation                                                    Pawan Hans
                                                            Helicopters Limited

2.       AUDIT COMMITTEE

         As part of the Corporate Governance process and in compliance with the povisions of the Companies
         Act 2013 and DPE Guidelines, the Audit Committee of the Board has been constituted.

         As on 31 March 2015 the following were the members of the Audit Committee :

         Dr Shefali Juneja                   Chairperson
         Shri Rohit Nandan                   Member
         Shri S Venkat                       Member
         Smt Puja Jindal                     Member

         The Terms of Reference of the Audit Committee are:

l        To recommend for appointment, remuneration and terms of appointment of auditors of the company;

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l         To review and monitor the auditor's independence and performance, and effectiveness of audit
          process;
l         To discuss with the external auditor, before the audit commences, the nature and scope of the audit and
          to ensure coordination where more than one audit firm is involved;
l         To review the Internal Audit program & ensure co-ordination between the Internal & External Auditors as
          well as determine whether the Internal Audit function is commensurate with the size and nature of the
          Airlines Business and is provided adequate resources and representation within the company;
l         To review/examine the half-yearly and annual financial statements and the auditors' report thereon;
l         To discuss problems and reservations arising from the interim and final audits and any matter that the
          auditor may wish to discuss in the absence of Management where necessary;
l         To review the Statutory Auditor's Report, Management's response thereto and to take steps to ensure
          implementation of the recommendations of the Statutory Auditors ;
l         Approval or any subsequent modification of transactions of the company with related parties;
l         Scrutiny of inter-corporate loans and investments;
l         Valuation of undertakings or assets of the company, wherever it is necessary;
l         Evaluation of internal financial controls and risk management systems;
l         Monitoring the end use of funds raised through public offers and related matters;
l         To consider other matters as defined by the Board.

The Audit Committee met two times during the year to review various issues including inter alia annual
accounts of the Company for the year before submission to the Board, on the following dates :
                                 th
          25 November 2014 (16 Meeting)
                              th
          06 February 2015 (17 Meeting)

          Attendance at the Audit Committee Meetings

          Name of the Member                                         No. of Meetings Attended

          Dr Shefali Juneja, Chairman                                            1
          Shri Rohit Nandan, Member                                              2
          Shri S Venkat, Member                                                  2
          Smt Puja Jindal                                                        2

3.        ANNUAL GENERAL MEETINGS DURING THE LAST THREE YEARS
          The details of these meetings are given below :

                                      Date and time of the Meeting          Venue
     st                                                                                           nd
41 Annual General Meeting             19 December 2012 At 1200 hrs          Conference Room, 22 Floor,
                                                                            Air India Building, Nariman Point,
                                                                            Mumbai-400 021.
42ndAnnual General Meeting            23 December 2013 At 1630 hrs          Conference Room, 22ndFloor,
                                                                            Air India Building, Nariman Point,
                                                                            Mumbai-400 021.
43rd Annual General Meeting           19 December 2014 At 1400 hrs          Conference Room, 22ndFloor,
                                                                            Air India Building, Nariman Point,
                                                                            Mumbai-400 021.

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4.   SECRETARIAL AUDIT:

     Pursuant to the provisions of section 204 of the Companies Act, 2013 and Companies (Appointment
     and Remuneration of Managerial Personnel) Rules, 2014, the company has appointed M/s Vijay
     Sonone & Company, Practicing Company Secretaries, Mumbai, to conduct Secretarial Audit for the
     financial year 2014-2015.

     The Secretarial Audit Report for the financial year ended 31 March, 2015 is annexed to this report.

     The Managements' Comments on Secretarial Auditors' observations are as under:

     Observations                                            Management's Comments

     The Company has not appointed Independent            Air India Charters Limited (AICL) is a wholly
     Directors as required under the provisions of        owned Subsidiary of Air India Limited (AIL), a
     Section 149(4) of the Companies Act, 2013 read       Government Company.
     with Rule 4 of the Companies (Appointment and
     Qualification of Directors) Rules, 2014 and           As per Article 22 of the Articles of Association of
     hence, no meeting of the Independent Directors       the Company, all the Directors of the Company
     could be held during the Audit Period.               are appointed by AIL in consultation with the
                                                          Government of India.

                                                          AICL has requested AI to nominate at least two
                                                          Independent Directors on its Board and the reply
                                                          from AI is awaited.

     Since the Company has not appointed                  As per the provisions of Section 177(2) of the
     Independent Directors, the Company has not           Companies Act, Audit Committee shall consist of
     complied with the provisions of Section 177(2)       a minimum of three Directors with Independent
     and Section 178 of the Companies Act, 2013           Directors forming a majority.
     read with Rule 6 of the Companies (Meetings of
     Board and its Powers) Rules, 2014 as regards         As required under section 178, the Nomination
     the composition of the Audit Committee and the       and Remuneration Committee should consist of
     Nomination and Remuneration Committee of the         3 or more Non Executive Directors out of which
     Board.                                               not less than one half should be Independent
                                                          Directors.

                                                          Presently there is no Independent Director on
                                                          the Board of AICL and the matter has been taken
                                                          up with AI.

     The Company has not constituted a Corporate          As required under section 135, the CSR
     Social Responsibility Committee as required          committee should consist of 3 Directors out of
     under the provisions of Section 135 of the           which at least one should be Independent
     Companies Act, 2013 read with the Companies          Director. Presently there is no Independent
     (Corporate Social Responsibility) Rules, 2014        Director on the Board of AICL. Further the
     and hence, no meeting of the Corporate Social        Company has not earned profits for the past 3
     Responsibility Committee could be held during        years. In view of this the CSR committee has not
     the Audit Period.                                    been constituted.

5.   EXTRACT OF ANNUAL RETURN

     As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
     (Management and Administration) Rules, 2014 the extract of annual return in form MGT 9 is also
     annexed.
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                                                                                                                     ANNEXURE

Information pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (2) of The Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Director's Report
for the year ended 31 March 2015 list of staff whose salary exceeds Rs. 5,00,000 a month or Rs.60,00,000 annually.

S.   Employee Name                        Remune-      Designation    Age   Exp.    Qualification    Date of      Last Employment
No   Number                                ration in                        Years                   Joining
                                            Rupees

1    85001047   Sunny Sharad Asaldekar    7,746,647    Instructor     33     10       B.COM        24.11.2004           N.A.
2    85001048   Sajneesh Sharma           6,837,589    Check pilot    39     10         HSC        24.11.2004           N.A.
3    85001049   Dheeraj Malviya           5,898,240     Captain       39     10     BA (ELEC.)     24.11.2004          FRESH
4    85001050   Brijesh Rambhai Rathod    6,686,918    Check pilot    39     10         HSC        24.11.2004           N.A.
5    85001051   V.S. Rajkumar             7,437,462    Instructor     39     10         B.SC       24.11.2004   CONTINENTAL WINES LTD.
6    85001052   Nirmal Jeet Singh         7,316,986    Check pilot    41     10        M.SC        14.12.2004     INDIAN NAVY
7    85001053   Dhiraj Rai Gupta          8,355,787    Examiner       55     10        M.SC        14.12.2004   INDIAN AIR FORCE
8    85001055   Om Kumar Singh            6,898,672    Check pilot    32     10         HSC        01.06.2005         N.A.
9    85001056   Syed Abu Thaher           7,459,387    Check pilot    39     10         B.SC       01.06.2005         N.A.
10   85001057   Harish Gupta              6,352,410     Captain       43     10         HSC        01.06.2005     ALLIANCE AIR
11   85001059   Ashish Gangurde           6,971,468    Check pilot    41     10         SSC        27.06.2005         BSF
12   85001060   Agraj Singh               5,885,435     Captain       38     10         HSC        26.07.2005        FRESH
13   85001062   Satinder Jit Singh        6,381,738     Captain       53      9         SSC        19.12.2005         BSF
14   85001064   Kushal Sharad Asaldekar   7,886,941    Instructor     31      9        BCOM        09.01.2006         N.A.
15   85001065   Nikhil N. Mane            5,914,282     Captain       31      9     BSC (AVIA.)    03.02.2006        FRESH
16   85001066   Akshay Kumar              5,994,282     Captain       32      9     BSC (AVIA.)    03.02.2006        FRESH
17   85001068   Kanak Chaturvedi          6,467,322     Captain       38      9        B.SC        21.08.2006   INDIAN COAST GUARD
18   85001069   Sandip Raja Sekaran       5,874,282     Captain       32      6         HSC        27.04.2009     JET AIRWAYS
19   85001095   A. Kochhar                6,950,676    Check pilot    50     10       B.TECH       11.04.2005      AIR SAHARA
20   85001096   Sharad Dogra              7,832,849    Examiner       42     10         HSC        22.04.2005      AIR SAHARA
21   85001097   Sameer Dogra              7,827,210    Examiner       40      9         HSC        01.03.2006      AIR SAHARA
22   85001098   Anand Kumar               7,960,319     Captain       45      9        B.SC        12.07.2006      AIR SAHARA
23   85001099   G. S. Sidhu               7,139,196    Check pilot    57      9         SSC        13.07.2006     ALLIANCE AIR
24   85001100   R P Singh                 8,891,285    Examiner       53      9        M.SC        03.10.2006     INDIAN NAVY
25   85001102   Alok Nayak                6,478,973     Captain       52      8         B.A.       01.07.2007     INDIAN NAVY
26   85001103   Aju Cherian               6,573,736     Captain       54      8        B.SC        16.07.2007        INDIGO
27   85001107   Devender Singh Jain       6,218,365     Captain       60      8        M.SC        05.11.2007   INDIAN AIR FORCE
28   85001109   Rajesh Sobti              5,899,431     Captain       62      8         MSC        05.11.2007   INDIAN AIR FORCE
29   85001111   Jatinder Singh Dhillon    5,929,675     Captain       62      7         N.A        11.02.2008   INDIAN AIR FORCE
30   85001112   Jacob Paul                6,221,085     Captain       60      7     MPHIL, DEF.    11.02.2008   INDIAN AIR FORCE
31   85001113   Vikas Yajurvedi           5,893,270     Captain       64      7      MSC. DEF.     11.02.2008   INDIAN AIR FORCE
32   85001119   Pankul Nag                6,185,626     Captain       51      6         B.A.       06.01.2009     INDIAN NAVY
33   85001120   Kapil Gupta               8,444,057    Instructor     42      6        M.SC        05.05.2009   INDIAN AIR FORCE
34   85001121   Bindu Sebastian           6,116,507     Captain       44      6          HR        08.06.2009   INDIAN AIR FORCE
35   85001122   Gautam Sarma              6,013,468     Captain       56      5     GRADUATE       02.09.2010   INDIAN AIR FORCE
36   85001123   Javed Ahmad               5,322,669     Captain       64      3     BSC SCIE.      14.11.2011     ALLIANCE AIR
37   85001156   V. D. Kulkarni            7,370,874     Captain       61      3        B.SC        02.03.2012       AIR INDIA
38   85001199   V.S. Manoj Kumar          6,109,582     Captain       43     10     BSC CHEM.      01.06.2005        FRESH
39   85001217   Gurudarshan Kaur Sandhu   5,728,293     Captain       37     10     BSC (AVIA.)    24.11.2004        FRESH
40   85001235   Kavita Devanpalli         6,259,382     Captain       39     10         BSC        14.12.2004        FRESH
41   85001240   Amit Pandey               5,769,190     Captain       47     2          N.A        01.10.2013          N.A.
42   85001286   Deepak Vasant Sathe       5,326,101     Captain       54     2          N.A        01.10.2013       AIR INDIA
43   85001287   Arun Varghese             7,063,685     Captain       31     2          N.A        01.10.2013       AIR INDIA
44   85001288   Tanya Anand               6,582,369     Captain       27     2          N.A        01.10.2013       AIR INDIA
45   85001289   Anish Nair                6,596,820     Captain       40     2          N.A        01.10.2013       AIR INDIA
46   85001290   Gaurav Balkawde           8,712,857     Captain       27     2          N.A        01.10.2013       AIR INDIA

                                                                 13
AICL

                                      SECRETARIAL AUDIT REPORT
                                                                    ST
                         FOR THE FINANCIAL YEAR ENDED 31 MARCH, 2015
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,
The Members,
Air India Charters Limited,
CIN-U62100MH1971GOI015328
21st Floor, Air India Bldg.,
Nariman Point,
Mumbai -400021

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to
good corporate practices by Air India Charters Limited [CIN-U62100MH1971GOI015328] (hereinafter called
'the Company').Secretarial Audit was conducted in a manner that provided me a reasonable basis for
evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on my verification of the Company's books, papers, minute books, forms and returns filed and other
records maintained by the Company and also the information provided by the Company, its officers, agents and
authorized representatives during the conduct of secretarial audit and as per the explanations given to me and
the representation made by the Management, I hereby report that in my opinion, the Company has, during the
                                                      st
Audit Period covering the financial year ended on 31 March, 2015 ('Audit Period') generally complied with the
statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-
mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
I have examined the books, papers, minute books, forms and returns filed and other records maintained by the
Company for the financial year ended on 31st March, 2015 according to the applicable provisions of:
(i)     The Companies Act, 2013 (the Act) and the rules made thereunder (In so far as they are applicable);
(ii)    The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder (Not
        applicable to the Company during the Audit Period);
(iii)   The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (Not applicable to
        the Company during the Audit Period);
(iv)    Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent
        of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings (Not
        applicable to the Company during the Audit Period);
(v)     The following Regulations and Guidelines prescribed under the Securities and Exchange Board of
        India Act, 1992 ('SEBI Act'):-
        (a)    The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
               Regulations, 2011 (Not applicable to the Company during the Audit Period);
        (b)    The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992
               (Not applicable to the Company during the Audit Period);
        (c)    The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
               Regulations, 2009 (Not applicable to the Company during the Audit Period);

                                                        14
AICL

       (d)     The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee
               Stock Purchase Scheme) Guidelines, 1999 (Not applicable to the Company during the Audit
               Period);
       (e)     The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,
               2008 (Not applicable to the Company during the Audit Period);
       (f)     The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents)
               Regulations, 1993 regarding the Companies Act and dealing with client (Not applicable to the
               Company during the Audit Period);
       (g)     The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009
               (Not applicable to the Company during the Audit Period); and
       (h)     The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not
               applicable to the Company during the Audit Period);
Having regard to the compliance system prevailing in the Company and on the basis of the Compliance
Certificates/Management Representation Letters issued by the designated officers of the Company, the
Company has complied with the following laws applicable specifically to the Company:
       (a)     Aircraft Act, 1934;
       (b)     Carriage by Air Act 1972;
       (c)     The Aircraft (Carriage of Dangerous Goods) Rules, 2003;
       (d)     Civil Aviation Requirements issued by DGCA.
I have also examined compliance with the applicable clauses of the following:
(i)    Secretarial Standards issued by The Institute of Company Secretaries of India (Not applicable to the
       Company during the Audit Period).
(ii)   The Listing Agreements entered into by the Company with Stock Exchange(s) (Not applicable to the
       Company);
During the Audit Period under review the Company has generally complied with the provisions of the Act, Rules,
Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:
i.     The Company has not appointed Independent Directors as required under the provisions of Section
       149(4) of the Companies Act, 2013 read with Rule 4 of the Companies (Appointment and Qualification
       of Directors) Rules, 2014 and hence, no meeting of the Independent Directors could be held during the
       Audit Period.
ii.    Since the Company has not appointed Independent Directors, the Company has not complied with the
       provisions of Section 177(2) and Section 178 of the Companies Act, 2013 read with Rule 6 of the
       Companies (Meetings of Board and its Powers) Rules, 2014 as regards the composition of the Audit
       Committee and the Nomination and Remuneration Committee of the Board.
iii.   The Company has not constituted a Corporate Social Responsibility Committee as required under the
       provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social
       Responsibility) Rules, 2014 and hence, no meeting of the Corporate Social Responsibility Committee
       could be held during the Audit Period.
I further report, that the compliance by the Company of applicable financial laws, like direct and indirect tax
laws, has not been reviewed in this Audit since the same have been subject to review by statutory financial audit
and other designated professionals;

                                                        15
AICL

Subject to what is stated herein above as regards the appointment of Independent Directors, the changes in the
composition of the Board of Directors that took place during the period under review were carried out in
compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda
were sent at least seven days in advance and a system exists for seeking and obtaining further information and
clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
Decisions at the Board Meetings, as represented by the Management, were taken unanimously.
As represented and explained to us, I further report that there are adequate systems and processes in the
Company commensurate with the size and operations of the Company to monitor and ensure compliance with
applicable laws, rules, regulations and guidelines.
I further report that during the audit period, there are no specific events / actions having a major bearing on the
Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc.
referred to above.

                                                                                            Vijay B. Sonone
                                                                                Company Secretary in Practice

                                                                                                 FCS No: 7301
                                                                                Certificate of Practice No: 7991
Mumbai
  th
20 November, 2015

This Report is to be read with our letter of even date which is annexed as 'Appendix A' and forms an integral
part of this report.

                                                         16
AICL

                                                                                                     'Appendix A’

To,
The Members,
Air India Charters Limited,
CIN-U62100MH1971GOI015328
21st Floor, Air India Bldg.,
Nariman Point,
Mumbai -400021

My report of even date is to be read along with this letter.
1.     The maintenance of the secretarial records is the responsibility of the management of the Company. My
       responsibility is to express an opinion on these secretarial records based on my audit.
2.     I have followed the audit practices and processes as were appropriate to obtain reasonable
       assurance about the correctness of the contents of the secretarial records. The verification was done
       on test check basis to ensure that the correct facts are reflected in the secretarial records. I believe that
       the processes and practices, I followed provide a reasonable basis for my opinion.
3.     I have not verified the correctness and appropriateness of the financial records and books of accounts
       of the Company.
4.     Where ever required, I have obtained the Management Representations about the compliance of
       laws, rules and regulations and occurance of events etc.
5.     The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards
       is the responsibility of the management. My examination was limited to the verification of procedures on
       test check basis.
6.     The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the
       efficacy or effectiveness with which the management has conducted the affairs of the Company.

                                                                                                 Vijay B. Sonone
                                                                                 Company Secretary in Practice

                                                                                                  FCS No: 7301
                                                                                 Certificate of Practice No: 7991
Mumbai
  th
20 November, 2015

                                                         17
AICL

                           Annexure to Directors' Report for the year 2014-15

                          FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN
                                As on financial year ended on 31.03.2015
          Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies
                               (Management & Administration) Rules, 2014.

    I.        REGISTRATION & OTHER DETAILS:

1.         CIN                                     U62100MH1971GOI015328
2.         Registration Date                       9 September 1971
3.         Name of the Company                     AIR INDIA CHARTERS LIMITED (AICL)
           Category/Sub-category       of    the
4.                                                 Government Company
           Company
           Address of the Registered office 21 Floor, Air India Building, Nariman Point, Mumbai -
5.                                         400021.
           & contact details
                                           Ph.No : 022-22796666.
6.         Whether listed company          No
           Name, Address & contact details
7.         of the Registrar & Transfer Agent, N.A.
           if any.

    II.       PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities
              contributing 10 % or more of the total turnover of the company shall be stated) -

                                                                                NIC Code       % to total
    Sr                                                                            of the      turnover of
                 Name and Description of main products / services
    No                                                                          Product/          the
                                                                                 Service       Company

    1.       To establish, maintain and operate international and
             domestic air transport services, scheduled and non
                                                                                   511            100
             scheduled, in all the countries of the world for the carriage of
             passengers, meals and freight and for any other purposes.

III.          PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANY:

                                                                            Holding /
Sr.         Name and Address of the                                                               Applicable
                                                                          Subsidiary      % of
No.               Company                            CIN/GIN                                      Section
                                                                          / Associate    Shares
1          Air India Limited
           113, Airlines House,
           Gurudwara Rakabganj              U62200DL2007GOI161431           Holding      100%       2 (46)
           Road, New Delhi,
           110 001.

                                                         18
AICL

     IV.       SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total
               Equity) : Category-wise Share Holding

      Category of       No. of Shares held at the beginning of        No. of Shares held at the end of             %
     Shareholders            the year [As on 01-04-2014]               the year [As on 31-03-2015]              Change
                                                                                                                during
                                              during      % of                                          % of      the
                        Demat    Physical    the year     Total   Demat       Physical       Total      Total    year
                                                         Shares                                        Shares

A.   Promoters

(1) Indian

a)   Individual/ HUF

b)   Central Govt

c)   State Govt(s)

d)   Bodies Corp.       -        30,00,000   30,00,000   100      -       7,80,00,000    7,80,00,000   100

e)   Banks / FI

f)   Any other

Total shareholding of
                                 30,00,000   30,00,000   100      -       7,80,00,000    7,80,00,000   100
Promoter (A)
B.   Public
                        Not Applicable
     Shareholding
1.   Institutions

a)   Mutual Funds/UTI

b)   Banks / FI

c)   Central Govt.

d)   State Govt.(s)

e)   Venture Capital
     Funds
f)   Insurance
     Companies
g)   FIIs

h)   Foreign Venture
     Capital Funds

i)   Others (specify)
     Foreign Banks

Sub-total (B)(1):-      -        -           -           -        -       -              -             -        -

                                                             19
AICL

                                                                                                                        %
                           No. of Shares held at the beginning of the    No. of Shares held at the end of the year
      Category of                                                                                                    Change
                                    year [As on 01-04-2014]                        [As on 31-03-2015]
     Shareholders                                                                                                    during
                                                                % of                                          % of     the
                            Demat     Physical      Total      Total    Demat     Physical        Total      Total    year
                                                               Share                                         Share
                                                                 s                                             s
2. Non-Institutions        Not Applicable
a) Bodies Corp.
   (Market
   Maker + LLP)
i)   Indian

ii) Overseas

b) Individuals
i)   Individual
     shareholders
     holding nominal
     share capital
     upto Rs. 1 lakh
ii) Individual
    shareholders
    holding nominal
    share capital in
    excess of Rs. 1 lakh
c) Others (specify)
i)   Non Resident
     Indians
ii) Non Resident
    Indians - Non
    Repatriable

iii) Office Bearers

iv) Directors

v) HUF
vi) Overseas
    Corporate Bodies
vii) Foreign Nationals
viii) Clearing Members
ix) Trusts
x) Foreign Bodies - R
R
Sub-total (B)(2):-            -             -         -          -        -           -             -           -      -
Total Public
Shareholding (B) =            -             -         -          -        -           -             -           -      -
(B)(1)+ (B)(2)
C. Shares held by
    Custodian for             -             -         -          -        -           -             -           -      -
    GDRs & ADRs
Grand Total (A+B+C)                   30,00,000   30,00,000     100             7,80,00,000    7,80,00,000     100

                                                                20
AICL

    B)       Shareholding of Promoter-

                                   Shareholding at the beginning of             Shareholding at the end                    %
                                              the year                                of the year                       change
                                                              %of                                          %of             in
    Sr      Shareholder's                     % of total     Shares                     % of total        Shares        Share-
    No         Name                No. of      Shares       Pledged/        No. of       Shares          Pledged/       holding
                                   Shares       of the     encumber         Shares       of the         encumber        during
                                              Company      ed to total                  Company         ed to total       the
                                                             shares                                       shares         year

    1      Air India Limited      30,00,000      100          NIL         7,80,00,000        100             NIL          0.00
           along with its
           nominees

    C)       Change in Promoters' Shareholding (please specify, if there is no change)
                                                                Shareholding at the            Cumulative Shareholding at
                                                               beginning of the year                end of the year
    Sr                                                      No. of shares      % of total      No. of shares         % of total
                               Particulars
    No.                                                                        shares of                             shares of
                                                                                 the                                    the
                                                                               company                               company
            At the beginning of the year

            Air India Limited                                 30,00,000           100              30,00,000
            At the end of the year

            Air India Limited                                7,80,00,000          100              7,80,00,000

    D)       Shareholding Pattern of top ten Shareholders: (Other than Directors, Promoters
             and Holders of GDRs and ADRs):

                                                                 Shareholding at the           Cumulative Shareholding at
                                                                beginning of the year               end of the year
Sr
             For Each of the Top 10 Shareholders                              % of total                             % of total
No                                                             No. of                               No. of
                                                                             shares of the                         shares of the
                                                               shares                               shares
                                                                               company                               company
1         NOT APPLICABLE
2
3
4
5
6
7
8
9
10

                                                                21
AICL

E)       Shareholding of Directors and Key Managerial Personnel:

Sr.     Shareholding of each Directors and each        Shareholding at the           Cumulative Shareholding at
No.           Key Managerial Personnel                beginning of the year               the end of year
                                                   No. of shares      % of total     No. of shares    % of total
                                                                     shares of the                   shares of the
                                                                       company                         company

 1      Shri Rohit Nandan                               1               0.0003            1             0.0003

 2      Shri S Venkat                                   1               0.0003            1             0.0003

        Total                                           2                                 2

V.       INDEBTEDNESS- Indebtedness of the Company including interest outstanding/
         accrued but not due for payment.
                                                                                                      (In Rs Crore)
                                                       Secured Loans
                                                                            Unsecured                    Total
                                                         excluding                       Deposits
                                                                              Loans                  Indebtedness
                                                          deposits

 Indebtedness at the beginning of the financial year

 i)     Principal Amount                                      2257.44         1152.83           -         3410.27

 ii)    Interest due but not paid                                       -            -          -                -

 iii)   Interest accrued but not due                                41.42            -          -           41.42

 Total (i+ii+iii)                                             2298.87         1152.83           -         3451.70

 Change in Indebtedness during the financial year

 * Addition                                                             -            -          -                -

 * Reduction                                                       226.66        55.75          -          282.41

 Net Change                                                        226.66        55.75          -          282.41

 Indebtedness at the end of the financial year

 i)     Principal Amount                                      2017.92         1097.08           -         3115.00

 ii)    Interest d ue but not paid                                      -            -          -                -

 iii)   Interest accrued but not due                                54.29            -          -           54.29

 Total (i+ii+iii)                                             2072.21         1097.08           -         3169.29

                                                        22
AICL

VI.   REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A.    Remuneration to Managing Director, Whole-time Directors and/or Manager:
                                                                                             ( In figures)

Sr          Particulars of Remuneration                       Name of MD/WTD/ Manager             Total
No                                                                                               Amount

      Gross salary
1
      (a)    Salary as per provisions contained in
             section 17(1) of the Income-tax Act,
             1961
       (b) Value of perquisites u/s 17(2) of the
           Income-tax Act, 1961

       (c) Profits in lieu of salary under section
           17(3) of the Income -tax Act, 1961

2     Stock Option
3     Sweat Equity

4     Commission as % of profit others, specify.

5     Others : (PF, DCS, House Perks tax etc)
      Total (A)
      Ceiling as per the Act

* There are no Managing, Whole Time Directors in the Company.
B.     Remuneration to other directors
Sr                                                                                                Total
       Particulars of Remuneration                                   Name of Directors
No.                                                                                              Amount
1      Independent Directors                         -           -        -        -     -   -
                                                     -           -        -        -     -   -
       Fee for attending board committee meetings
       Commission                                    -           -        -        -     -   -
                                                     -           -        -        -     -   -
       Others, please specify (Fees for attending
       Board Sub Committee Meetings)
       Total(1)                                      -           -        -        -     -   -
2      Other Non-Executive Directors                 -           -        -        -     -   -
                                                     -           -        -        -     -   -
       Fee for attending board committee meetings
       Commission                                    -           -        -        -     -   -
       Others, please specify                        -           -        -        -     -   -
       Total (2)                                     -           -        -              -   -
       Total (B)=(1+2)                               -           -        -        -     -   -
       Total Managerial Remuneration                 -           -        -        -     -   -
       Overall Ceiling as per the Act                -           -        -        -     -   -
                                                     -           -        -        -     -   -

                                                         23
AICL

C.     REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/
       MANAGER/ WTD
                                                           ( figures in Rs)
 Sr.                                                                             Key Managerial Personnel
 No.                 Particulars of Remuneration
                                                                        CEO               CS       CFO           Total
                                                                      *Not
 1      Gross salary                                                                      **       **              -
                                                                    Applicable
        (a)     Salary as per provisions contained in section
                                                                    -             -            -             -
                17(1) of the Income-tax Act, 1961

        (b)     Value of perquisites u/s 17(2) of the
                                                                    -             -            -             -
                Income-tax Act, 1961

        (c)     Profits in lieu of salary under section 17(3)
                                                                    -             -            -             -
                of the Income-tax Act, 1961

 2      Stock Option                                                     -                -         -              -
 3      Sweat Equity                                                     -                -         -              -
 4      Commission                                                       -                -         -              -
        - as % of profit                                                  -                -         -              -
        Others, specify.                                                 -                -         -              -
 5      Others: (PF, DCS, House Perks tax etc)                           -                -         -              -
        Total                                                            -                -         -              -

*        Not applicable to Government Companies. Only CFO and CS are KMPs.
** The Company Secretary is holding the position in addition to her responsibilities as AGM-Corporate
Affairs, Air India Ltd. Similarly, CFO is on deputation from Air India and no remuneration is paid to them
by AICL.
VII.   PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

                                                                               Details of
                                              Section                          Penalty /                        Appeal
                                                                                                Authority
                                               of the             Brief       Punishment/                        made,
                   Type                                                                        [RD / NCLT/
                                             Companies         Description    Compound-                      if any (give
                                                                                                 COURT]
                                                Act                             ing fees                        Details)
                                                                               imposed
 A.    COMPANY
       Penalty                                     -                -                 -             -              -
       Punishment                                  -                -                 -             -              -
       Compounding                                 -                -                 -             -              -
 B.    DIRECTORS
       Penalty                                     -                -                 -             -              -
       Punishment                                  -                -                 -             -              -
       Compounding                                 -                -                 -             -              -
 C.    OTHER OFFICERS IN DEFAULT
       Penalty                                     -                -                 -             -              -
       Punishment                                  -                -                 -             -              -
       Compounding                                 -                -                 -             -              -

                                                               24
AICL

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b)
OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENT OF AIR INDIA CHARTERS LIMITED
FOR THE YEAR ENDED 31ST MARCH 2015

The preparation of financial statement of Air India Charters Limited for the year ended 31 March 2015 in
accordance with the financial reporting framework prescribed under the Companies Act, 2013 is the
responsibility of the Management of the Company. The Statutory Auditors appointed by the Comptroller and
Auditor General of India under section 139(5) of the Act is responsible for expressing opinion on the financial
statements under Section 143 of the Act based on independent audit in accordance with Standards on auditing
prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report
dated 20 November 2015.

I, on the behalf of the Comptroller and Auditor General of India (CAG), have conducted a supplementary audit
under section 143(6)(a) of the Act of the financial statements of Air India Charters Limited for the year ended 31
March 2015. This supplementary audit has been, carried out independently without access to the working
papers of the statutory auditor and is limited primarily to inquiries of the statutory auditors and company
personnel and a selective examination of some of the accounting records. On the basis of my audit nothing
significant has come to my knowledge which would give rise to any comment upon or supplement to Statutory
Auditors’ Report.

                                                                                  For and on the behalf of
                                                                The Comptroller & Auditor General of India

                                                                                                          Sd/-
                                                                                                 Parama Sen
                                                                        Principal Director of Commercial Audit
                                                                  & ex-officio Member, Audit Board-II, Mumbai

Place : Mumbai

Date : 04 January 2016

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     INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AIR INDIA CHARTERS LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of “Air India Charters Limited” (“the
Company”), which comprise the Balance Sheet as at 31 March, 2015, the Statement of Profit and Loss for the
period then ended, 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 Management and Board of Directors of the Company are responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ('the Act') with respect to the preparation of these financial statements that
give a true and fair view of the financial position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014. This
responsibility 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; design, implementation and maintenance of adequate internal financial
controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these 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 there under.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant to the Company's preparation of the
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an
adequate internal financial controls system over financial reporting and the operating effectiveness of such
controls. An audit also includes evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the
overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for qualified
opinion.

1.     BASIS OF QUALIFIED OPINION

       I.      As stated in Note No.(1)(C)(1), the Company, since FY 2009-10, follows policy of
               capitalizing the exchange difference on foreign currency long term borrowings, relating
               to acquisition of depreciable assets and the same are depreciated over the remaining
               useful life of respective asset, including the year, in which such exchange difference
               arises. Hence, such exchange difference of Rs. 791.34 million, in respect of financial year

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       2014-15 has been capitalized as at the beginning of the year instead of end of the year. As
       a result, in current year, depreciation has been provided for the whole year on such
       amount. This accounting policy is not in compliance with “AS 11 - The Effects of Changes
       in Foreign Exchange Rates” read with “AS-6 Depreciation Accounting” and Notification
       No. G.S.R. 225(E) dated 31st March 2009 issued by Ministry of Corporate Affairs. As such,
       depreciation for the year, losses for the year and accumulated depreciation are
       overstated by Rs. 53.80 million.

ii.    Note No. 33, and in other cases wherever the Company has undertaken transactions with
       holding company, the existence of arm's length relationship in such transactions has
       not been determined. Precise impact on financial statements cannot be ascertained and
       we are unable to form an opinion on the same.

iii.   We invite attention to Note No. (1)(C)(3) read with Note No.31 regarding balances of
       Inventories which are maintained & controlled by Parent Company and report as under:

       a.     With reference to Note No. 31 (a) to (m), the Company does not have any control
              over the recording & reporting on the Inventory Accounting System.

       b.     The Management has not conducted the physical verification of Inventories
              during as well as at the year end.

       c.     As regards Inventory lying with third parties, Management has neither conducted
              any physical verification nor obtained confirmations for the balances as at the
              year end.

       d.     In absence of adequate data, the Management has not made any provision
              relating to balances lying in intermediary account for current financial year. We
              are unable to comment on the adequacy and completeness or otherwise, of these
              provisions on account of above mentioned observations.

       e.     The cumulative impact of points (a) to (d) above, on the financial statements
              cannot be ascertained and we are unable to form an opinion on the same.

iv.    As stated in Note No. (5), for non-reinstatement of most of the foreign currency liabilities,
       at the year-end using FEDAI rate, as per the provisions of the Accounting Standard-11
       “The Effect of Changes in Foreign Exchange Rates” issued by Institute of Chartered
       Accountants of India. This is due to non- availability of payable amount in foreign
       currency, Therefore, we are also unable to determine quantum and its impact on
                                                           st
       understatement of the loss for the period ended 31 March, 2015.

v.     As stated in Note No. (25)(b)(ii),The Company has provided excess Gratuity Liability of
       Rs.61.32 million and excess provision for Leave Encashment of Rs.17.44 million against
       the required provision based on the actuarial valuation as on 31st March 2015 which is
       required to be determined and provided for as per Accounting standard 15 ”Employee
       Benefits” issued by Institute of Chartered Accountants of India.

vi.    We further report that in view of the observations as per paragraph (i) to (v) above,
       cumulative impact to the extent quantifiable is as follows,

       a.     Depreciation for the year and Accumulated Depreciation is overstated by
              Rs.53.80 million,

       b.     Gratuity and Leave Encashment liability is overstated by Rs.78.76 million,

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               c.      Losses for the year & Accumulated Losses are overstated by Rs.132.56 million.

               d.      The Earnings per share as computed in Note No. 49 is subject to observations
                       contained herein.

2.     QUALIFIED OPINION

       Subject to the “Basis for Qualified Opinion” paragraph above and unascertainable impact
       thereof, in our opinion and to the best of our information and according to the explanations
       given to us, the 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: -

       i.      In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March
               2015;

       ii.     In the case of the Statement of Profit and Loss, of the Loss for the year ended on that
               date; and

       iii.    In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

3.     EMPHASIS OF MATTER

       We also invite attention to the following –

       i.      Note no. 36, 38, and 47 regarding confirmations and reconciliation including matching of
               debits/credits in various balances in other assets / liabilities accounts at certain locations and
               pending reconciliation of account payables & account receivables, balances of PSU Oil
               Companies and intermediary accounts. The precise financial impact of the same on the
               accounts / financial statements is not ascertainable. We are unable to comment on the impact
               of adjustments arising out of reconciliation/confirmation of such balances, on the Financial
               Statements.

       ii.     Note No. 55, regarding the financial statements of the Company having been prepared on a
               going concern basis, notwithstanding the fact that its net worth is completely eroded. The
               appropriateness of the said basis is, inter alia, dependent on the Company's ability to improve
               operational and financial performance.

       iii.    Note No. 23(a) which describes the uncertainty related to the non-provision of interest and
               penalty, if any, payable towards outstanding dues for service tax, tax deduction at source.

       iv.     Necessary certificate as prescribed under SA 402 issued by the Institute of Chartered
               Accountants of India (ICAI) in respect of Inventory Accounting System being handled by parent
               company were not made available for Audit Purposes.

       v.      Note No. 52 regarding non-disclosure of information as prescribed in clauses (a) to (e) except
               (d) (which is not applicable to the Company) of Note 5 (viii) of Part II of Schedule III of the
               Companies Act, 2013.

Our opinion is not qualified in respect of these matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (Auditor's Report) Order, 2015 (“the Order”) issued by the Central Government
of India in terms of sub-Section (11) of Section 143 of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 3 and 4 of the Order.

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