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INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF JET AIRWAYS (INDIA) LIMITED
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 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the 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.
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 our audit opinion on the standalone financial statements.
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 31st March, 2015, and its loss 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 financial statements:
a) Note 32 to the financial statements in respect of loan given to its wholly owned major subsidiary ("subsidiary company") of Rs. 209,412 lakhs (net of provision) as at 31st March 2015 (Rs. 196,392 lakhs as at 31st March 2014). The subsidiary company has a negative net–worth of Rs. 243,428 lakhs as at 31st March 2015 (Rs. 214,289 lakhs as at 31st March 2014). On a consideration of factors as explained in the note and based on recent valuation report, the Company has made a provision for doubtful loan of Rs. 22,739 lakhs so as to fairly reflect the recoverable amount of the loan. The assessment of remaining carrying amount of loan is critically dependent upon the achievement of the expected operating performance by the subsidiary company after implementation of the business plan as mentioned in the note.
b) Note 42 in the financial statements which indicate the preparation of financial statements of the Company on going concern basis for the reasons stated therein. The appropriateness of assumption of going concern is dependent upon realisation of the ongoing synergies from alliance with the Strategic Partner 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 modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid 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 in sub–paragraph (a) and (b) 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 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements in accordance with generally accepted accounting practice – Refer Note 29 A (b) to the financial statements;
ii. The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Annexure to the Independent Auditors' Report
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)
(i) In respect of its fixed assets;
a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) The Company has a program of verification of fixed assets to cover all the items in a phased manner, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its 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.
(ii) In respect of its inventories;
a) As explained to us, the inventory has been physically verified during the year by the Management other than inventory lying with third parties. In our opinion, the frequency of verification is reasonable. In respect of inventory lying with third parties we have relied on the confirmations obtained by the Management from such entities.
b) In our opinion and according to the information and explanations given to us, the procedures of physical verification followed by the Management for stock lying with it were reasonable and adequate in relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
(iii) According to the information and explanations given to us, the Company has granted unsecured loans to its wholly owned subsidiaries covered in the Register maintained under Section 189 of the Companies Act, 2013. In respect of such loans:
a) The loan given in earlier years is interest free and incremental loans given during the year is interest bearing. The loans given in previous years and incremental loans given during the year is repayable in the financial year 2019–2020.
b) There is no overdue amount in excess of Rs. 1 lakh remaining outstanding as at the year end.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of services. Sale of goods is not a significant part of the Company's activity. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.
(v) According to information and explanations given to us, the Company has not accepted any deposit during the year.
(vi) According to information and explanations given to us, maintenance of cost records has not been prescribed for the Company by the Central Government under sub section (1) of section 148 of the Companies Act, 2013.
(vii) According to the information and explanations given to us, in respect of statutory dues:
a) Undisputed statutory dues, including provident fund, sales–tax, wealth tax, duty of customs, duty of excise, cess and any other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities except in respect of value added tax, profession tax, employees' state insurance, income tax (tax deducted at source) and service tax, the delays ranged from one day to seven months.
There were no undisputed amounts payable in respect of provident fund, employee state insurance, sales tax, wealth tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues in arrears as at March 31, 2015 for a period of more than six months from the date they became payable except in respect of service tax (including interest) of Rs. 18,451 lakhs (since paid Rs. 7,558 lakhs) and profession tax of Rs. 0.06 lakhs.
b) According to the information and explanations given to us, there are no dues of sales tax, wealth tax, duty of customs, duty of excise, value added tax, and cess which have not been deposited on account of any dispute other than the following:
c) The Company has been generally regular in transferring amounts to the Investor Education Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder within time.
(viii) The accumulated losses of the Company at the end of the financial year are more than fifty per cent of its net worth. The Company has not incurred cash losses during the financial year covered by our audit and has incurred cash losses in the immediately preceding financial year.
(ix) Based on our audit procedures and according to the information and explanations given to us, there have been defaults in the repayment of dues to financial institutions and banks as under:
x) The Company has given guarantees for loans taken by its wholly owned major subsidiary Company from banks/financial institution. Based on the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.
(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.
(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year. We are informed that cases of possible fraudulent credit card ticket bookings aggregating to Rs. 57 lakhs are being pursued by the Management.
For DELOITTE HASKINS & SELLS LLP
(Firm's Registration No. 117366W/W–100018)
Membership No. 31467
FOR CHATURVEDI & SHAH
(Firm's Registration No. 101720W)
Parag D. Mehta
Membership No. 113904
Place : Mumbai
Date : 29th May, 2015