AIR INDIA ENGINEERING SERVICES LIMITEDairindia.com/writereaddata/Portal/FinancialReport/1_246...the assets and manpower from Air India Limited, will be transferred to Air India Engineering

AIR INDIA ENGINEERING SERVICES LIMITED

AIESL

CONTENTS

Page No.

1. Board of Directors 1

2. Directors’ Report 2

3. Comments of the Comptroller & Auditor General of India 5

4. Statutory Auditor's Report 7

5. Balance Sheet as at 31 March 2014 11

6. StatementofProfit&Lossfortheyearended31March2014 12

7. Cash Flow Statement 13

8. Notes forming part of the Financial Statements for the year 14 ended 31 March 2014

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BOARD Of DIRECTORS (AS ON 28.05.2015)

Shri Rohit Nandan Chairman

Shri B.S. Bhullar

Shri S. Venkat

Auditor

M/s. Jhawar Mantri & Associates Chartered Accountants

Registered OfficeAirlines House 113, Gurdwara Rakabganj Road New Delhi-110 001.

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DIRECTORS’ REPORT

The Directors take pleasure in presenting the Tenth Annual Report of the Company, together with the Audited Accounts, Auditors’ Report and Comments by the Comptroller and Auditor General of India, for the year ended 31 March, 2014.

OPERATIONALISATION:

The Board of Directors ofAir India Limited, the parent company, at its Meeting held on 7August 2010 approvedoperationalisationofAirIndiaEngineeringServicesLimited.CabinetNoteforoperationalisationwassubmittedtotheMinistryofCivilAviation.CabinethadapprovedoperationalisationofAIESLon6September2012.ItwasproposedthattheassetsandmanpowerfromAirIndiaLimited,willbetransferredtoAirIndiaEngineeringServicesLimitedasperthedecisionoftheCabinet.TheCompanywillbetreatedasaseparateprofitcentreforcarryingouttheMaintenance,RepairandOverhaul (MRO)activitiesofAirbusandBoeingfleet.Theprocessofoperationalisationhasaccordinglystartedw.e.f. 1stFebruary,2013.Further,stepshavebeeninitiatedtoobtain/fulfilvariousRegulatoryandStatutoryapprovals/compliancesinordertostartMROactivities.

Duringtheyear2013-14, thecompany(AIESL)entered intoaMemorandumofUnderstanding(MoU)with itsparentcompanyviz.AirIndiaLtd.(AI)regardingtheservicestobeprovidedonmaintenanceandrepairandoverhaulfacilitiestoAirIndia.TheMoUinter-aliaalsoincludesthefollowing:-

1. AIhasdecidedtotransferitsMRObusiness(includinginfrastructure)toAIESL.2. AIESLshallobtainallnecessaryapprovals/licensesetc.fromallconcernedstatutoryandregulatoryauthorities/

agenciesincludingDGCAofIndiatocarryout&performMROactivities.3. AI shall provideAIESL a total equity of Rs. 375Cr. during first three years and support required for Capital

expenditure to the extent of Rs.974 crores till FY 2017.4. AIshalltransferallitsmovableassetspertainingtoMROandthevalueofmovableassetstobetransferredbyAI

toAIESLtoconstitute&formpartoftheinitialequity/investmentinAIESL.5. AIESL toshare20%of its labour revenue from thirdparties from the fourthyearofoperationsorasmutually

agreed.

AnMoUhasalsobeenenteredintowithAirlineAlliedServicesLtd.(AASL),awhollyownedsubsidiaryofAIL,whereinAASLhasdecidedtotransferitsMROactivities(includinginfrastructure)toAIESLandAASLagreedtocommititsfleetinentiretyforallMROworktoAIESL.

Similarly,anMoUhasalsobeenenteredintoduring2014-15withAirIndiaChartersLtd.(AICL),awhollyownedsubsidiaryofAIL,whereinAICLhasdecidedtotransferitsMROactivities(includinginfrastructure)toAIESLandAICLagreestocommititsfleetinentiretyforallMROworktoAIESL.

Assuch,AIESLshallbehavingcommittedbusinessfromAirIndiagroupalongwithinfrastructureandothersupport.Thecompany as of 1stJanuary,2015asalsoobtainedDGCAcertificatefortherepairandoverhaulofitsfacilities.Certificateof facilities for EASA and FAA would be procured shortly.

MRO fACILITY AT NAGPUR

Asapartofcommitment inthePurchaseAgreement forfleetof68aircraftcomprising18B737s,23B777sand27B787swithAirIndiaLtd.,BoeinghasinvestedaboutUSD107million(Rs.650croresapprox.)towardstheMROfacilityincludingcertainEquipment/ToolingrequiredforAircraftMaintenanceandassociatedOverhaulShopsformaintenanceofaircraftandcomponents.AdditionalinvestmentofatleastUSD10Million(Rs.60croresapprox.)isexpectedtobemadebyAirIndiaLtd.tomakethefacilityfunctional.

50acresoflandwasacquiredbyAirIndiaLtd.ona99yearleasetermfromMADCinSEZareanearNagpurAirporttosetuptheMROfacility.BoeingselectedCBRE(CBRichardEllis)asProjectmanagementConsultants(PMC)andM/SLarsen&ToubroasDesign&Build(D&B)contractor

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The constructionwork commenced inMarch 2011and the facility has been commencedand handed over toAI inDecember, 2014.

ThefacilityconsistsoftwowidebodyHangars(100mx100meach),SupportBuilding(approx.24000sq.m),GroundSupportEquipment buildingandotherMiscellaneousbuildings. Initially theproposal is to takeup the taskofB777majorcheck(CCheck)alongwithcertainbackshopactivitieslikeCabinSurvivalEquipment/CompressedGasOxygenShop.

The hangars are of international standard meeting NFPA 409 Fire standards and equipped with facilities such asmechanisedslidingdoor,undergroundutilitypits,aircraftcabincooling,hangarventilation,BuildingManagementSystem(BMS)etc.

Thereareotherperipheralamenitieslikerainwaterharvesting,effluenttreatmentplant,solarwaterheaters/streetlightsthatcontributetowardsgreeninitiatives.

ThenecessarymanpowertoruntheNagpurfacilityhasalreadybeenidentified.AIESLwillgettherightofusetothesehangersinordertoservicethefleetofAirIndiaandthirdparties.

SETTING UP Of GEnx / GE90 ENGINE OVERHAUL AND TESTING fACILITY

InordertosupplementthisMROFacilityatMihanSEZ,Nagpur,AirIndiaLtd.hasdecidedtosetupanEngineOverhaulFacility forGEnx-1BEngine(poweringB787)andGE90Engine(poweringB777),atanestimatedcostofUSD89Million.(Rs.540croresapprox.)

TheProjectwillcomprisefollowing3stages:

I SettingupGE90EngineTestingFacility(Expectedcompletion-December,2015)II UpgradeofaboveIfortestingGEnxEngines.(Expectedcompletion-December,2016)III SettingupGEnx/GE90EngineOverhaulWorkshop(Expectedcompletion-December,2017)

Approx.USD64.5Million(Rs.390croresapprox.)willbeprovidedbyGEAviationasMROCreditAllowance,aspertheagreementssignedwithAirIndiaLtd.,towardssettingupofGEnxEngineOverhaulFacility.

AIESL will get the right of use of these facilities.

fINANCIAL PERfORMANCE :

Nobusinesstransactionswerecarriedoutbythecompanyduringtheperiodunderreview.

OTHER fINANCIAL INfORMATION:

Share Capital :

The Authorised Share Capital of the Company is Rs.10,00,00,000/-. The entire Paid-up Share Capital of the Company, amounting to Rs.5,00,000/- (50000 Equity Shares of Rs.10/- each) has been subscribed and paid-up byAir IndiaLimited.

Foreign Exchange Earnings :-

SincetheCompanyhasnotcommencedanybusinessactivities,theforeignexchangeearningsfortheperiodunderreviewisNIL.

DIRECTORS’ RESPONSIBILITY STATEMENT:

TheBoardofDirectorsoftheCompanyconfirm:-

1. thatinthepreparationoftheAnnualAccounts,theapplicableaccountingstandardshavebeenfollowedandtherehas been no material departure.

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2. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that arereasonableandprudentsoastogiveatrueandfairviewofthestateofaffairsoftheCompanyasat31March2014andoftheprofitorlossoftheCompanyfortheyearendedonthatdate.

3. thatproperandsufficientcarehasbeentakenforthemaintenanceofadequateaccountingrecordsinaccordancewiththeprovisionsoftheCompaniesAct,2013forsafeguardingtheassetsoftheCompanyandforpreventinganddetecting fraud and other irregularities, and

4. thattheannualaccountshavebeenpreparedaccordingtothegoingconcernbasis.

AUDITORS :

M/s. Jhawar Mantri & Associates, Chartered Accountants, Mumbai, were appointed as Statutory Auditors for the year 2013-14 by the Comptroller & Auditor General of India.

BOARD Of DIRECTORS :

During the year, the Board of Directors held four meetings. As on 31st March 2014, the Board consisted of the following Members:-

Shri Rohit Nandan ChairmanChairman & Managing DirectorAirIndiaLimited

Ms.M.Sathiyavathy DirectorAddl.Secretary&FinancialAdvisorMinistryofCivilAviation

Shri. G. Asok Kumar DirectorJoint SecretaryMinistryofCivilAviation

Shri S Venkat DirectorDirector(Finance)AirIndiaLimited

ACKNOWLEDGEMENTS :

TheBoardsincerelyacknowledgesthesupportandguidancereceivedfromthe,MinistryofCivilAviation,Comptrollerand Auditor General of India, Ministry of Corporate Affairs and other agencies.

For and on behalf of the Board

Sd/-Rohit Nandan

ChairmanPlace:NewDelhiDate:26November2014

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COMMENTS Of THE COMPTROLLER AND AUDITOR GENERAL Of INDIA UNDER SECTION 619(4) Of THE COMPANIES ACT, 1956 ON THE ACCOUNTS Of AIR INDIA ENGINEERING SERVICES LIMITED fOR THE YEAR ENDED 31 MARCH 2014.

ThepreparationoffinancialstatementsofAir India Engineering Services Limited (AIESL) for the year ended 31 March2014 in accordancewith thefinancial reporting frameworkprescribedunder theCompaniesAct,1956 is theresponsibility of the management of the Company. The Independent Auditors appointed by the Comptroller and Auditor Generalof IndiaunderSection619(2)of theCompaniesAct,1956are responsible forexpressingopinionon thesefinancialstatementsundersection227of theCompaniesAct,1956basedon independentaudit inaccordancewiththe Standards on Auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is statedtohavebeendonebythemvidetheirAuditReportdated02December2014.

I,onbehalfof theComptrollerandAuditorGeneralof India,haveconductedasupplementaryauditofAIESLundersection619(3) (b)of theCompaniesAct, 1956of thefinancial statements for theyearended31March2014.Thissupplementary audit has been carried out independently without access to working papers of the Independent Auditors and is also limited primarily to inquiries of the IndependentAuditors and is also limited primarily to inquiries of theIndependentAuditorsandCompanypersonnelandaselectiveexaminationofsomeoftheaccountingrecords.Basedonmysupplementaryaudit,Iwouldliketohighlightthefollowingsignificantmattersundersection619(4)oftheCompaniesAct,1956whichhavecometomyattentionandwhichinmyviewarenecessaryforenablingabetterunderstandingofthefinancialstatementsandtherelatedAuditReport:

Notes forming Part of Financial Statements

ConsequenttoCabinetapprovalinSeptember2012tooperationaliseAIESLasanindependententityforMaintenanceRepairandOverhaul(MRO)services,AIESLhasbeenoperationalisedeffective1February,2013.Inpursuanttothis,MemorandumofUnderstanding(MOU)hasbeensingedbetweenAirIndiaLimited(AIL)andAIESLon5April,2013toformalise the relationship.

AsperthisMOU:

AILshall transfer itsMRObusinessatvarious locationsacrossIndiatoAIESLonthedateofexecutionof thisMOU.

AIL shall provide toAIESL a total equity ofRs. 375 crore during the first three years and support for capitalexpenditureofRs.974croretillfinancialyear(FY)2017.

AILshalltransferallitsmovableassetspertainingtoMROunitofAILandAILsubsidiariestoAIESL.

AIESLagreedtosharewithAILeachmonthasumequalto20percentoflabourrevenueearnedfromthirdpartycustomerairlinesbyprovidingMROservices.

Asthis ismaterial informationandMOUhadbeenenteredduring theFY2013-14, itshouldhavebeendisclosed inFinancial statements.

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

Sd/-Parama Sen

Principal Director of Commercial Audit & Ex-officio Member, Audit Board-II, Mumbai

Place:MumbaiDate:7May2015

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MANAGEMENT REPLIES TO THE COMMENTS Of THE COMPTROLLER AND AUDITOR GENERAL Of INDIA UN-DER SECTION 619(4) Of THE COMPANIES ACT, 1956 ON THE ACCOUNTS Of THE COMPANY fOR THE YEAR ENDED MARCH 31, 2014

Audit Observation Management Reply

Consequent to Cabinet approval in September 2012to operationalize AIESL as an independent entity forMaintenanceRepairandOverhaul(MRO)services,AIESLhas been operationalized effective 1 February, 2013. Inpursuant to this,MemorandumofUnderstanding (MOU)has been signed between Air India Limited (AIL) andAIESLon5April,2013toformalizetherelationship.

AsperthisMOU:

AIL shall transfer its MRO business at variouslocations across India to AIESL on the date ofexecutionofthisMOU.

AILshallprovidetoAIESLatotalequityofRs.375crore during the first three years and support forCapital expenditure of Rs.974 crore till financialyear(FY)2017.

AILshalltransferallitsmovableassetspertainingtoMROunitofAILandAILsubsidiariestoAIESL.

AIESLagreedtosharewithAILeachmonthasumequalto20percentoflabourrevenueearnedfromthird party customer airlines by providing MROservices.

AsthisismaterialinformationandMOUhadbeenenteredduringtheFY2013-14,itshouldhavebeendisclosedinFinancial statements.

TheMoUbetweenAI&AIESLrequiresthat“AIESLshallobtain all necessary approvals/licenses/permissions/clearances from all concerned statutory and regulatory authorities/ agencies including but not limited to Director GeneralofCivilAviationinordertocarryoutandperformMROServicesandotherobligationsinrespectthereof.”

AIESL could not start as MRO during 2013-14 in theabsenceofDGCAapproval/Licensei.e.CAR145whichis mandatory & fundamental for functioning as MRO in India.

The disclosure has been made in the accounts videNoteNo 69 (c) of theNotes to theAccounts ofAI forFY2013-14withregard tohivingoffprocesscouldnotbecompletedasat theyearendand the revenueandexpenditure related to these services compiled by AImanagement continued to be included in the AI books.

Suitable disclosure to this effect has been made in Directors’ Report for the year 2013-14 which forms part of the Annual Report of the Company for the year.

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REPORT Of THE AUDITORS TO THE MEMBERS Of AIR INDIA ENGINEERING SERVICES LIMITED

REPORT ON THE fINANCIAL STATEMENTS

WehaveauditedtheaccompanyingfinacialstatementsofAir India Engineering Services Limited('theCompany')whichcomprisestheBalanceSheetasat31March2014,theStatementofProfitandLossandCashFlowStatementfortheyearthenendedandasummaryofsingificantaccountingpoliciesandotherexplanatoryinformation,whichwehavesigned under reference to this report.

MANAGEMENT'S RESPONSIBILITY fOR THE fINANCIAL STATEMENTS

TheCompany'sManagementisresponsibleforthepreparationofthesefinancialstatementsthatgiveatrueandfairviewofthefinancialpositionandfinancialperformanceoftheCompanyinaccordancewiththeaccountingstandardsnotifiedunder'theCompaniesAct,1956'ofIndia(the"Act")readwiththeGeneralCircular15/2013datedSeptember13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includesthedesign,implementationandmaintenanceofinternalcontrolrelevanttothepreparationandpresentationofthefinancialstatementsthatgiveatrueandfairviewandarefreefrommaterialmisstatement,whetherduetofraudorerror.

AUDITOR'S REPONSIBILITY

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewiththeStandardsonAuditingandotherapplicableauthoritativepronouncementissuedbytheInstituteofCharteredAccountantsofIndia.ThoseStandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatements.

Anaudit involvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheCompany'spreparationandfairpresentationofthefinancialstatementsinorderto design audit procedures that are appropriate in the circumstances, but no for the purpose of expressing an opinion ontheeffectivenessoftheentity'sinternalcontrol.Anauditalsoincludesevaluationtheappropriatenessofaccountingpoliciesusedand thereasonablenessof theaccountingestimatesmadebymanagement,aswellasevaluating theoverallpresentationofthefinancialstatements.

We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our auditopinion.

OPINION

Inouropinionandtothebestofourinformationandaccordingtotheexplanationsgiventous,theaforesaidfinancialstatementsgivetheinformationrequiredbytheActinthemannersorequiredandgiveatrueandfairviewinconformitywith the accounting principles generally accepted in India.

(a) InthecaseoftheBalanceSheet,ofthestateofaffairsoftheCompanyasatMarch31,2014;(b) InthecaseoftheStatementofProfitandLoss,ofthelossfortheyearendedonthatdate;and(c) InthecaseoftheCashFlowStatement,ofthecashflowsfortheyearendedonthatdate.

Report on other Legal and Regulatory Requirements

1. AsrequiredbytheCompanies(Auditor'sReport)Order,2003('theOrder'),asamended,issuedbytheCentralGovernmentofIndiaintermsofsub-section(4A)ofsection227oftheAct,wegiveintheAnnexureastatementonthemattersspecifiedinparagraphs4and5oftheOrder.

2. ReportingwhetherDirectorsaredisqualifiedason31March2014,frombeingappointedasaDirectorintermsofclause(g)ofsub-section(1)ofSection274of theCompaniesAct,1956 isnotrequiredasthesameisnotapplicabletoGovernmentCompanyinlieuNotificationNo.GSR829(E)dated21-10-2003.

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3. Asrequiredbysection227(3)oftheAct,wereportthat:

a. Wehaveobtainedalltheinformationandexplanationswhichtothebestofourknowledgeandbeliefwerenecessaryforthepurposeofouraudit;

b. in our opinionproper booksof account as requiredby lawhavebeen kept by theCompany so far asappearsfromourexaminationofthosebooks;

c. inouropinion,theBalanceSheetandStatementofProfitandLossdealtwithbythisReportareinagreementwiththebooksofaccount;

d. inouropinion,theBalanceSheetandStatementofProfitandLoss,complywiththeAccountingStandardsnotifiedundertheActreadwiththeGeneralCircular15/2013datedSeptember13,2013oftheMinistryofCorporateAffairsinrespectofSection133ofCompaniesAct,2013;

e. Since theCentralGovernmenthasnot issuedanynotificationas to the rateatwhich thecess is tobepaid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

For Jhawar Mantri & Associates

Chartered AccountantsFRN.:113221W

Sd/-(B.P. Mantri)

PartnerM.No.:045701

Place:NaviMumbaiDate:2December2014

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ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

REfERRED TO IN PARAGRAPH (1) UNDER THE HEADING Of "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" Of OUR REPORT Of EVEN DATE

1. TheCompanydoesnothaveanyfixedassets.Accordinglyclauseisnotapplicable.

2. TheCompanyisnotcarryingonanytradingormanufacturingactivities.Accordinglyclauserelatingtoinventoryisnot applicable.

3. In respect of loans, securedor unsecured, grantedor takenby theCompany to or fromcompanies, firmsorotherpartiescoveredbytheregistermaintainedundersection301oftheCompaniesAct,1956accordingtotheinformationandexplanationsgiventous:

a) TheCompanyhastakenunsecuredloansfromitsHoldingCompanyAirIndiaLimited.ThereisonlyonepartyandamountinvolvedisRs.10,30,423.TheCompanyhasnotgrantedanyloans,securedorunsecuredtocompanies,firmsorotherpartiescoveredintheregistermaintainedundersection301oftheCompaniesAct, 1956.

b) Therateofinterestandothertermsandconditionsofsuchloanstakenbythecompany,areprimafacienotprejudicial to the interests of the Company.

4. Sincetherearenoactivitiesregardingpurchaseof inventoryandfixedassetsandsaleofgoodsandservicesduring the year, this clause is not applicable.

5. During the year under consideration the Company has not entered into any transaction that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly this clause is not applicable.

6. TheCompanyhasnotacceptedanyfixeddepositsfromthepublicduringtheyear.

7. Asperinformationandexplanationgiventousthecompanydoesnotrequireformalinternalauditsystemasperthis clause.

8. Asinformedtous,theCentralGovernmenthasnotprescribedmaintananceofcostrecordsunderclause(d)ofsub-section(1)ofsection209oftheAct.

9. a) SinceCompany is yet to commence its operationsmost of the statutory provisions are not applicable.Accordingtoinformationandexplanationgiventous,therearenootherundisputedstaturoryduesoutstandingas at 31st March 2014 for a period of more than six months from the date they became payable.

b) According to the informationandexplanationsgiven tous, therearenoduesof sales tax, income tax,customsduty,wealthtax,servicetax,exeiseduty,cessthathavenotbeendepositedonaccountofanydispute.

10. TheCompanyishavingaccumulatedlossesofRs.10,33,349/-whichismorethan50%ofitsnetworth.Duringtheyear,theCompanyhasincurredcashlossesofRs.31,059/-.CashLossintheimmediatelyprecedingfinancialyear was Rs. 21,480/-.

11. TheCompanydoesnothaveborrowingfromFinancialInstitution,BankorDebentureHolders.Accordinglyclauseis not applicable.

12. Accordingtotheinformationandexplanationsgiventous,theCompanyhasnotgrantedanyloansandadvanceson the basis of security by way of pledge of shares, debentures and other securities.

13. TheCompanyisnotachitfundoranidhi/mutualbenefitfund/society.Therefore,theprovisionsofclause4(xiii)oftheCompanies(Auditor'sReport)Order,2003arenotapplicabletotheCompany.

14. During the year under consideration the Company has not dealt in or traded in shares, securities, debentures and otherinvestments.Accordinglyclauseisnotapplicable.

15. Aspertheinformationandexplanationgiventous,thecompanyhasnotgivenanyguaranteeforloanstakenbyothersfrombanksorfinancialinstitutions.AccordinglyclauseisnotapplicabletotheCompany.

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16. The company has not obtained any term loan during the year. Accordingly clause is not applicable to the Company.

17. AccordingtotheinformationandexplanationsgiventousandonanoverallexaminationofthebalancesheetoftheCompany,weareoftheopinionthatnofundsraisedonshort-termbasishavebeenusedforanylongterminvestment.

18. ThecompanyhasnotmadeanypreferentialallotmentofsharestopartiesandcompaniescoveredintheRegistermaintained under section 301 of the Act.

19. The company has not raised any money by issue of debentures during the year.

20. The company has not raised any money through a public issue during the year.

21. Tothebestofourknowledgeandbeliefandaccordingtotheinformationandexplanationsgiventous,nofraudonor by the company was noticed or reported during the year.

For Jhawar Mantri & Associates

Chartered AccountantsFRN.:113221W

Sd/-(B.P. Mantri)

PartnerM.No.:045701

Place:NaviMumbaiDate:2December2014

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BALANCE SHEET AS ON 31 MARCH 2014(Amount in Rupees)

Particulars Note No. As at March 31, 2014

As at March 31, 2013

I. EQUITY AND LIABILITIES Shareholders’ funds Share capital 2 500,000 500,000 Reservesandsurplus 3 (1,033,349) (1,002,290) Non-current liabilities Long-termborrowings 4 1,030,423 980,881 Current liabilities Other current liabilities 5 22,472 21,409 TOTAL 519,546 500,000

II. ASSETS Current assets Cashandcashequivalents 6 519,546 500,000 TOTAL 519,546 500,000

SignificantAccountingPolicies 1

SeeaccompanyingnotestothefinancialstatementsAsperourreportofevendateattached

For and on behalf of For and on behalf of the BoardJhawar Mantri & AssociatesChartered AccountantsFRNo.113221W

Sd/- Sd/- Sd/- (B. P. Mantri) (Rohit Nandan) (S. Venkat) Partner Chairman Director M. No. 045701

Sd/- Sd/- Sd/- (Arun K. Jain) (Rajni Kant) (H. R. Jagannath) Ch. of Finance Co.Secretary Ch.ExecutiveOfficer

Place:NaviMumbai Place:DelhiDate:02December2014 Date:26November2014

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STATEMENT Of PROfIT AND LOSS fOR THE YEAR ENDED 31 MARCH 2014(Amount in Rupees)

Particulars Note No. 2013-14 2012-13I. Revenuefromoperations - - II. Total Revenue (I) - - III. Expenses:

Other Expenses 7 31,059 21,480 Total expenses 31,059 21,480

IV. Profit before exceptional and extraordinary items and tax (II-III)

(31,059) (21,480)

V. Exceptional items - - VI. Profit before extraordinary items and tax (IV-V) (31,059) (21,480)VII. Extraordinary Items - - VIII. Profit before tax (VI-VII) (31,059) (21,480)IX. Taxexpense:

Current tax - - Deferred tax - -

X. Profit (Loss) for the period (VIII-IX) (31,059) (21,480)

XI. Earningsperequityshare:Basic and Diluted 9 (0.62) (0.43)

SeeaccompanyingnotestothefinancialstatementsAsperourreportofevendateattached





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CASH fLOW STATEMENT fOR THE YEAR ENDED 31 MARCH 2014(Amount in Rupees)

Particulars 2013-14 2012-131 CASH fLOW fROM OPERATING ACTIVITIES

NetProfit/(Loss)BeforeTax (31,059) (21,480)

ChangeinCurrentLiabilities 1,063 (15,566)Net Cash Flow from Operating Activities (29,996) (37,046)

2 CASH fLOW fROM INVESTING ACTIVITY - - 3 CASH fLOW fROM fINANCING ACTIVITY

Proceeds from Issue of Share Capital - -

ChangeinLongTermBorrowings 49,542 37,046 Net Cash Flow from Financing Activities 49,542 37,046 Net Increase/(Decrease) in Cash and Cash Equivalents 19,546 - Opening Balance of Cash/Cash Equivalents 500,000 500,000 Closing Balance of Cash/Cash Equivalents 519,546 500,000

Asperourreportofevendateattached





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NOTES fORMING PART Of THE fINANCIAL STATEMENT fOR THE YEAR ENDED 31 MARCH 2014

NOTE “1” : SIGNIfICANT ACCOUNTING POLICIES

1. BASIS Of PREPARATION Of fINANCIAL STATEMENTS:

ThefinancialstatementshavebeenpreparedunderthehistoricalcostconventioninaccordancewiththegenerallyacceptedaccountingprinciplesandtheprovisionsoftheCompaniesAct,1956.Thecompanyfollowsmercantilesystem of accounting.

Theaccountsarepreparedonthebasisof“GoingConcern”.

2. PROVISION fOR CURRENT TAX AND DEfERRED TAX:

Provisionforcurrenttax,ifany,ismadeaftertakingintoconsiderationbenefitsadmissibleundertheprovisionsoftheIncomeTaxAct,1961.DeferredTaxresultingfrom‘timingdifference’betweenbookandtaxableprofitisaccountedforusingthetaxratesandlawsthathavebeenenactedasontheBalanceSheetdate.Thedeferredtaxassetisrecognizedandcarriedforwardtotheextentthatthereisvirtualcertaintythattheassetwillberealizedin future.

NOTE "2" : SHARE CAPITAL Particulars As at March 31, 2014 As at March 31 , 2013

Number Amount Rs. Number Amount Rs. a) Authorised Equity Shares EquitySharesofRs.10each 9,000,000 90,000,000 9,000,000 90,000,000 Preference Shares of Rs. 100 each 100,000 10,000,000 100,000 10,000,000

TOTAL 100,000,000 100,000,000 b) Issued, Subscribed & Paid up EquitySharesofRs.10eachfullypaid 50,000 500,000 50,000 500,000

TOTAL 500,000 500,000 c) Reconciliation of Shares Current Year PreviousYear

No of Shares Amount No of Shares AmountEquity Shares Shares Outstanding at the beginning 50,000 500,000 50,000 500,000 Add:Issuedduringtheyear - - - - Less:Reductionduringtheyear - - - - Shares Outstanding at the year end 50,000 500,000 50,000 500,000d) Details of Shares held by the Holding Year ended 31.03.2014 Year ended 31.03.2013 Company, Subsidiary and associates. Percentage No of Shares Percentage No of Shares Shares held by Holding Company AirIndiaLimited 100% 50,000 100% 50,000e) Details of Major Shareholders, holding more

than 5% of the above issued Capital Name of Shareholder

Current Year PreviousYearNo of Shares % of holding No of Shares %ofholding

AirIndiaLimited 50,000 100 50,000 10050,000 100 50,000 100

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NOTE ‘3’ : RESERVES AND SURPLUS(Amount in Rupees)

Particular As at March 31, 2014


Surplus in Profit and loss account Opening balance (1,002,290) (980,810)(+)NetLossforthecurrentyear (31,059) (21,480)

TOTAL (1,033,349) (1,002,290)

NOTE ‘4’ : LONG TERM BORROWINGS(Amount in Rupees)



Unsecured loans from Related Party FromHoldingCompany: AirIndiaLimited 1,030,423 980,881 (RateofInterest-Nil,Repaymentterms-Nil)

TOTAL 1,030,423 980,881

NOTE ‘5’ : OTHER CURRENT LIABILITIES(Amount in Rupees)



Expenses Payable 22,472 21,409

TOTAL 22,472 21,409

NOTE ‘6’ : CASH AND CASH EQUIVALENTS(Amount in Rupees)



Balances with Banks In Current Accounts 519,546 500,000

TOTAL 519,546 500,000

NOTE ‘7’ : OTHER EXPENSES(Amount in Rupees)

Particular 2013-14 2012-13

AuditorsRemuneration(ReferNoteNo.8) 11,236 11,236 Legal,ProfessionalandFilingCharges 19,169 10,244 Bank Charges 654 -

TOTAL 31,059 21,480

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NOTE ‘8’ : PAYMENTS Of AUDITORS AS(Amount in Rupees)

Particular 2013-14 2012-13

Statutory Audit 10,000 10,000 ReimbursementofServiceTax 1,236 1,236

TOTAL 11,236 11,236

NOTE ‘9’ : EARNING PER SHARE (EPS)(Amount in Rupees)



NetProfitaftertaxasperProfit&LossA/c(Rs.) (31,059) (21,480)WeightedAveragenumberofEquityShare 50,000 50,000 outstanding during the year BasicanddilutedEarning/(Loss)PerShare(Rs.) (0.62) (0.43)NominalValuePerEquityShare(Rs.) 10 10

NOTE ‘10’ : DEfERRED TAX

In accordance with A.S 22 ‘’Accounting for taxes on Income’’ issued by the Institute of Chartered Accountants of India, asthereisnovirtualcertainitysupportedbyconvincingevidencethatsufficientfuturetaxableincomewillbeavailableagainstwhichdeferredtaxassetscanberealized,deferredtaxassetshavenotbeenrecognizedforthecurrentyear.

NOTE ‘11’

IntheTAP(TurnAroundPlan)forAIL(AirIndiaLimited),theengineeringservicesbusinesswasproposedtobehivedofftothesubsidiarycompanyAIESL.AspartofTAP/FRP,AItransferredemployeesforengineeringactivitiestoAIESL.

ConsequenttothecabinetapprovaltooperationlizetoAIESLasindependententityforMROservices,anMOUhasbeensignedbetweenAIandAIESLonApril5,2013toformalisetherelationship.AsperthisMOU,AIshalltransferitsMRObusinesstoAIESLbesidestransferofengineeringrelatedassets&manpowerandothersupportsetc.However,assets& employees continued in AI books of accounts.

Whilethehivingoffprocessistobecompletedasattheyearend,therevenueandexpenditurerelatedtoMROservicescontinuedintheaccountsofAIL.

Intheabsenceofanyturnoverorreceipts,itisnotliabletopayorprovideforanycessu/s441(A)oftheCompaniesAct,1956.

AIESL

17

NOTE ‘12’ : RELATED PARTY DISCLOSURES(Amount in Rupees)

Transactions during the year with related party Holding Company TotalExpenses Reimbursed 49,542 49,542

(37,046) (37,046)UnsecuredLoansBalanceasat31stMarch,2014 1,030,423 1,030,423

(980,881) (980,881)

Name, detail and relationship with related party

S. no Relationship Name of Party1 Holding Company AirIndiaLimited

NOTE ‘13’ : Previousyear’sfigureshavebeenarrangedorregrouped,whereverconsiderednecessarytoconformtocurrentyear’spresentaionasperrevisedScheduleVIformat._______________________________________________________________________________________________

AsperourReportofEvenDateattached





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AIR INDIA ENGINEERING SERVICES LIMITEDairindia.com/writereaddata/Portal/FinancialReport/1_246...the assets and manpower from Air India Limited, will be transferred to Air India Engineering