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Updated:22 Jul, 2014, 15:53 PM IST

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Updated:22 Jul, 2014, 16:00 PM IST

INDEPENDENT AUDITORS' REPORT:

To the Members of Jet Airways (India) Limited

Report on the Financial Statements

We have audited the accompanying financial statements of JET AIRWAYS (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and 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 Financial Statements

The Company's Management is responsible for 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 Standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 judgement, 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 control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter

We draw attention to following notes to the financial statements:

(a) Note 29 A (b) (ix) which describes the uncertainty related to the outcome of the continuing litigation with erstwhile shareholders of Jet Lite (India) Limited. During the previous year, in terms of the order passed by the Honourable High Court of Bombay disposing off the claim, the Company had discharged Rs. 11,643 lakhs as interest @ 9% p.a.. The counterparty's claim contesting this judgment seeking increased compensation and interest was dismissed by the Honourable High Court of Bombay. The Special Leave Petition filed by the parties is pending before the Honourable Supreme Court of India. Based on legal advice and pending final determination, the amount paid to the counter party has not been recognised as interest in the accounts.

(b) Note 32 regarding amount of investments in and advances given to its wholly owned major subsidiary aggregating to Rs. 298,160 lakhs as at 31st March 2013. The accumulated losses have fully eroded the net worth of the subsidiary in past and its negative net worth as at the year–end raised to Rs. 171,358 lakhs. The estimation is critically dependent on the achievement of the projections of operating performance by the subsidiary as mentioned in the Note. 

(c) Note 39 regarding 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 implementation of the alliance with 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.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act. 

For Deloitte Haskins & Sells

Chartered Accountants

Registration No. 117366W

R. D. Kamat

Partner

Membership No. 36822

For Chaturvedi & Shah

Chartered Accountants

Registration No. 101720W

C. D. Lala

Partner

Membership No. 35671 

Place: Mumbai

Date: 24th May, 2013

Annexure to the Auditors' Report

Annexure to the Auditors' Report to the Members of Jet Airways (India) Limited

(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.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(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) In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956:

a) The Company has given interest free loan to its wholly owned subsidiary company. In respect of the said loan, the maximum amount outstanding at any time during the year was Rs. 142,102 lakhs and the year–end balance was Rs. 133,660 lakhs.

b) In our opinion and based on explanations received from the management, the terms and conditions of the aforesaid loans are not prima facie prejudicial to the interest of the Company.

c) The said interest free loan is repayable after 7 years (financial year 2019–20) by way of a bullet payment.

d) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, the internal control procedures for the purchase of inventory, fixed assets and with regard to rendering of services are commensurate with the size of the Company and the nature of its business. 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) In respect of contracts or arrangements referred to in section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements have been entered in the register maintained under that section.

(b) Transactions exceeding Rupees five lakhs in respect of any party during the year made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time or within the limits stipulated by the Central Government approval.

(vi) According to information and explanations given to us, the company has not accepted deposits from the public during the year. Therefore, the provisions of clause 4(vi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company. 

(vii) The Company has an internal audit system comprising of its own internal team and involvement of a reputed external firm of Chartered Accountants for specific areas on a rotational basis. In our opinion, the Company has an adequate internal audit system commensurate with its size and nature of its business.

(viii) Maintenance of cost records has not been prescribed for the Company by the Central Government under clause (d) of sub section (1) of section 209 of the Companies Act, 1956. Therefore, the provisions of clause 4(viii) of the Companies (Auditor's Report) Order, 2003 are not applicable.

(ix) In respect of statutory dues:

a) Undisputed statutory dues, including Investor Education and Protection Fund, Wealth Tax, Custom Duty, Excise duty, Cess and other material statutory dues, as applicable, have been generally regularly deposited with the appropriate authorities. However, in respect of Sales Tax, Provident Fund, Employees' State Insurance, Income Tax and Service Tax, the delays ranged from fifteen days to eight months. No undisputed amounts payable in respect of the aforesaid dues were outstanding as on 31st March, 2013 for a period more than six months from the date they became payable.

(x) 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 incurred cash loss only during the preceding financial year but has not incurred any cash loss during the current financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and any other securities and hence question of maintenance of adequate records for this purpose does not arise. 

(xii) According to the information and explanation given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xiii) The Company has not dealt (other than in Mutual Fund Units) or traded in shares, securities, debentures or other investments during the year. For dealings in units of Mutual Funds, the Company has maintained proper records of transactions and contracts. All the investments have been held by the Company in its own name.

(xiv) The Company has given guarantees for loans taken by its wholly owned 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.

(xv) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

(xvi) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short–term basis have, prima facie, not been used for long–term investment during the year.

(xvii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4(xviii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xviii) During the period covered by our audit report, the Company has not issued any debentures and no debentures were outstanding at the beginning of the year. Therefore, the provisions of clause 4(xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xix) The Company has not raised any money by way of public issue during the year.

(xx) According to the information and explanations given to us and on the basis of the examination of the records, except for possible fraudulent bookings of tickets through credit cards amounting Rs. 134 lakhs, which we are informed are being pursued, no fraud by the Company and no material fraud on the Company was noticed or reported during the year. 

For Deloitte Haskins & Sells

Chartered Accountants

Registration No. 117366W

R. D. Kamat

Partner

Membership No. 36822

For Chaturvedi & Shah

Chartered Accountants

Registration No. 101720W

C. D. Lala

Partner

Membership No. 35671 

Place: Mumbai

Date: 24th May, 2013