14th Annual Report 2014-15 - Bengaluru International...

14th Annual Report 2014-15

Contents

Board of Directors : 03

Directors’ Report : 05

Standalone

Auditor’s Report : 25

Annexure to Auditor’s Report : 29

Financial Statements

- Balance Sheet : 34

- Profit & Loss Account : 35

- Cash Flow Statement : 36

Significant Accounting Policies : 38

Notes to Financial Statements : 44

Consolidated

Auditor’s Report : 63

Annexure to Auditor’s Report : 69

Financial Statements

- Balance Sheet : 74

- Profit & Loss Account : 75

- Cash Flow Statement : 76

Significant Accounting Policies : 78

Notes to Financial Statements : 85

BANGALORE INTERNATIONAL AIRPORT LIMITED

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CIN : U45203KA2001PLC028418

Board of Directors : Mr. Kaushik Mukherjee, IAS - Chairman

: Dr. G V Krishna Reddy – Co-Chairman

: Mr. G V Sanjay Reddy – Managing Director

: Mrs. Vandita Sharma, IAS

: Mr. Sudhir Raheja

: Mr. Venkatramana R Hegde

: Mr. Arvind Shrivastava, IAS

: Mr. D R Kaarthikeyan

: Mr. Issac George Anicattu

: Mr. Pramod Kumar Bhambani

: Mr. Johannes Schmidt

: Mr. Basil Justin Wetters

: Mr. Krishna Ram Bhupal

: Mr. Daniel Schmucki

: Mr. S Balasubramanian (Independent Director)

: Dr. Anumolu Meher Prasad (Independent Director)

Company Secretary : Mr. M T Siva Kumar

Statutory Auditors : M/s. B S R and Company Maruti Info-Tech Centre, 11-12/1 Inner Ring Road, Koramangala, Bengaluru -560 071

Secretarial Auditors : M/s. V. Sreedharan and Associates 32/33, 1st Floor, GNR Complex, 8th Cross, Wilson Garden, Bengaluru – 560027

Cost Auditors : M/s. Narasimha Murthy & Co 3-6-365, 104 &105, Pavani Estate, Y.V. Rao Mansion, Himayatnagar, Hyderabad – 500 029

Internal Auditors : M/s. Deloitte Haskins & Sells LLP Deloitte Centre, Anchorage II, 100/2 Richmond Road, Bengaluru – 560 025

Registered Office : Administration Block,Kempegowda International Airport, Bengaluru – 560 300; Tel: +91 80 6678 2620;

Website : www.bengaluruairport.com

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DIRECTORS’ REPORT

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To,The Members of Bangalore International Airport LimitedThe Directors take pleasure in presenting the Fourteenth Annual Report of Bangalore International Airport Limited (the “Company” or “your Company”) together with the audited financial statements for the financial year ended 31st March, 2015.

1. FINANCIAL RESULTS 2014-15The details of the key financial results are summarised as follows:

(Rupees in Crore)

Financial Year 2014-15

Financial Year 2013-14

Income 932.67 675.22

Expenditure

Operating Expenses 313.91 261.10

Finance cost 197.28 105.60

Depreciation 208.97 148.85

720.16 515.55

Profit/(Loss) for the year 212.51 159.67

Less: Provision for taxation 137.20 92.56

Profit/(Loss) after tax 75.31 67.11

Add: Profit/(Loss) brought forward 391.72 324.61

Profit/(Loss) carried forward to Balance Sheet 467.03 391.72

Financial Overview

During the year under review, your Company was able to achieve an Income turnover of Rs. 932.67 crore (increased by 38 % over the previous year) and has reported a Profit after tax of Rs. 75.31 crore compared to the profit of Rs.67.11 crore reported during the last financial year. The drop in Profit after tax was mainly due to accounting of deferred taxes amounting to Rs.137.20 crore

Allotment of Shares: During the year under review, no fresh allotment of shares took place.

Changes in Shareholding in BIAL: There is no change in the shareholding pattern during the year.

Foreign exchange earnings & outgo: The foreign exchange outgoings during the year related mainly to the procurements/ payments

in foreign currencies for the airport services as part of day-to-day operation. Details of foreign exchange earnings/expenditure have been furnished under Note 29 & 30 Notes to Financial Statements.

Particulars of loans, guarantees or investments: The Company has not provided any guarantee or made any investments during the year. Details of

loan provided during the year have been furnished under Note 35 of Notes to Financial Statements.

2. OVERVIEW / INDUSTRY OUTLOOK Traffic The key highlights of the Operations of the Airport are as follows:

Type 2014 - 2015 2013 - 2014 Growth

Air Traffic Movements (Nos.) 134,209 118,575 13.2 %

Number of passengers 15,401,926 12,869,678 19.7%

Cargo (Metric Tons) 279,532 242,426 15.3%


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During the financial year 2014 - 2015, Kempegowda International Airport Bengaluru (the ‘Airport’ or ‘KIA’) handled 134,209 Air Traffic Movements (‘ATMs’) which is 13.2% higher than the previous year. The number of passengers who travelled through the airport during the year was 15.4 million, which is higher by 19.7% over the previous year and is an all-time high for the Airport. This has positioned your Airport as the third busiest Airport in the country after Delhi and Mumbai and moves KIAB into ACI mid- sized (15 -25 million) airport category globally.

Domestic airlines grew at an average rate of 21.8% compared to previous year. International ATMs showed a cumulative growth of about 8% and passengers grew by 11.3% during the year 2014-2015. The Overall cargo traffic witnessed a cumulative growth of 15.3%. Domestic Cargo grew by 24.1% while international grew by 9.9%.

Regulatory Scenario

The Airport Regulatory Authority (AERA) had issued an order on 10th June, 2014, in exercise of powers under the AERA Act read with the Aircraft Rules, in relation to determination of aero-nautical tariff of the KIA (the “Tariff Order”) for the current control period (i.e., from 2011 to 2016). As per the Tariff Order, the landing charges (as per weight of aircraft and per landing, for domestic and international flights, respectively), housing charges (as per weight of aircraft and per hour), parking charges, UDF (per embarking passenger, for short or long haul domestic and for short, medium or long international flights, respectively) would be payable by the Airlines to the Company and Fuel Throughput charges (FTP) would be collected through Concessionaire. The order provides for computation of aeronautical tariffs on 40% shared revenue till (“SRT”) basis for the current control period. However AERA decided to carry out the trueing up of the differ-ence of revenues computed under 40% SRT and single till while determining the tariffs for second control period. It determined the X-factor as nil as for the first control period and noted that the determination of X-factor would require an independent study. The AERA proposed to conduct such a study and consider its results appropriately while determining the aeronautical tariffs for the next control period.

The UDF was determined at Rs. 342 per embarking domestic passenger and Rs.1,368 per embark-ing international passenger, for the period from 1 July, 2014 up to 31st March, 2015. From the pe-riod 1st April, 2015 up to 31stMarch, 2016, UDF was determined at Rs. 306 per embarking domestic passenger and Rs. 1,226 per embarking international passenger

Significant and material orders passed by the Regulatorsor courts or tribunals impacting the going concern status of the Company.There were no significant and material orders passed by the Regulators or courts or tribunals impacting the going concern status of the Company.

3. OPERATIONS UPDATEManagement of Performance and Service Quality Setting itself very high standards of performance, your company monitors and measures the performance of operations and processes at the Airport continuously. Such a quality management program has yielded rich dividends in terms of high performance in Operations.

• Your company has achieved an overall satisfaction score of 4.37 in the ACI (Airports CouncilInternational’s) Airport Service Quality passenger survey (“ASQ”) for calendar year 2014. This is the highest overall ASQ score until now in any year, despite T1 enhancement work since July, 2014.

• A new dedicated facility has been handed over to Immigrations to support the initiative of the Government for Tourist Visa on Arrival enabled with Electronic Travel Authorisation (“ETA”).

• Your company has commenced conduct of trials for Electronic Mobile boarding process partnering with Airlines, CISF and MoCA. The combined teams are working closely to establish processes for successful implementation.

• Your airport has become the first airport in the country to be IATA E-freight compliant, successfully completing a proof-of-concept and operationalization of E-freight facility.


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4. PROJECT UPDATE

BIAL Terminal 1 Refurbishment Project

The terminal refurbishment project at Kempegowda International Airport, Bengaluru was envisaged to give the original terminal – in operation for seven years now – a face lift and improve passenger facilities. It involves redesigning commercial areas and providing passengers more choice.

Capacity Enhancement of T1A A study has been initiated to identify the opportunities to expand the capacity of Terminal 1, which

are currently designed for 20 million passengers per annum, which would identify opportunities to add capacity without compromising service levels and provide inputs on planning for Terminal 2.

New South Parallel Runway Your company has appointed a consultant to prepare the Schematic design for the runway and

associated airside infrastructure. Post completion of the design project, by 15th April, 2015, tender documents will be prepared for earthworks and pavements. The tender process is expected to commence during 2nd quarter of 2015.

Terminal 2 Your company has identified and finalised the lead architect for the new terminal. As the first

step towards terminal design, terminal planner has been selected and appointed. Appointment of consultants for Cost, baggage handling system, Landscape; Local Architect and Engineer are in process.

5. COMMERCIAL UPDATE The total commercial revenues grew by 30% during the year over previous year and the revenue

per departing passenger increased by 8% (included Retail, Food & Beverages, advertising, landside and lounges). Several new concepts in Retail and F&B have been added to phase-1 of the T1 Refurbishment Project, enhancing passenger experience. The new ranges of digital displays, including our mega video wall, Digital MUPIs and Suspended Screens are high quality solutions that have been designed to suit the environment while further strengthening our advertising offer & revenue generation. After successful 18 months of operations, BIAL & KSRTC augmented “Flybus” services to Mysore. A 32 days shopping festival “Season of Smiles” was held during the festive seasons during December 2014& January 2015, which gave the passengers/visitors enhanced experience.

6. HUMAN RESOURCES The Human Resources (“HR”) of your Company progressed well during 2014-15 by ensuring

acquisition of skilled manpower into the company and building the organization capability to take on new horizons for future.

Your company has been recognized in 2014-15 as a “‘Dream Company to work for” in the Airlines and Aviation Sector, by the World HRD Congress.

Your company has implemented key organization capability building initiatives across all levels viz.

• Leadership Development Program at Senior Management Levels• Managerial Development Programs for Managerial Cadre• Business Etiquette and Attitude related programs for junior levels. • Your company has implemented the Policy on Prevention, Prohibition and Redressal of Sexual

Harassment of Women at Workplace in furtherance to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

Your company has ensured compliance with applicable labour laws and accordingly has been certified by appropriate government authorities during the year. No major industrial Relations issues have been reported during the year.

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment


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and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are covered in the extract of Annual return.

7. DISCLOSURE OF INFORMATION PURSUANT TO SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013

Conservation of Energy & Technology absorption• Your Company has achieved Airport Carbon Accreditation Level 2 (Reduction Level) in 2012

which was upgraded to Level 3 (Optimization Level) in the year 2013 successfully. During the year the same level -3 is renewed successfully in the year 2014.

• The surveillance audit of all the four ISO standards i.e. ISO 14001:2014,ISO 9001:2008, OHSAS 18001:2007 & ISO 50001:2011 which were achieved earlier has been successfully completed without any major non-compliance in 2014 and renewed.

• Energy saving measures like LED conversion, occupancy sensors etc. continued in 2014 also. Further use of biodiesel along with diesel is continuing to reduce overall carbon foot print. The exercise of carbon footprint reduction enhanced by involving stakeholders which re-sulted in Level 3 Airport Carbon Accreditation.

• As per the latest guidelines of Bureau of Energy Efficiency, your Company has its own energy management organization in place consisting of certified energy auditor.

• During T1A refurbishment, efforts are taken to implement energy saving lighting fixtures wherever possible.

• As a part of water sustenance, your company has rejuvenated two more old existing surface wells. Now, presently there are four wells refurbished to cater the need of water for Airport operations.

• To reduce the carbon foot print, your company has already planned to use alternate energy source or green power for Airport operation.

8. PUBLIC DEPOSITS Your Company has not accepted any deposits and hence no amount of principal or interest was

outstanding as on the date of Balance Sheet.

9. DIRECTORS AND KEY MANAGERIAL PERSONELL In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and

Articles of Association of the Company, Mr. Krishna Ram Bhupal (DIN 00005442), Mr. Kaarthikeyan Devarayapuram Ramasamy (DIN 00327907) and Mr. Issac George Anicattu (DIN 00005456)retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

During the year under review, there were changes in the Board members.

Changes in Directorship of GoK Mr. I S N Prasad, IAS, representing Government of Karnataka vacated his office due to withdrawal

of nomination from Government of Karnataka with effect from 4th August 2014. Mr.Arvind Shrivastava, IAS was appointed as a Director of your company with effect from 4th August 2014 in the casual vacancy created by the cessation of Mr. I S N Prasad, IAS.

Changes in the Directorship of Private Promoters Mr. Basil Justin Wetters was appointed as a Director of the company with effect from 14th May

2015 in the casual vacancy created by the resignation of Mr. Klaus Kolof, who was representing Siemens Project Ventures GmbH.

Mr. Issac George Anicattu was appointed as a Director of the company with effect from 23rd January 2015 in the casual vacancy created by the resignation of Mrs. Indira K Reddy, who was representing Bangalore Airport & Infrastructure Developers Private Limited.

The Board places on record its appreciation for the valuable services rendered by the outgoing Directors, Mr. I S N Prasad, IAS, Mr. Klaus Kolof and Mrs. Indira K Reddy during their respective


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tenure as Directors of your Company.

Appointment of Independent Directors

Pursuant to the Section 149(6) read with Schedule IV of the Companies Act 2013 and the Rules made thereunder, your company had appointed Mr. Sundaram Balasubramanian and Dr. Anumolu Meher Prasad as Independent Directors of the Board for a term of three years with effect from 4th September 2014. Consequently, all the Committees of the Board viz., Audit Committee, CSR Committee, Nomination and Remuneration Committee, are constituted / reconstituted with the induction of Independent Directors in compliance with the relevant provisions of the Companies Act, 2013.

The Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and that there are no changes in their status Independence.

In addition to the provisions of Companies Act, 2013, the appointment of Directors are governed by Shareholders Agreement of the company dated 23rd January 2002 (amended and restated up to 28th July 2006).

Key managerial Personnel

Mr. G V Sanjay Reddy, Managing Director, Mr. Bodapati Bhaskar, Chief Financial Officer and Mr. M T Siva Kumar, Company Secretary are the “Key Managerial Personnel” of the company.

Mr. S. Chandrasekar was discharging the functions of the Company Secretary as an interim arrangement since 9th March 2010,in addition to the functions of Head-Finance and Accounts. During the year the Company has appointed Mr. M T Siva Kumar as the Company Secretary of the Company with effect from 4thAugust 2014. Mr. S. Chandrasekar is continuing to discharge the functions as Asst. Vice President and Head- Finance & Accounts after vacating the office as Company Secretary.

The Board places on record its appreciation for the valuable services rendered by Mr. S Chandrasekar during his respective tenure as Company Secretary of your Company.

Board evaluation Pursuant to the provisions of the Companies Act, 2013, the Independent Directors at their meeting

considered/evaluated the Board’s performance, performance of the Chairman and other Non-independent Directors, without participation of any of the Non-Independent directors and the management.

Meetings A calendar of Meetings is prepared and circulated in advance to the Directors.During the financial

year six Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

10. CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate Governance goes beyond the statutory form. Sound Corporate Governance is a key driver of sustainable corporate growth and long-term value creation for the stakeholders and protection of their interests. Your Company endeavors to meet the growing aspirations of all stakeholders including shareholders, employees and customers. Your Company is committed to maintain the highest level of transparency, accountability and equity in its operations. Your Company always strives to follow the path of good Governance through a broad framework of various processes.

Vigil Mechanism & Whistle Blower Policy

Your Company has established a Vigil mechanism & Whistle Blower policy for employees and its directors, as prescribed under section 177 of the Companies Act 2013 to report genuine concerns about unethical behaviors, actual or suspected fraud or violation of the Company’s


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Code of Conduct. The mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism. The employees are informed of this policy through appropriate internal communications. Your company hereby affirms that no Director/Employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a

Remuneration policy.

Risk management policy The Company overseesthe risk through Business Continuity Management and related Audit.

11. SUBSIDIARY COMPANY Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies

(Accounts) Rules, 2014, the statement containing salient features of the Financial Statement of the Company’s Subsidiary/Associate/Joint Venture is the Form AOC – 1 is attached to the Financial Statement.

12. CONSOLIDATED FINANCIAL STATEMENT The Consolidated Financial Statements of the Company are prepared in accordance with

Accounting Standards (“AS”) 21, issued by the Institute of Chartered Accountants of India.

13. EXRACT OF ANNUAL RETURN The details forming part of the extract of Annual Return in Form MGT 9 as on 31st March 2015 is

annexed as “Annexure I”.

14. AUDIT COMMITTEE In terms of Section 177 of the Companies Act, 2013 the Audit Committee were reconstituted and

presently consists 3 Directors as its members viz., Mr. Sundaram Balasubramanian, Dr. Anumolu Meher Prasad, Independent Directors and Mr. Issac George Anicattu. The role, terms of reference, the authority and power of the Audit Committee are in conformity with the requirements of Section 177 of the Companies Act, 2013 and Rules made thereunder.

The Audit Committee meets periodically with the Internal Auditors and the Statutory Auditors to review the manner in which the Auditors are discharging their responsibilities and to discuss about auditing, internal control system and financial reporting issues. To ensure complete independence, the Statutory Auditors and the Internal Auditors have full and free access to the members of the Audit Committee to discuss any matter of substance. Three meetings of the Audit Committee were held during the financial year 2014-15.

15. AUDITORS AND THEIR REPORT Statutory Auditors The Company’s auditors M/s. BSR and Company, Chartered Accountants who retire at the ensuing

Annual General Meeting of the Company and eligible for reappointment. The company has received confirmation from the Auditors regarding their consent and eligibility under section 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules 2014 for appointment as the Statutory Auditors of the Company.

The Audit Committee and the Board of Directors have recommended the appointment of the Statutory Auditors for the Financial Year 2015-16. The necessary resolutions are being placed before the Shareholders for approval.

The Shareholders will be required to appoint the Statutory Auditors for the financial year 2015-16 and fix their remuneration.

The observations of the Statutory Auditors in the form of “Emphasis of Matter” together with the Notes to the financial statements referred to in the Auditor’s report are self-explanatory and do not call for any further explanation from the Directors.


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Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and

Audit) Amendment Rules, 2014 the cost records maintained by the Company in respect of its Aeronautical services arerequired to be audited. Your Directors had, on the recommendation of the audit committee appointed M/s. Narasimha Murthy and Co, Cost Accountants to audit the cost accounts of the Company for the financial year 2014-15. As required under the Companies Act, 2013 the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member’s ratification for the remuneration payable to M/s. Narasimha Murthy and Co, the Cost Auditors is included in the notice convening the 14th Annual general meeting.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. V. Sreedharan & Associates, Company Secretary in practice to undertake the Secretarial Audit of the Company for the Financial Year ended 31st March, 2015. The report of the Secretarial audit is annexed as “Annexure II”.

Internal Controls Systems

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal audit function which forms part of the Finance Department, through the Internal Auditors, monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of the internal audit, the process owners undertake corrective action in their respective areas and thereby strengthen the controls.

16. DIRECTORS’ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 (3) (c) OF THE COMPANIES ACT, 2013

Pursuant to the requirements specified under Section 134(3)(c) of the Companies Act, 2013, with respect to the Directors’ Responsibilities Statement; your Directors hereby makes the following statements;

i. that in the preparation of the annual accounts for the year ended 31st March, 2015, the ap-plicable accounting standards have been followed along with proper explanations relating to material departures.

ii. that such accounting policies as mentioned in Note 2 of the Notes to the financial state-ments have been selected and applied 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 as at 31st March, 2015 and of the profit of the Company for the financial year ended on that date ;

iii. that proper and sufficient care has been taken for the maintenance of adequate account-ing records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. that the Annual Financial Statements have been prepared for the financial year ended 31st March, 2015 on a “going concern” basis.

v. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

17. RELATED PARTY TRANSACTION

The transaction entered into by the company with the related party is in the ordinary course of business and at arm’s length price basis. The details of transactions are provided in Form. No. AOC – 2 is annexed as “Annexure III”.


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18. CORPORATE SOCIAL RESPONSIBILITY (CSR) In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors

of your Company have constituted a CSR Committee on 20th October, 2014 upon induction of Independent Director. The Committee comprises of Mr. S. Balasubramanian, Independent Director, Mr. G.V. Sanjay Reddy, Managing Director, Mr. Venkatramana R. Hegde and Mr. Pramod Kumar Bhambani. The Board approved the CSR policy at the meeting held on 23rd January, 2015 based on the recommendation of CSR Committee. The approved CSR policy is uploaded in the company’s website.

As per the section 135 of the Companies Act 2013, the Board shall ensure that the Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy. However, in the current year, due to delay in constitution of the CSR committee, formalisation of the CSR policy and identification of the projects for CSR spend; the Company has not been able to spend the required amount on the CSR activities during the financial year 2014-15. The Annual report on CSR activities is annexed as “Annexure IV”.

Your Company has a strong focus on fulfilling its Corporate Social Responsibilities. As part of CSR, Your Company works on three core issues - Environment, Safety and Community Service. The CSR activities are primarily led by the 7 member core committee and over 280 registered volunteers. The year was also a year of consolidation to relook at the CSR approach and focus on sustainable progress and keeping the community initiatives robust.

As part of its commitment to the environment, your Company successfully executed the distribution of around 108 tree sapling among the employees who made a commitment to go green. Your company also unveiled the Green Map to create awareness on various green initiatives that are going to be added features at the airport. In another safety drive, your Company conducted a session on ‘Environment awareness and Bird activity impact on aircraft movement’ at the neighboring in the month of July 2014.

Your company held an exclusive event for 70 children from Sarvodaya Service Society, an NGO that shelters homeless kids and children with learning disability, as part of the month-long festival “Season of Smiles” in January this year. The children received the gift of knowledge with scholarships to help them pursue their education for a year to toys and sporting gear. This initiative was jointly sponsored by the airport partners that came together to spread joy through the festival. In October last year children from Sarvodaya Service Society were invited for a tour of the airport facilities as part of the Joy of Giving week campaign. Your Company donated 150 blankets to the NGO at the end of the visit.

19. ACKNOWLEDGEMENT

Your Directors take this opportunity to convey their sincere thanks to the Government of India, particularly, the Ministry of Civil Aviation, Ministry of Defence, Ministry of Commerce & Industry, Ministry of Finance and the Airports Authority of India and the Government of Karnataka, in particular the Infrastructure Development Department, the Finance Department, KSIIDC, Bangalore Water Supply and Sewage Board, Bangalore Electricity Supply Company, Karnataka Power Transmission Company Limited, Bangalore International Airport Area Planning Authority and other bodies associated with the Project, the Customers, Shareholders, Suppliers, Bankers, Business Partners/Associates, Financial institutions, Regulatory Agencies and other stakeholders for their support and encouragement to the Company.

Your Directors also wish to place on record their sincere appreciation to all the employees of the Company for their unstinted commitment and continued contribution to the Company. Their dedication and competence has ensured that the Company continues to be a leading player in the Airport Industry.


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For and on behalf of the Board of Directors

Bengaluru 27th July, 2015 Managing Director Director (DIN: 00005282) (DIN: 06689221)

_________________________________________________________________________________

Safe Harbor Statement:

This document contains forward-looking statements and information - that is, statements related to future, not past, events. These statements may be identified by words such as “expects”, “looks”, “forward to”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will”, “project” or words of similar meaning. Such statements are based on our current expectations and certain as-sumptions and are therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond BIAL’s control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of BIAL to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.


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Annexure I to the Boards’ Report

Form No. MGT-9EXTRACT OF ANNUAL RETURN

as on the financial year ended on 31st March 2015

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i. CIN : U45203KA2001PLC028418

ii. Registration Date : 05/01/2001

iii. Name of the Company : BANGALORE INTERNATIONAL AIRPORT LIMITED

iv. Category / Sub-Category : Company having share capital of the Company

v. Address of the Registered office : Administration Block, and contact details Kempegowda International, Airport,Bengaluru – 560 300

vi. Whether listed company : Yes/No

vii. Name, Address and Contact details of Registrar and Transfer Agent, if any – NA

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY - NA

All the business activities contributing 10 % or more of the total turnover of the company;

Sl. No. Name and Description of main products / services

NIC Code of the Prod-

uct/ service

% to total turnover of the company

- - - -

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl. No.

Name and Address of the Company CIN/GLN

Holding/Subsidiary/Associate

% of shares held

Applicable Section

1 Bangalore Airport Hotel Limited Address: Alpha 2, Administration Block, Kempegowda International Airport, Bengaluru – 560 300

U55101KA2006PLC078358 Subsidiary 100 % Sec.2(87)


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IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i. Category-wise shareholding

Category-wise Share Holding

No. of Shares held at thebeginning of the year No. of Shares held at the end of the year

%Changeduring

the year

Demat Physi-cal Total

% ofTotal

SharesDemat Physi-

cal Total% ofTotal

Shares

A. Promoters

(1) Indian

a) Individual/HUF - 3 3 - - 3 3 - -

b) Central Govt 4,99,98,000 - 4,99,98,000 13% 4,99,98,000 - 4,99,98,000 13% -

c) State Govt (s) 4,99,97,997 - 4,99,97,997 13% 4,99,97,997 - 4,99,97,997 13% -

d) Bodies Corp. 16,53,78,000 - 16,53,78,000 43% 16,53,78,000 - 16,53,78,000 43% -

e) Banks / FI - - - - - - - - -

f) Any Other…. - - - - - - - - -

Sub-total (A) (1):- 26,53,73,997 3 26,53,73,997 69% 26,53,73,997 3 26,53,73,997 69%

(2) Foreign

a) NRIs-Individuals

- - - - - - - - -

b) Other – Individuals

- - - - - - - - -

c) Bodies Corp. 11,92,26,000 - 11,92,26,000 31% 11,92,26,000 - 11,92,26,000 31% -

d) Banks / FI - - - - - - - - -

e) Any Other…. - - - - - - - - -

Sub-total (A) (2):- 11,92,26,000 - 11,92,26,000 31% 11,92,26,000 - 11,92,26,000 31% -

Total shareholding of Promoter

(A) = (A)(1)+(A)(2)

38,45,99,997 3 38,46,00,000 100% 38,45,99,997 3 38,46,00,000 100% -

B. Public Shareholding

1) Institutions

a) Mutual Funds - - - - - - - - -

b) Banks / FI - - - - - - - - -

c) Central Govt - - - - - - - - -

d) State Govt(s) - - - - - - - - -

e) V C F - - - - - - - - -

f) Insurance Co. - - - - - - - - -

g) FIIs - - - - - - - - -

h) Foreign VCF - - - - - - - - -

i) Others - - - - - - - - -

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

2) Non-Institutions

a) Bodies Corp.

i. Indian - - - - - - - - -

ii. Overseas - - - - - - - - -


17

b) Individuals

i. Individual shareholders

holding nominal share capital upto Rs. 1 lakh

ii. Individual sharehold-ers holding nominal share capital in excess of Rs 1 lakh

- - - - - - - - -

c) Others (specify)

- - - - - - - - -

Sub-total (B) (2):- - - - - - - - - -

Total Public Share-holding

(B)=(B)(1)+ (B)(2)

- - - - - - - - -

C. Shares held by Custodian for GDRs & ADRs

- - - - - - - - -

Grand Total (A+B+C) 38,45,99,997 3 38,46,00,000 100% 38,45,99,997 3 38,46,00,000 100% -

ii) Shareholding of Promoters

Sl. No.

Shareholder’sName

Shareholding at the beginningof the year

Shareholding at the end of theyear

No. of

Shares

% of

total Shares of the

company

%of Shares

Pledged /

encumbered

to total shares

No. of

Shares

% of

total Shares of the

company

%of Shares Pledged /

encumbered

to total shares

% change in

shareholding during the

year

1

Karnataka State Industrial Infrastructure Development corporation limited

4,99,97,997 13% 30% 4,99,97,997 13% 30% -

2 Airports Authority of India 4,99,98,000 13% 30% 4,99,98,000 13% 30% -

3 Siemens Project Ventures GmbH 9,99,96,000 26% 30% 9,99,96,000 26% 30% -

4

Bangalore Airport Infrastructure & Developers Private Limited

16,53,78,000 43% 30% 16,53,78,000 43% 30% -

5 Flughafen Zurich AG 1,92,30,000 5% 30% 1,92,30,000 5% 30% -

6 Mr. N R Narayana Murthy 1 - - 1 - - -

7 Mr. Y Sreenivasappa 1 - - 1 - - -

8 Mr. S Ravishankar 1 - - 1 - - -


18

iii) Change in Promoters’ Shareholding – No changes during the reporting period

Sl. No.

Shareholding at the beginning of the year

Cumulative Shareholding during theyear

No. of shares

% of totalshares of the

company

No. of shares

% of total shares ofthe company

At the beginning of the year - - - -

Date wise Increase / Decrease in Promoters Shareholding dur-ing the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):

- - - -

At the End of the year - - - -

iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) – Not Applicable

Sl. No. Shareholding at the beginning of the year Cumulative Shareholding during

the year

For Each of the Top 10 Shareholders No. of shares % of total shares of the company

No. of shares

% of total shares of the company


Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

- - - -

At the End of the year (or on the date of separation, if separated during the year) - - - -

v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.

Shareholding at the beginning of the year

Cumulative Shareholding during the year

For Each of the Directors and KMP No. of shares


No. of shares



Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

- - - -

At the End of the year - - - -

v) INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment

Secured Loans excluding deposits

Unsecured Loans Deposits Total Indebtedness

Indebtedness at the beginning of the financial year 1,918.11 333.50 - 2,251.61

i. Principal Amount 1,911.13 333.50 - 2,244.63

ii. Interest due but not paid - - - -

iii. Interest accrued but not due 6.98 - - 6.98

Total (i+ii+iii) 1,918.11 333.50 - 2,251.61

Change in Indebtedness duringthe financial year

271.49 1.00 - 272.49

• Addition - - - -

• Reduction 271.49 1.00 - 272.49

Net Change 271.49 1.00 - 272.49

Indebtedness at the end of the financial year

1,646.62 332.50 - 1,979.12

i. Principal Amount 1,641.90 332.50 - 1,974.40

ii. Interest due but not paid - - - -

iii. Interest accrued but not due 4.72 - - 4.72

Total (i+ii+iii) 1,646.62 332.50 - 1,979.12


19

VI) REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

– Following annexed as “Annex A”

A. Remuneration to Managing Director, Whole-time Directors and/or Manager;

B. Remuneration to other directors;

C. Remuneration to Key Managerial Personnel other than Md/Manager/Wtd;

VII) PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Companies Act

Brief Description

Details of Penalty / Punishment/

Compounding fees imposed

Authority [RD / NCLT/ COURT]

Appeal made, if any (give Details)

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -

OTHER OFFICERS IN DEFAULT

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -


20

Annexure II to the Boards’ Report

FORM No. MR-3

SECRETARIAL AUDIT REPORT

[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]

FOR THE FINANCIAL YEAR ENDED: 31st March, 2015

To, The Members of, Bangalore International Airport Limited Administration Block, Kempegowda International Airport,Bengaluru 560300.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Bangalore International Airport Limited (hereinafter referred to as the company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our 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, we hereby report that in our opinion, the company has, during the financial year ended on March 31, 2015 (hereinafter referred to as the audit period) 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:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company during the audit period according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; (not applicable to the company on the above matters during the audit period)

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder ap-plicable to the extent of External Commercial Borrowings.

(During the audit period, Foreign Exchange Management Act,1999 and rules made thereunder to the extent of Foreign Direct Investment and Overseas Direct Investment were not appli-cable to the company.)

The company being an unlisted public company, the following Acts, Rules,


21

Regulations and Guidelines are not applicable:

i. 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;

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regula-tions, 1992;

c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Re-quirements) Regulations, 2009;

d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and The Securities and Ex-change Board of India (Share Based Employee Benefits) Regulations, 2014 w.e.f. October 28, 2014

e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008.

f) The Securities and Exchange Board of India (Registrars to an issue and Shares transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with the client;

g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regula-tions, 2009; and

h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998

iv) Other laws applicable specifically to the Company namely:

(a) Airport Authority of India Act, 1994 and the rules made there under.

(b) The Airport Economic Regulatory Authority of India Act, 2008 and the rules made there under.

We have not examined compliance by the Company with respect to:

(a) the Secretarial Standards issued by the Institute of Company Secretaries of India as they had not been notified by the Central Government upto March 31, 2015.

(b) applicable financial laws, like direct and indirect tax laws, since the same have been subject to review by statutory financial audit and other designated professionals.

(c) Listing Agreement with the Stock Exchange(s), as the company is an Unlisted Public Company.

During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of


22

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.

As per the minutes of the meetings duly recorded and signed by the Chairman, the decisions of the Board were unanimous and no dissenting views have been recorded.

We 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 and regulations.

We further report that during the audit period, there were no events/actions having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, etc.

Place: Bengaluru For V. Sreedharan & AssociatesDate : 3rd July, 2015 (V. Sreedharan)

Partner

FCS: 2347; CP No: 833


23

Annexure III to the Boards’ Report

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies(Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013

including certain arm’s length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm’s length basis:

-NIL-

2. Details of material contracts or arrangement or transactions at arm’s length basis:

(a) Name of the related party and nature of relationship

: GVK Projects and Technical Services Limited

Dr. Venkata Krishna Reddy Gunupati (DIN:00005212) was director in both Bangalore International Airport Limited and GVK Projects and Technical Services Limited

(b)Nature of contracts /arrange-ments/transactions

: Consultancy Service Agreement

(c)Duration of the contracts/ ar-rangements/transactions

: 11th November 2014 to 31st March 2015

(d) Salient terms of the contracts or arrangements or transactions including the value

: Agreement is entered for availing Technical Consultancy Services from M/s. GVK Projects and Technical Services Limited to operationalize the Bangalore Airport Hotel.

Value: INR 11,50,00,000/-

(e) Date of approval by the Board 20th October 2014

(f) Amount paid as advances Rs. 5,75,00,000/-

For and on behalf of the Board of Directors

Bengaluru 27th July, 2015 Managing Director Director

(DIN: 00005282) (DIN: 06689221)


24

Annexure IV to the Boards’ Report

ANNUAL REPORT ON CORPROATE SOCIAL RESPOSIBILITY (CSR) ACTIVITIES

1. A brief outline of the Company’s CSR policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects orprogrammes.

CSR policy is stated therein Web-link: http://www.bengaluruairport.com/bial/pdf/CSR_Policy-Final.pdf

2. Composition of the CSR Committee;

i) Mr. S. Balasubramanian, Chairman (Independent Director)

ii) Mr. G.V. Sanjay Reddy, Managing Director

iii) Mr. Venkatramana R. Hegde, Member

iv) Mr. Pramod Kumar Bhambani, Member

3. Average net profit of the Company for the last three financial year is Rs.158.34 crore

4. Prescribed CSR Expenditure (2% of the amount of Rs.158.34 Cr) is Rs. 3.17 crore

5. Details of CSR spent during the financial year;

a. Total amount to be spent for the financial year is Rs. 3.17 crore

b. Amount unspent is Rs. 3.17 crore

6. In case the Company has failed to spend two per cent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board report;

As per the section 135 of the Act, the Board shall ensure that the Company spends, in every finan-cial year, at least two per cent of the average of the net profits of the three immediately preced-ing financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy. However, in the current year, due to delay in constitution of the CSR committee (delay due to induction of Independent Directors on the Board), formalisation of the CSR policy and identification of the projects for CSR spend; the Company has not been able to spend the required amount on the CSR activities during the financial year 2014-15.

7. The CSR Committee of the Company hereby confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

G V Sanjay Reddy

(DIN: 00005282)

Managing Director

Sundaram Balasubramanian

(DIN:02849971)

Chairman of the Corporate Social Responsibility Committee


http://www.bengaluruairport.com/bial/pdf/CSR_Policy-Final.pdf

25

AUDITOR’S REPORT(STANDALONE)


26

TO THE MEMBERS OF BANGALORE INTERNATIONAL AIRPORT LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bangalore International Airport Limited (“the Company”), which comprise the Balance Sheet as at 31 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 Com-panies 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 (Ac-counts) 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 prevent-ing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implemen-tation 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 mis-statement, 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 thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the dis-closures 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 con-trols 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so


27

required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 27(c) to the standalone financial statements. The Company, in the previous year, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Company computed and accounted for deferred tax amounting to Rs. 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013 (“the Act”).

During the current year, the Airport Economic Regulatory Authority (‘AERA’) in its OrderNo 08 / 2014-15 dated 10 June 2014 issued to the Company has stated that it has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act. Accordingly, the circular resolution as mentioned in the above paragraph was cancelled during the Board of Directors meeting held on 4 August 2014. We have been informed by the Management that pending notification of such useful lives of fixed assets by AERA, the Company would continue to follow the useful lives of fixed assets as per the exiting accounting policy and has accounted for deferred tax as at 31 March 2015 aggregating Rs 158.70 crore after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the current useful lives of fixed assets. Pending the aforesaid notification from AERA any impact on the depreciation, book value of fixed assets and the consequential impact on taxes including deferred taxes is currently not ascertainable.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(i) 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 said Order.

(ii) 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) In our opinion, the matter related to depreciation policy and deferred tax described under the Emphasis of Matter paragraph above, does not have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors as on 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and


28

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 standalone financial statements – Refer Note 28 to the standalone financial statements

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

for B S R and Company

Chartered Accountants

Firm registration number: 128900W

S Sethuraman

Partner

Membership number: 203491

Place: Chennai

Date: 20 April 2015


29


ANNEXURE TO AUDITOR’S REPORT(STANDALONE)

30

The Annexure referred to in the Auditor’s Report to the Members of Bangalore International Airport Limited (“the Company”) for the year ended 31 March 2015. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with the programme, fixed assets have been verified during the year and no material discrepancies were noticed on such verification.

(ii) (a)

(b)

(c)

The inventories have been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable.

The procedures of physical verification of inventories followed by Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

The Company is maintaining proper records of inventories. The discrepancies identified on physical verification of inventories between physical stocks and book records were not material.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation by the Management that alternative quotes were not obtained for certain items owing to those being specialized and proprietary in nature, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of fixed assets and inventories and with regard to the sale of services. The activities of the Company do not involve sale of goods. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.

(v) The Company has not accepted any deposits from the public.

(vi) The Central Government of India has prescribed the maintenance of cost records under Section 148(1) of the Act, read with Rule 3 of the Companies (Cost records and audit) Rules, 2014, as amended in relation to Aeronautical services rendered by the Company. The Company has informed that it will initiate the process of maintaining the cost records required as per the Rules for the applicable services. Therefore, we have not been able to examine the cost records (Refer Note 42 to the standalone financial statements).

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and excise duty during the year.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of wealth-tax, sales-tax, customs duty which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of income-tax, entry tax, service-tax and property tax have not been deposited by the Company on account of disputes:


ANNEXURE TO AUDITOR’S REPORT ON STANDALONE FINANCIAL STATEMENTS

31

Name of the statute Nature of duesAmount (in Rs crore)

Period to which it relates

Forum where the dispute is pending

Income Tax Act, 1961 Tax deduction at source (including interest)

6.84 2005-06 High Court of Karnataka

Income Tax Act, 1961 Demand under Section 156 on account of disal-lowances

2.67* 2009-10 Income Tax Appellate Tribunal (ITAT)

Karnataka Special Tax on Entry of Certain Goods Act, 2004

Special Entry Tax 2.13 2006-07 High Court of Karnataka

Karnataka Panchayath Raj Act, 1993

Property tax 14.62 2010-13 Anneshwara Gram Panchayath


Property tax 1.53 2010-13 Bettakotte Gram Panchayath

Finance Act, 1994 Service Tax including interest and penalty

9.15 2005-09 Customs, Excise and Service Tax Appellate Tribunal, Bangalore

Finance Act, 1994 Service Tax including interest and penalty

1.64 2009-10

Finance Act, 1994 Service Tax includinginterest and penalty

0.72 2010-11Customs, Excise and Service Tax AppellateTribunal, BangaloreFinance Act, 1994 Service Tax including

interest and penalty1.05 2009-12

* Out of the above, an amount of Rs 1.25 crore has been paid under protest

(c) As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund during the year.

(viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institution or debentureholders during the year.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purposes for which they were raised.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R and CompanyChartered AccountantsFirm registration number: 128900W

S SethuramanPartnerMembership number: 203491Place: Chennai

Date: 20April 2015


32

33

FINANCIAL STATEMENTS(STANDALONE)


34


(in rupees crore)

BALANCE SHEET AS AT Note 31 March 2015 31 March 2014

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital 3 384.60 384.60

Reserves and surplus 4 467.13 391.99

851.73 776.59

NON - CURRENT LIABILITIES Long-term borrowings 5 1,676.53 1,970.42

Deferred tax liability 6 158.70 21.50

Other long-term liabilities 7 346.57 303.74

Long-term provisions 8 1.78 1.50

2,183.58 2,297.16CURRENT LIABILITIES

Trade payables 9 71.72 43.79

Other current liabilities 10 413.80 422.83

Short-term provisions 11 8.06 6.77

493.58 473.39

TOTAL 3,528.89 3,547.14

ASSETS

NON-CURRENT ASSETSFixed assets 12

Tangible fixed assets 2,648.50 2,792.61

Intangible fixed assets 28.39 32.77

Capital work-in-progress 140.00 64.36

2,816.89 2,889.74Non-current investments 13 2.00 2.00

Long-term loans and advances 14 216.28 185.96

Other non-current assets 15 3.09 -

3,038.26 3,077.70 CURRENT ASSETSInventories 16 16.72 15.18

Trade receivables 17 69.06 40.18

Cash and bank balances 18 193.45 285.18

Short-term loans and advances 19 178.76 101.41

Other current assets 20 32.64 27.49

490.63 469.44

TOTAL 3,528.89 3,547.14

SIGNIFICANT ACCOUNTING POLICIES 2

The notes referred to above form an integral part of the standalone financial statements

As per our report of even date attached

for B S R and Company for and on behalf of the Board of Directors ofChartered Accountants Bangalore International Airport LimitedFirm registration number: 128900W

S Sethuraman Managing Director DirectorPartner (DIN : 00005882) (DIN : 02849971) Membership number: 203491

Place: ChennaiDate: 20 April 2015 Director ChiefFinancialOfficer (DIN : 00005456)

Company Secretary

35


(in rupees crore, except per share data)STATEMENT OF PROFIT AND LOSS FOR THE Note Year ended Year ended 31 March 2015 31 March 2014

Revenue

Revenue from operations 21 915.51 646.44

Other income 22 17.16 28.78

Total revenue 932.67 675.22

Expenses

Employee benefits 23 99.67 90.37

Finance costs 24 197.28 105.60

Depreciation and amortisation 12 208.97 148.85

Other expenses 25 214.24 170.73

Total expenses 720.16 515.55

Profit before tax 212.51 159.67

Income tax expense

Current tax / Minimum alternate tax (“MAT”) 41.56 32.02

MAT credit entitlement [Previous year: net of credit written down Rs 71.06 crores] [Refer note 27(b)] (41.56) 39.04

Deferred tax expense [Refer note 27(c)] 137.20 21.50

Total tax expenses 137.20 92.56

Profit after tax 75.31 67.11

Earnings per equity share [nominal value of share Rs 10 (previous period: Rs 10)]Basic and diluted 39 1.96 1.74

Weighted average number of equity sharesBasic and diluted 384,600,000 384,600,000


The notes referred to above form an integral part of the standalone financial statements

As per our report of even date attachedfor B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport LimitedFirm registration number: 128900W

S Sethuraman Managing Director DirectorPartner (DIN : 00005882) (DIN : 02849971)Membership number: 203491


Company Secretary

36


(in rupees crore)

CASH FLOW STATEMENT FOR THE Note Year ended Year ended 31 March 2015 31 March 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 212.51 159.67

Adjustmentstoreconcileprofitbeforetaxtocashprovidedbyoperatingactivities

Depreciation and amortisation expense 208.97 148.85

Loss on sale of fixed assets (net) 0.02 0.33

Unrealised foreign exchange gain (4.25) (1.27)

Provision for doubtful debt written back - (0.11)

Bad debt written off - 0.11

Interest income (16.83) (27.58)

Finance expenses 197.28 105.60

Operating Profit before working capital changes 597.70 385.60

Changes in assets and liabilities:

Inventories (1.54) 0.94

Trade receivables (28.88) (1.21)

Loans and advances and other assets (93.11) (58.87)

Liabilities and provisions 68.13 67.93

Cash generated from operations 542.30 394.39

Income tax paid (net of refund) (50.98) (45.78)

Net cash generated from operating activities 491.32 348.61

CASH FLOWS FROM INVESTING ACTIVITIES

Payment towards capital expenditure (137.22) (487.06)

Investment in subsidiary - (2.00)

Interest received 21.43 23.59

Proceeds from sale of fixed assets 0.60 0.19

Redemption/ maturity of bank deposits (having original maturity

of more than three months) 170.05 (59.60)

Net cash from / (used in) investing activities 54.86 (524.88)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of loan taken from banks (265.23) (226.40)

Proceeds from loan taken from banks - 306.00

Finance expenses (199.54) (101.84)

Net cash (used in) financing activities (464.77) (22.24)

37


(in rupees crore)

CASH FLOW STATEMENT FOR THE Note Year ended Year ended 31 March 2015 31 March 2014

Net increase in cash and cash equivalents 81.41 (198.51)

Cash and cash equivalents at the beginning of the year 18 101.02 299.53

Cash and cash equivalents at the end of the year 18 182.43 101.02


for B S R and Company for and on behalf of the Board of Directors of

Chartered Accountants Bangalore International Airport LimitedFirm registration number: 128900W

S Sethuraman Managing Director Director

Partner (DIN : 00005882) (DIN : 2849971)


Place: Chennai

Date: 20 April 2015 Director Chief Financial Officer

(DIN : 00005456)

Company Secretary

Notes to the standalone financial statements (continued)

38

Notes to the standalone financial statements

1 Company Overview

The Company has been incorporated on 5 January 2001 for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bangalore. Accordingly, a joint venture amongst Siemens Project Ventures GmbH, Germany (hereinafter ‘Siemens’), Flughafen Zurich AG, Switzerland (hereinafter ‘Zurich Airport’), L&T Infrastructure Development Projects Limited (hereinafter ‘L&TIDPL’), Karnataka State Industrial and Infrastructure Development Corporation Limited (hereinafter ‘KSIIDC’) and Airports Authority of India (hereinafter ‘AAI’) was entered into for the execution of this project.

Bengaluru International Airport (‘BIA’) has commenced commercial operations on 23 May 2008, the Airport Opening Date (hereinafter ‘AOD’). The Airport was renamed as Kempegowda International Airport (‘KIA’) on 14 December 2013 in the presence of Honourable Minister of Civil Aviation and Honourable Chief Minister of Karnataka.

During the year 2009-10, Bangalore Airport & Infrastructure Developers Private Limited (hereinafter ‘BAIDPL’) which is a step down subsidiary of GVK Power & Infrastructure Limited (hereinafter ‘GVK Power’) had acquired 17% of the outstanding equity shares from L&TIDPL and 12% of the outstanding equity shares from Zurich Airport. Further during the year 2011-12, BAIDPL acquired 14% of the outstanding equity shares from Siemens. Thus making BAIDPL the single largest shareholder in the Company with 43% stake in aggregate.

2 Significantaccountingpolicies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements.

2.1 Basisofpreparationoffinancialstatements

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting except for certain financial instruments which are measured at fair values and comply with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (‘ICAI’), and the provisions of the Companies Act, 2013 (“the Act”). The financial statements are prepared in Rupees in crores unless otherwise stated.

2.2 Use of estimates

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles (“GAAP”) in India requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of income and expenses of the year, assets and liabilities and disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III of the Act.

2.3 Revenue recognition

Revenue from airport operations are recognised on accrual basis, net of service tax, applicable discounts and collection charges, when services are rendered and it is probable that an economic benefit will be received, which can be quantified reliably.


39

Aeronautical Revenue (net of credit notes) includes revenue from all regulated charges levied at the KIA, i.e., landing fees, parking and housing fees, passenger service fee (facilitation component) and user development fees at the rates prescribed by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing, housing and parking charges are recognised, when such services are provided. Passenger service fees - facilitation component and user development fees are recognised in respect of each embarking passenger at a specified rate. Passenger service fees - security component collected as per MoCA / AERA orders are not recognised as revenue of the Company since the same is collected in a fiduciary capacity.

Non-Aeronautical Revenue means all revenue streams other than Aeronautical Revenue. The same consists of (i) revenue from concessions, which includes retail, fuel throughput charges, cargo handling charges, flight catering charges, aerobridge charges and ground handling charges; (ii) landside traffic charges; (iii) rents and land leases; (iv) information communication technology services; (v) food and beverage concessions; (vi) utility charges; and (vii) other non-aviation related charges.

Interest is recognised using the time proportion method based on rates implicit in the transaction. Award fees and tender fees are recognised on an accrual basis in accordance with the terms of the relevant arrangement. Utility charges includes power and water charges which are recovered from users of such utilities and are adjusted against the relevant expenses.

2.4 Tangible fixed assets and depreciation

Tangible fixed assets are stated at their original cost of acquisition less accumulated depreciation. The cost includes cost of subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned.

Advances paid towards acquisition of fixed assets, outstanding at each balance sheet date are shown under capital advances. The cost of fixed assets not ready for its intended use on such date is disclosed as Capital work-in-progress.

Depreciation is provided on a Straight Line Method (‘SLM’) over the useful lives of the assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged.

Pursuant to this policy, the rates of depreciation determined by the Management are as set out below:

Class of Asset Rate of depreciation per annum*

Building 3.33%-5%

Engineering structures 3.33%-5%

Plant and machinery 4.75%-16.21%

Office equipment 10.34%-25%

Computers 16.21%-25%

Furniture and fixtures 6.33%-10%

Vehicles 9.5%-20%

Leasehold Improvements are amortised over the primary period of lease.

*For these class of assets, based on Management’s internal assessment, the Management believes that the useful lives as given above best represent the period over which Management expects

Notes to the standalone financial statements (continued)BANGALORE INTERNATIONAL AIRPORT LIMITED

40

to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Act. Further, the Airport Economic Regulatory Authority (‘AERA’) in its order dated 10 June 2014 has mentioned that that it has separately initiated the process to issue a notification on useful lives for airport specific assets based on the Part B of Schedule II of the Act. (Also refer Note 27(c)).

2.5 Intangible assets and amortisation

Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

Computer software licenses are capitalised on the basis of costs incurred to acquire and put to use the specific software. Operating software is capitalised and amortised along with the related fixed asset. Other software is amortised, on a straight line method, over a period of three to five years based on Management’s assessment of useful life.

The Company had incurred certain legal and other expenses during the construction period towards various agreements, viz. Concession Agreement, Communication, Navigation and Surveillance and Air Traffic Management (CNS/ ATM) Agreement, Operations and Management Services Agreement, State Support Agreement and Land Lease Agreement which are capitalised as ‘Intangibles – Others’ and are amortised over a period of seven or thirty years.

The amortisation period and method used for intangible assets are reviewed at each period end.

2.6 Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

2.7 Lease accounting

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Operating lease expenses/income is recognised in the Statement of Profit and Loss on a straight line basis over the lease term.

2.8 Foreign currency transactions

The Company is exposed to foreign currency transactions including foreign currency expenses and payables. With a view to minimize the volatility arising from fluctuations in currency rates, the Company enters into foreign exchange forward contracts and other derivative instruments. Additionally, the Company enters into interest rate derivatives to minimise its interest costs.

Foreign exchange transactions are recorded in Indian rupees using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.



41

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are accounted for using the guidance in Accounting Standard (‘AS’) 11, ‘The effects of changes in foreign exchange rates’. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and purpose of the contract, either the contracts are recorded based on the forward rate/ fair value at the reporting date, or based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium or discount at the inception is amortised as income or expense over the life of the contract.

The Company has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements.

In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the Statement of Profit and Loss upon the occurrence of the hedged transaction.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Statement of Profit and Loss.

2.9 Inventory

Inventory consists of spares for machineries, which are charged to the Statement of Profit and Loss as and when they are consumed. The inventories are valued using the weighted average cost method.

2.10 RetirementandotherEmployeeBenefits

Definedcontributionplans

The Company has defined contribution plans (where Company pays pre-defined amounts and does not have any legal or informal obligation to pay additional sums) for post employment benefits namely Provident Fund, and the Company’s contributions thereto are charged to Statement of Profit and Loss every year. The Company’s contributions to State plan, namely, Employee Pension Scheme, 1995, is charged to Statement of Profit and Loss every year.

Definedbenefitplans

The Company’s gratuity benefit scheme is a defined benefit plan administered by the Life Insurance Corporation. The Company’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company’s obligation under the plan is performed annually by a qualified actuary using the Projected Unit Credit Method.

The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expenses in the Statement of Profit and Loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in Statement of Profit and Loss on a straight-line basis over the average period until the benefits become vested. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

BANGALORE INTERNATIONAL AIRPORT LIMITEDNotes to the standalone financial statements (continued)

42

Compensated absences

Compensated absences are accrued based on an actuarial valuation as at the balance sheet date, carried out by an independent actuary using the Projected Unit Cost Method. The Company accrues for the expected cost of short term compensated absences in the period in which the employee renders service.

2.11 Concession fee

The Concession fee is computed as a percentage of gross revenue pursuant to the terms and conditions of the Concession Agreement for designing, financing, construction, operation and maintenance of an International Airport at Devanahalli, Bangalore and is recognised in the Statement of Profit and Loss.

2.12 Income taxes

Income-tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The current income tax charge is determined in accordance with the relevant provisions of the Income-tax Act, 1961 applicable to the Company.

Deferred tax charge or credit are recognised for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and the profit as per the financial statements. Deferred tax in respect of timing difference which originate during the tax holiday period but reverse after the tax holiday period is recognised in the year in which the timing difference originate. For this purpose, the timing differences which originate first are considered to be reversed first. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realised.

In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (‘MAT’) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.13 Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit/loss after tax, attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive equity shares outstanding during the year.



43

2.14 Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation as at the balance sheet date. The provisions are measured on an undiscounted basis.

Onerous Contracts

A contract is considered as onerous when the expected economic benefits to be derived by the company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.

Contingencies

Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognised when it is probable that a liability has been incurred, and the amount can be estimated reliably.

2.15 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised.

2.16 Cashflowstatement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.

2.17 Investments

Long-term investments are carried at cost less provision for diminution, other than temporary diminution in the value of the investments. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is carried out separately in respect of each investment.


44

3 Share capital (in rupees crore, except as otherwise stated) Particulars As at 31 March 2015 As at 31 March 2014

Equity shares

Authorised:

700,000,000 (Previous year: 700,000,000) equity shares of Rs 10 each 700.00 700.00

Issued, subscribed and fully paid up:

384,600,000 (Previous year: 384,600,000) equity shares of Rs 10 each

fully paid up 384.60 384.60

384.60 384.60

a Reconciliation of the number of equity shares outstanding at the beginning and at the end of the reporting year :

Particulars As at 31 March 2015 As at 31 March 2014

At the commencement of the year 384,600,000 384,600,000

Number of shares issued during the year - -

At the end of the year 384,600,000 384,600,000

b Rights, preferences and restrictions attached to the equity shares

The Company has only one class of equity shares having par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company can declare and pay dividends. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. No dividends have been declared by the Company till date.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.”

c Particular of shareholders holding more than 5% shares of a class of shares

Name of the share holder As at 31 March 2015 As at 31 March 2014 No. of shares % held No. of shares % held

Bangalore Airport & Infrastructure Developers Private Limited 165,378,000 43 165,378,000 43

Siemens Project Ventures GmbH, Germany 99,996,000 26 99,996,000 26

Karnataka State Industrial and Infrastructure Development

Corporation Limited (KSIIDC) 49,997,997 13 49,997,997 13

Airports Authority of India 49,998,000 13 49,998,000 13

Flughafen Zurich AG, Switzerland 19,230,000 5 19,230,000 5

4 Reserves and surplus (in rupees crore)

Particulars As at 31 March 2015 As at 31 March 2014 Hedge reserve [Refer note 38]

At the commencement of the year 0.27 (1.25)

Additions during the year (0.17) 1.52

At the end of the year 0.10 0.27

Surplus (Statement of profit and loss)

At the commencement of the year 391.72 324.61

Add: Profit for the year 75.31 67.11

At the end of the year 467.03 391.72

467.13 391.99



45

5 Long-term borrowings

(in rupees crore)


Secured loan

From banks:

Rupee term loan* 1,260.34 1,516.54

Foreign currency term loan ** 83.69 120.38

1,344.03 1,636.92

Unsecured loan

From other parties:

State financial support (Base amount) *** 272.25 272.25

State financial support (Contingent amount) *** 60.25 61.25

332.50 333.50

1,676.53 1,970.42

* In March 2005, the Company had entered into a loan agreement with the ICICI Bank with a clause which specified the right with the rupee lender to assign, novate or transfer the loan. Based on the same, the loan has been assigned by ICICI Bank to the various banks on various dates. The Company had availed Indian currency term loan of Rs 1,229.21 crore. The rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all of the Company’s immovable properties located in the State of Karnataka; on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in thirty equal quarterly installments which commenced from 31 October 2010. The interest rate on the above loan ranges from 9 percent to 13 percent payable at the end of each month. The Company has repaid 18 principal installments till 31 March 2015.

In December 2012, the Company had entered into a rupee loan agreement with ICICI Bank and Axis Bank for an amount of Rs.1,100 crore. This agreement specifies the right of these rupee lenders to assign, novate or transfer the loan. Based on this, the banks have novated the loans to various other banks on various dates. The Company had availed Indian currency term loan of Rs 1,100 crore as at 31 March 2015. This rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in fifty two quarterly installments commencing from 31 December 2013 (1% till quarter ended 31 March 2014; 1.5 % till quarter ended 31 March 2015 and 2% thereon till quarter ended September 2026). The interest rate on the above loan is presently at 11.75% p.a., payable at the end of each month. The Company has repaid 6 principal installments till 31 March 2015.

**The Company availed a foreign currency term loan of USD 5 crore from ICICI Bank Limited under a facility agreement. The foreign currency term loan is secured by way of a first ranking mortgage and charge with the Security Trustee in respect of all of the Company’s movable and immovable properties and assets (both, present and future); borrower’s right under each project documents; interest in all licenses, permits, approvals, assignments, concessions, easements and consents; all revenue and receivables; insurance contracts; letter of credit, guarantee or performance bonds issued in favour of the Company and hypothecated to the Security Trustee (acting for the benefit of the lenders), pari passu with the rupee term loan. The principal amounts are repayable in thirty equal quarterly installments commenced from 31 October 2010. The interest rate as per agreement is 6 months USD LIBOR rate plus 150 basis points. The interest is paid on half yearly installments on 31 January and 31 July every year respectively. The Company has repaid 18 principal installments till 31 March 2015.


46

*** The Company had entered into a State Support Agreement (hereinafter ‘SSA’) [for the development, construction, operation and maintenance of KIA] with the Government of Karnataka (GoK) on 20 January 2005 (as amended on 20 June 2006) whereby GoK, subject to other terms, would make available to the Company over the project period, Rs 272.25 crore (‘Base amount’) and Rs 77.75 crore (‘Contingent amount’), which is to be used exclusively towards financing of the ‘base project cost’ and ‘project contingency’ respectively. The amounts, being interest free, are repayable in twenty equal half yearly installments commencing from 30 April 2018.

The Management would identify/ recommend and the Board of Directors consider and approve such expenditure as can be categorized/ financed under project contingency. The SSA stipulates the mechanism for obtaining funding from GoK for such project contingency amounts.

6 Deferred tax liability [Refer note 27(c)] (in rupees crore)


Excess of depreciation allowed under the Income Tax Act, 1961 over depreciation as per books 158.70 21.50

158.70 21.50

7 Other long-term liabilities (in rupees crore)


To parties other than related parties

Purchase of fixed assets 1.40 0.89

Security deposits from service provider, right holders, etc. 97.34 92.33

Concession fee payable (Refer note below) 171.33 134.02

To related parties

Security deposits from service provider, right holders, etc. [Refer note 35] 76.50 76.50

346.57 303.74

The Company has entered into a Concession Agreement (hereinafter ‘CA’) with the Ministry of Civil Aviation, Government of India on 5 July 2004 (as amended on 20 November 2006, to include scope of re-design) whereby the Government of India has granted to the Company exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of KIA [excluding the right to carry out the reserved activities as per CA or to provide Communication and Navigation Surveillance/ Air Traffic Management (CNS/ ATM) services, which are required to be provided by AAI] for an initial period of 30 years (and renewable for a further period of 30 years subject to stipulated conditions) from the date of commencement of commercial operations of air traffic and has provided for the payment of a concession fee by the Company.

The concession fee for the first ten financial years shall be payable in twenty equal half-yearly installments and first such installment being due and payable on 30 June and second of such installment being due and payable on 31 December (‘Reference Date’) on the eleventh financial year after the AOD. For the rest of the term, the installment shall be payable on the Reference Date falling thereafter.

8 Long-term provisions (in rupees crore)


Provision for employee benefits

Gratuity [Refer note 33(a)] 1.78 1.50

1.78 1.50



47

9 Trade payables (in rupees crore)

Particulars As at 31 March 2015 As at 31 March 2014 Trade payables Due to micro and small enterprises [Refer note 40] 2.10 1.01 Others 69.62 42.78 71.72 43.7910 Other current liabilities (in rupees crore)


Book overdraft 0.21 1.96

Current maturities of long-term borrowings

From banks:

Rupee term loans 256.19 234.18

Foreign currency term loan 41.68 40.03

Interest accrued but not due on borrowings 4.72 6.98

Security deposits from service provider, right holders, etc. 3.39 6.10

Income received in advance 0.23 0.18

Deferred revenue 0.15 3.83

Accrued salaries and benefits 13.34 10.69

Other payables

Purchase of fixed assets* 83.54 110.11

Withholding and other taxes payable 2.47 2.13

Mark-to-market loss on forward and options contracts 0.17 0.17

Other liabilities 7.71 6.47

413.80 422.83

*The Company is carrying an accrual aggregating Rs 11.64 crore (Previous year: Rs 62.51 crore) as at 31 March 2015 towards the Terminal expansion and Apron, and Rs 8.86 crore (Previous year: Rs Nil) towards other sustaining projects based on the terms of the contract, purchase orders raised, and the best estimate of the Management as the final bills are yet to be received from the vendors as at the period end. The Company is of the view that the provision has been created based on the best estimates and will approximate the actual liability to be settled.

11 Short-term provisions

(in rupees crore)


Provision for employee benefit

Compensated absences 7.30 6.01

Provision for tax (net of advance tax) 0.76 0.76 8.06 6.77


48

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13 Non-current investments

(in rupees crore)


Long-term, non-trade, unquoted, at cost Investmentinsubsidiary Bangalore Airport Hotel Limited 2.00 2.00

[72,000,000 (Previous year: 72,000,000) equity shares of Rs 10 each, fully paid-up] 2.00 2.00

At the commencement of the year 2.00 -

Additions during the year - 2.00 At the end of the year 2.00 2.00

Pursuant to the Framework Agreement (FWA) dated 16 November 2006 and by way of a Sublease Deed dated 24 January 2007, the Company had granted a portion of its leased land to L&T Bangalore Airport Hotel Limited (“L&T BAHL”) on a sublease basis, for the purpose of constructing and commissioning an airport hotel (the “Project or Facility”).

L&T BAHL was expected to undertake the Project and construct the hotel in accordance with the terms and conditions stipulated in the FWA and the Sublease Deed. However, L&T BAHL was not able to complete the construction and make the hotel facility ready for operation as certain approvals and clearances were not forthcoming. After number of discussions and communications and on account of disagreements, L&T BAHL had invoked the dispute resolution clause in the FWA and both parties had referred the matter to Arbitration Tribunal. L&T BAHL prayed for declaring the FWA as terminated and claimed compensation for the partial construction of the Airport Hotel. The Tribunal had passed its award on 20 April 2013, wherein the Honourable Tribunal had held that the FWA is not enforceable because of frustration and had directed L&T BAHL to handover the possession of partially constructed facility to the Company on ‘as is where is’ basis and directed the Company to pay a lump sum of Rs 301 crore and refund the security deposit amounting to Rs 76.5 crore with interest at 18 percent p.a. from the date of award.

Subsequent to the above mentioned Tribunal award, the Company and the Stakeholders of L&T BAHL (L&T Urban Infrastructure Limited (“LTRL”) and EIH limited (“EIH”) entered into a “Settlement Agreement” dated 27 June 2013, the Stakeholders agreed to sell its shares to the Company. In the previous year, the Company has entered into a “Share Purchase Agreement” dated 20 December 2013 to acquire 74% of the outstanding equity shares of L&T BAHL from LTRL and 26% from EIH, for aggregate purchase consideration of Rs 2.00 crore. The Company changed the name of L&T BAHL to Bangalore Airport Hotel Limited (BAHL) which was approved by the Ministry of Corporate Affairs on 14 March 2014. Thus, BAHL is a 100% subsidiary of the Company.

14 Long-term loans and advances (Unsecured, considered good unless otherwise stated) (in rupees crore)


Capital advances 11.52 37.11 Deposits with government authorities 9.49 9.02 Other deposits 0.28 0.28 Minimum alternate tax credit entitlement [Refer note 27(b)] 93.18 51.62 Advance tax (net of provision) 56.10 46.68 Amount recoverable from Passenger Service Fee (Security Component)

Account [Refer note 26] 45.71 41.25

216.28 185.96

15 Other non-current assets (in rupees crore)


Other bank balances

Non-current portion of bank deposits* 3.09 - 3.09 -

*Bank deposit amounting Rs 3.09 crore (Previous year: Rs Nil) being fixed deposit placed as security with bank for a bank guarantee


50

16 Inventories (in rupees crore)


Stores and spares 16.72 15.18

16.72 15.18

17 Trade receivables (in rupees crore)


Receivablesoutstandingforaperiodexceedingsixmonthsfromthe date they became due for payment

Secured, considered good 1.97 0.26

Unsecured, considered good 1.62 1.36

Total A 3.59 1.62

Otherreceivables

Secured, considered good 6.14 6.25

Unsecured, considered good 59.33 32.31

Total B 65.47 38.56

Total C=(A+B) 69.06 40.18

18 Cash and bank balances

(in rupees crore)


Cashandcashequivalents

Cash on hand 0.01 -

Cheques on hand 0.39 0.38

Balances with banks:

Current accounts 12.00 44.72

Deposit accounts (with original maturity of 3 months or less) 170.03 55.92

Other bank balances

Deposit accounts (due to mature within 12 month of reporting date)* 11.02 184.16

11.02 184.16

193.45 285.18

*Bank deposit amounting Rs Nil (Previous year: Rs 2.72) being fixed deposit placed as security with bank for a bank guarantee

19 Short-term loans and advances (Unsecured, considered good unless otherwise stated) (in rupees crore)



Prepaid expenses 12.16 8.46

Mark-to-market gain on forward and options contracts 17.45 16.76

Others 0.20 2.20

Service tax credit receivable 4.78 20.59

Balance with government authorities - 0.33

Other deposits 0.36 0.35

To related parties

Advances [Refer note 35] 143.81 52.72

178.76 101.41



51

20 Other current assets (Unsecured, considered good unless otherwise stated) (in rupees crore)


Interest accrued but not due on fixed deposits 1.94 6.54

Unbilled revenue 30.70 20.95

32.64 27.49

21 Revenue from operations (in rupees crore)

Particulars Year ended 31 March 2015 Year ended31 March 2014

Sale of services

Aeronautical revenue 581.31 377.51

Non-aeronautical revenue 334.20 268.93

915.51 646.44

22 Other income (in rupees crore)


Interest from banks 16.83 27.58

Exchange gain (net) - 0.54

Tender fees 0.13 0.17

Miscellaneous income 0.20 0.49

17.16 28.78

23 Employee benefits (in rupees crore)


Salaries, bonus and allowances 87.92 80.66

Contribution to provident and other funds [Refer note 33(a) and 33(b)] 6.29 4.10

Staff welfare 3.79 3.07

Staff recruitment and training 1.67 2.54

99.67 90.37

24 Finance costs (in rupees crore)


Interest expense

Rupee term loan* 183.02 92.82

Foreign currency term loan* 12.96 12.13

Other borrowing costs 1.30 0.65

197.28 105.60

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 2.87 crore (Previous year: Rs 2.72 crore) [Refer note 26]

The exchange difference to the extent considered as an adjustment to borrowing costs is Rs Nil (Previous year: Rs Nil)

25 Other expenses (in rupees crore)


Rent Land lease ** 6.35 6.35 Others 0.39 0.43 Rates and taxes 27.15 13.04 Insurance 2.02 2.23 Power and water* 38.00 26.48


52

[Net of recovery Rs 19.39 crore (Previous year: Rs 18.13 crore)] Repairs and maintenance to buildings 26.04 19.04 Repairs and maintenance to machinery and others 28.65 26.70 Consumption of stores and spares [Refer note 31] 6.13 5.97 Concession fee 37.31 27.01 Legal and professional 3.44 3.12 Technical consultancy 6.61 6.92 Operations and management services fee 15.05 9.99 Advertisement 3.70 8.90 Travelling and conveyance 11.05 12.13 Communication [Net of recovery Rs 0.03 crore (Previous year: Rs 0.08 crore)]* 0.23 0.18 Printing and stationery 0.43 0.40 Exchange loss (net) 0.18 - Loss on sale of fixed assets (net) 0.02 0.33 Provision for doubtful debts - (0.11) Bad debt written off - 0.11 Miscellaneous 1.49 1.51 214.24 170.73

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 0.95 crore (Previous year: Rs 0.79 crore) [Refer note 26]

** Land lease agreement

The Company has entered into a Land Lease Agreement (LLA) with KSIIDC on 20 January 2005 whereby, for the purposes of KIA, KSIIDC has leased to the Company approximately 3,884 acres of land situated within Devanahalli Taluk and Bangalore North Taluk. A Land Lease Deed (LLD), which supersedes the LLA (containing the same clauses as the LLA) has been signed between the aforesaid parties and registered with the local authority on 30 April 2005. The term of the LLD is concurrent with the term of the CA.

The land, valued at Rs 175 crore (referred to as ‘site cost’), carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

Out of the additional land of approximately 133 acres that KSIIDC had to acquire and lease to the Company as per the LLD, KSIIDC has handed over land aggregating to approximately 124 acres. The Company has entered into an additional Land Lease Deed (LLD) with KSIIDC on 31 December 2011. This additional land valued at Rs. 36.78 crore carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

The Company has entered into arrangements for sub-lease of land to concessionaires for purposes of aeronautical and non-aeronautical activities.

26 Passenger Service Fee

Passenger Service Fee (PSF) collected from the departing passengers has two components, viz. Facilitation component (FC) and Security component (SC). As per orders issued by Ministry of Civil Aviation (‘MoCA’) from time to time, PSF (SC) collections are held by the Company in fiduciary capacity for the Government of India and are deposited in an escrow bank account maintained for meeting security related expenses. As per the Airports Economic Regulatory Authority (‘AERA’) tariff order dated 10 June 2014, effective 1 July 2014, the PSF collected from the departing passengers will only include the SC. The FC of the PSF is merged along with the user development fee as per the Tariff Order.

The following is the Memorandum Account relating to PSF (SC) for which the books are maintained separately. The balances/transactions do not form part of the Company’s books of account.



53

(in rupees crore)

Income and Expenditure Account for the Year ended 31 March 2015 Year ended 31 March 2014

Income

PSF (SC) (net of service tax) 98.91 81.09

Other income 0.63 99.54 1.28 82.37

Expenditure 114.34 89.20 Excess of income over expenditure transferred to PSF (SC) Fund (14.80) (6.83)

(in rupees crore)

Balance Sheet As at 31 March 2015 As at 31 March 2014

Assets

Fixed assets (net of accumulated depreciation) 20.29 25.19

Current assets and advances 29.57 24.65

Trade receivables 20.04 16.73

Cash and bank balances

Cash on hand 0.01 0.01

Current accounts 0.07 0.77

Deposit accounts 7.78 7.86 9.10 19.88

77.76 86.45

Liabilities

Book overdraft 0.08 -

Payable to the Company 45.71 41.25

Current liabilities and provisions 13.91 12.34

PSF (SC) fund 18.06 32.86

77.76 86.45

The following capital and revenue expenditure have been transferred/ debited to PSF (SC) Account by the Company and included in the above balances:

(in rupees crore)

Particulars Year ended Year ended 31 March 2015 31 March 2014

Interest on bank loans relating to the security assets 2.87 2.72

Other security related expenditure 0.95 0.79

The Company had received observations from the Comptroller and Auditor General of India (‘CAG’) during the audit for the years 2010-2011, stating that the perimeter wall should not form a part of the PSF(SC) books based on Ministry of Civil Aviation (‘MoCA’) SOP and clarification dated 5 July 2010. The Company had replied to the CAG stating that the general clarification by MoCA in July 2010, stated that the 16 April 2010 order shall be applicable prospectively and should not be applied retrospectively and accordingly no adjustment is required to be carried out. The CAG had also sent their comments to the MoCA for the audit for the year 2010-2011 in the month of March 2012 with a copy of the same to the Company. During the audit for the year 2011-2012, the CAG had sought the latest position on this issue. The Company had once again justified the treatment of expenditure on the airport security wall as security related expenditure.

In June 2013, the Company received a communication from MoCA in relation to the audit for the year 2011-12, which did not request for further comments on the issue related to treatment of expenditure on the security wall as security related expenditure. The CAG has during the audit for years 2012-2013 and 2013-2014 also did not request for any further information on the aforesaid expenditure on airport security wall. Accordingly, the Company has retained the security related capital assets (including perimeter wall) in the books of PSF (SC).


54

During the previous year, the Company has received an order from MoCA dated 18 February 2014 directing the Company to reimburse all capital expenditure incurred out of the PSF(SC) within a period of one month together with the interest accrued. The Company has filed a writ petition with the High Court of Karnataka seeking a stay on MoCA’s order. The Honourable High Court has granted an interim stay on the said order. The Honourable High Court has also granted MoCA time to file their objections in the matter.

The tax loss of the PSF(SC) books for the current year amounting to Rs 5.14 crore (Previous year: Rs 6.83 crore) has been adjusted with the total income of the Company for the purpose of the minimum alternate tax for the year ended 31 March 2015.

27 Taxation and Depreciation

a) The Finance Act, 2001 had introduced, with effect from assessment year 2002-03 (effective 1 April 2001), detailed Transfer Pricing regulations for computing taxable income and expenditure from ‘international transactions’ between ‘associated enterprises’ on an ‘arm’s length’ basis. The Finance Act, 2012 extended the transfer pricing provisions to specified domestic transactions (SDTs) along with the International transactions. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an ‘accountant’ within the due date of filing the Return of Income.

For the year ended 31 March 2014, the Company had undertaken a study to comply with the regulations for which the prescribed certificate of the Accountant has been obtained and that did not envisage any additional tax liability. For the year ended 31 March 2015, the Company is in the process of undertaking a study to comply with the said regulations.

b) The Company has opted to claim deduction under Section 80-IA of the Income Tax Act, 1961(“IT Act”) on the entire income effective year ended 31 March 2013, and had also claimed Minimum alternate tax (“MAT”) credit under Section 115JAA of the IT Act aggregating Rs 90.67 crore upto 31 March 2013.

The MAT credit asset aggregating Rs 90.67 crore as at 31 March 2013, was based on the projected future profits of the Company from the real estate and other businesses which may not be eligible for a deduction under Section 80-IA of the IT Act; which is supported by the Land lease agreement, which gives the Company the right to use the land parcel for various Non-Airport activities for a period of 30 years from the Airport opening date (i.e. 23 May 2008), which the Company is committed to undertake. The Management believed that there will be sufficient future taxable profits to utilise the aforementioned MAT credit entitlement within the stipulated period prescribed as per the provisions of the IT Act. As per the provisions of the IT Act, the Company can avail and set off these MAT credits against normal tax within a stipulated period of ten years from the year of availment. Further, as per the prescribed accounting regulations, MAT can be recognised only if there is convincing evidence that the Company would be in a position to set off the carried forward MAT in future years. As at 31 March 2014, in the absence of convincing evidence of profits emanating from the non-eligible 80-IA businesses, the Management decided to write down the MAT credit entitlement aggregating Rs 71.06 crore which was availed upto 31 March 2012 as the same was to be utilised within the tax holiday period or else it would have lapsed. The Management believes that the Company would generate sufficient profits which will be subject to normal tax in the post-tax holiday period (effective 1 April 2022) and has retained the MAT credit recognised from the financial year ended 31 March 2013 aggregating Rs 93.18 crore (including Rs.41.56 crore availed for the current year).

c) The Company, in the previous year, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Company computed and accounted for deferred tax amounting to Rs. 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013 (“the Act”).

The Airports Economic Regulatory Authority (‘AERA’) of India’s Order No 08 / 2014-15 dated 10 June 2014 which is specific to the Company, mentioned that they have initiated the process to issue a notification on the useful lives for airport specific assets as per Part B of Schedule II of the Act. Accordingly, the Company continues to follow the useful lives of fixed assets in line with the earlier financial years based on



55

Management’s assessment. The circular resolution which approved the revised useful lives which were in line with the useful lives of fixed assets as per Part C of Schedule II of the Act as mentioned above was cancelled during the Board of Directors meeting held on 4 August 2014.

Pending notification of such useful lives of fixed assets by AERA, the Company would continue to follow the useful lives of fixed assets as per the exiting accounting policy and as at 31 March 2015 has also accounted for the deferred tax based on the current useful lives of fixed assets amounting to Rs 158.70 crore after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22. The Management would change the useful lives of the fixed assets and record adjustments related to depreciation, book value of fixed assets and the consequential impact on taxes including deferred tax computation arising out of temporary timing differences on account of depreciation post notification of useful lives by AERA as per Part B of Schedule II of the Act as aforesaid.

The Company has furnished the required disclosure as part of the accounting policy that the useful lives of fixed assets followed by the Company are different from the useful lives of fixed assets prescribed in Part C of Schedule II of the Act.

d) The Company had received a demand order dated 21 November 2013 from Anneswara Gram Panchayat to pay property tax amounting to Rs 19.50 crore for the period 2010-2014. The Company was of the view that its liable to pay property tax only for the period 2013-14 and paid an amount of Rs. 4.88 crore. Further, during the year the Company has received a demand order dated 21 October 2014 from Bettakotte Gram Panchayat for Rs 2.04 crore for the period 2010-2013 and 2014-2015 as per Karnataka Panchayat Raj Act, 1993. The Company has paid the property tax for the financial year 2013-2014 for all the Panchayats. Further, the Company had written to the Government of Karnataka seeking a waiver/reduction for the period 2010-2013. The Company has not received any demand order from the other Panchayats for the earlier years except as stated above. The Company based on the prescribed rates has accounted for the property tax for the earlier years and 2014-15 as at 31 March 2015 based on the best estimate of the liability.

28 Contingent liabilities and commitments (To the extent not provided for)

Contingent liabilities: (in rupees crore)


Claims against the Company not acknowledged as debts 0.36 0.36

a) The Company had issued Bank Guarantee to Customs authorities aggregating Rs 2.72 crore (Previous year: Rs 2.72 crore) with respect to grant of project import license to extend concessional rate of duty for import of certain eligible equipments for use in KIA Terminal 1 Expansion project.

b) The Company has filed an application to get itself impleaded as one of the aggrieved party against an appeal filed by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs 2.13 crore (Previous year: Rs 2.13 crore).

c) The Income Tax Department had filed an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of Development Costs to overseas promoters. The Company had earlier paid the TDS amount of Rs. 5.94 crore in 2005-2006 (Previous year: Rs 5.94 crore) under protest before getting the relief from ITAT. This was refunded to the Company along with interest of Rs. 0.90 crore in 2008-2009 (Previous year: Rs 0.90 crore) as a result of favourable ITAT order. The High Court heard the case on 1 July 2014 and remanded it back to Tribunal for reconsideration. The Income Tax Tribunal resumed the case on 7 January 2015 and has posted the matter for further hearing on 6 May 2015.

d) The Company has received demand orders from Commissioner of Service tax for the periods 2005-2009, 2009-2010, 2010-2011 and October 2009 to March 2012 for payment of service tax of Rs 3.19 crore as a recipient of service towards reimbursement of salary costs to Zurich Airport (Previous year: Rs 2.65 crore pertaining to 2005-2009, 2009-2010 and 2010-2011). The interest and penalty as per the above demand orders till 31 March 2015 amounts to Rs 3.14 crore (Previous year: Rs 2.32 crore pertaining to 2005-2009, 2009-2010 and 2010-2011) and Rs 3.52 crore (Previous year: Rs 3.25 crore pertaining to 2005-2009, 2009-2010 and 2010-2011) respectively. Further, show cause notice have been issued for period


56

2012-2013 for a sum of Rs. 0.29 crore (net of payment made amounting to Rs 1.18 crore) (Previous year: Rs 2.04 crore pertaining to period October 2009 to March 2012 and 2012-2013) on the same account and few other matters. These payments relate to salaries of expatriates who were seconded to the Company. The Company has preferred an appeal against demand orders before the Custom, Excise and Service Tax Appellate Tribunal (“CESTAT”) and has challenged the show cause notice which is not confirmed by a formal demand as at the balance sheet date. During the previous period, the Company has obtained stay orders from the CESTAT on the demand orders in original and presently awaiting disposal on merits. The Company has challenged the demands based on the judicial precedence on the matter and is confident of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the Company which cannot be treated as services received by the Company. Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by Expatriate Remuneration Reimbursement Agreement between the Company and Zurich Airport. The Company has accounted these payments as salaries and discharged appropriate tax deducted at source as the economic employer of the said expatriates.

e) The Company received an Income-tax assessment order for AY 2010-11 in March 2013 from Deputy Commissioner of Income Tax, Bangalore for the assessment year 2010-11 with a net demand of Rs.15.59 crore (Previous year: Rs 15.59 crore). During the year, the Company preferred Rectification and Appeal before Commissioner of Income Tax (Appeals) and successfully obtained partial relief at the appellate stage. The net demand was reduced to Rs. 2.66 crore which was fully covered by the pre-deposit and refunds due to the company from the Department. The Company approached the Income Tax Appellate Tribunal (“ITAT”) for the balance relief and the department has also challenged the Commissioner of Income Tax (Appeals) Order. The case was admitted by the ITAT on 5 Feb 2015 and is posted for hearing on 29 April 2015.

The Company is not carrying provisions for all the above mentioned amounts in its books of account, as the Company is confident of successfully litigating the matters.

Commitments: (in rupees crore)

Particulars As at 31 March 2015 As at 31March 2014

Estimated amount of unexecuted capital contracts (net of advances) 54.32 28.96

Other commitments * - 0.90

* Pertains to open forward exchange contracts aggregating Rs Nil (Previous year: Rs 0.90 crore).

29 Expenditure in foreign currency (in rupees crore)


Salaries and wages 1.63 3.27

Technical consultancy 0.78 4.02

Operations and management services fee 0.19 0.31

Repairs and maintenance 2.23 1.96

Interest – banks 2.74 3.65

Travelling and conveyance 0.76 0.50

Staff recruitment and training 0.08 0.08

Others 0.02 0.05

8.43 13.84

30 Imports (Valued on the Cost, Insurance and Freight basis) (in rupees crore)


Capital goods (including Capital work-in-progress) 15.52 66.68

Stores and spares 0.15 0.07



57

31 Consumption of stores and spares (in rupees crore)

Particulars Year ended 31 March 2015 Year ended 31 March 2014

Amount % Amount %

Indigenous 5.26 86% 4.97 83%

Imported 0.87 14% 1.00 17% 6.13 100% 5.97 100%

32 Auditors’ remuneration (included in legal and professional expenses) (in rupees crore)


Statutory audit (including limited reviews) 0.30 0.25

Others* 0.13 0.14

0.43 0.39

*including certification and other fees

Reimbursement of out-of-pocket expenses 0.01 0.01

33 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below:

a) DefinedBenefitPlan

The Company provides for gratuity, a defined benefit plan (the gratuity plan) to its employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee’s last drawn salary and years of employment with the Company.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

(in rupees crore)


Obligations at year beginning 4.41 4.26

Current service cost 0.88 1.01

Interest cost 0.47 0.43

Actuarial (gain)/ loss on obligations 1.04 (0.78)

Benefits paid during the year (0.44) (0.51)

Obligations at year end 6.36 4.41

Change in the plan assets (in rupees crore)


Plan asset at year beginning 2.91 1.87

Expected return on plan assets 0.28 0.21

Actuarial (gain)/ loss (0.05) (0.04)

Contribution 1.88 1.38

Benefits paid during the year (0.44) (0.51)

Plan asset at year end 4.58 2.91

Reconciliation of present value of obligation and fair value of plan assets (in rupees crore)

Prticulars As at 31 March 2015 As at 31 March 2014

Fair value of plan assets at the year end (4.58) (2.91)

Present value of defined benefit obligation at year end 6.36 4.41

Liability recognised in the balance sheet 1.78 1.50

Classified as:

Long-term provisions 1.78 1.50

Short-term provisions - -

Total 1.78 1.50


58

Expense recognised during the year:

(in rupees crore)

Particulars Year ended Year ended

31 March 2015 31 March 2014

Current service cost 0.88 1.01

Interest cost 0.47 0.43

Expected return on plan assets (0.28) (0.21)

Actuarial (gain)/ loss 1.09 (0.74)

Past service cost - 0.01

2.16 0.50

Assumptions


Discount rate per annum 7.95% 9.15%

Salary escalation rate 7% 7%

Expected rate of return on plan assets 8.0% 7.5%

Attrition rate Age 21-44:2% Age 21-44:2%

Age 45-59:1% Age 45-59:1%

Ceiling limit of Gratuity 0.10 0.10

Amounts for the current year and the previous four years are as follows: (in rupees crore) Particulars As at

31 March 2015 31 March 2014 31 March 2013 31 March 2012 31 March 2011

Defined benefit obligations 6.36 4.41 4.26 3.08 2.27

Plan assets (4.58) (2.91) (1.87) - -

Surplus/ (deficit) (1.78) (1.50) (2.39) (3.08) (2.27)

Experience adjustment on plan liabilities 0.09 (0.13) (0.37) (0.09) 0.12

Experience adjustment on plan assets (0.05) (0.04) 0.07 - -

The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

b) Defined Contribution Plan

The Company has contributed Rs 5.56 crore (gross of amount transferred to Capital work-in-progress) towards provident fund during the year (Previous year: Rs 4.52 crore).

34 Segment Reporting

The Company is in the business of operations of the Airport at Bangalore. Consequently, disclosure under AS 17 “Segment reporting” has not been made, as, in the opinion of the Management, the Company does not have separate reportable business or geographical segments.

35 Related party

List of related parties:

Name of the party Description of relationship

Siemens Project Ventures GmbH, Germany Enterprises which exercise significant influence over the Company

Bangalore Airport & Infrastructure Developers Private Limited Enterprises which exercise significant influence over the Company

Bangalore Airport Hotel Limited (Formerly L&T BAHL) Subsidiary (with effect from 20 December 2013)

Mr. G V Sanjay Reddy Key Management Personnel

Orbit Tours and Travels Private Limited Enterprises in which directors have significant influence

GVK Projects & Technical Services Limited Enterprises in which directors have significant influence

GVK Power & Infrastructure Limited Enterprises in which directors have significant influence

PT GVK Services Indonesia Enterprises in which directors have significant influence



59

The details of amounts due to or due from related parties as at 31 March 2015 and 31 March 2014 are as follows:

(in rupees crore)

Name of the party Nature As at As at 31 March 2015 31 March 2014

Orbit Tours and Travels Private Limited Trade payables - 0.03

GVK Projects & Technical Services Limited. Trade payables 4.20 3.63

Siemens Project Ventures GmbH, Germany Trade payables 0.08 0.16

Bangalore Airport Hotel Limited Short-term loans and advances 143.81 52.72 Bangalore Airport Hotel Limited Other long-term liabilities 76.50 76.50

The details of related party transactions entered into by the Company for the year ended 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature of transaction Year ended Year ended 31 March 2015 31 March 2014

Mr. G.V. Sanjay Reddy Remuneration 3.40 3.31

Orbit Tours and Travels Private Limited Travelling and conveyance - 1.20

GVK Projects & Technical Services Limited (GVK PTSL) Travelling and conveyance and Technical consultancy 5.95 8.26

PT GVK Services Indonesia Travelling and conveyance - (0.12)

Siemens Project Ventures GmbH, Germany Travelling and conveyance 0.62 0.66

Bangalore Airport Hotel Limited Technical consultancy cost reimbursed to GVK PTSL 9.69 -

Bangalore Airport Hotel Limited Advances given 81.40 52.72

36 Reconciliation of bank deposits

Particulars As at As at 31 March 2015 31 March 2014

Bank deposits with original maturity of 3 months or less included under

‘Cash and cash equivalents’ 170.03 55.92

Bank deposits due to mature within 12 months of the reporting date included under

‘Other bank balances’ 11.02 184.16

Bank deposits/balances due to mature after 12 months of the reporting date included under ‘Other non-current assets’ 3.09 -

184.14 240.08

37 Leases

Operating lease (in rupees crore)


Rent* 0.63 0.67

*The Company has entered into leasing arrangements for office and residential premises, which are generally cancellable in nature. Such leases are generally for a period ranging from eleven to one hundred eight months with options for renewal against increased rent, and premature termination of agreement with notice periods ranging between one to six months. The same also includes rent for expatriates which is included as a part of employee benefits expense.

The amount of lease rentals towards cancellable operating leases for office premises is Rs 0.05 crore (Previous year: Rs 0.05 crore towards non-cancellable operating lease)

Sub-lease of land to concessionaires:The Company has entered into agreements for sub-lease of approximately 3.18 acres, with three concessionaires/ airline operators to use the land for commercial operations. The agreements provide for transfer of land back to the Company along with the buildings constructed by the concessionaires/ airline operators, at the end of the sub-lease term which ranges from seven to fifteen years. The Company has recognised revenue of Rs 3.63 crore (Previous year: Rs 3.35 crore) as part of Non-aeronautical revenue (Also refer note 21).


60

38 Derivatives

AS30andunhedgedforeigncurrencyexposure

As at 31 March 2015, the Company has outstanding forward contracts amounting to USD Nil (Previous year: USD 0.01 crore), EURO Nil (Previous year: EURO 0.01 crore). These derivative instruments have been entered to hedge highly probable forecasted payables.

The Company has unhedged foreign currency exposure of Rs 2.67 crore (Previous year: Rs 9.68 crore) for payables as at balance sheet date.

As at 31 March 2015 As at 31 March 2014 Foreign Foreign Particulars currency Amount (Rs) currency Amount (Rs) amount amount

EUR 0.02 1.26 0.05 4.34

CHF 0.01 0.64 0.02 1.06

USD 0.01 0.77 0.07 4.27

Total 0.04 2.67 0.14 9.67

The Company has applied the principles of AS 30, as per announcement by ICAI except to the extent such principles of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006.

In accordance with the principles of AS 30, those derivative instruments (comprising foreign currency forward contract and swap) which qualify for cash flow hedge accounting have been fair valued as at balance sheet date and the resultant exchange gain/(loss) as at the year-end aggregating Rs 0.10 crore (Previous year: Rs 0.27 crore) has been accounted in Hedge reserve (Also refer note 4).

Currency and interest rate swaps

The Company has also designated a dollar-denominated foreign currency borrowing amounting to USD 3.00 crore (Previous year: USD 3.00 crore), along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument to hedge its interest rate risk on future interest payments in USD from floating rate risk on USD Loan. The exchange gain on the above has been recorded in the statement of profit and loss amounting to Rs. 0.91 crore (Previous year: Rs. 16.35 crore).

39 Earnings per share

(in rupees crore, except as otherwise stated)


Nominal value of equity shares (Rs) 10 10

Weighted average number of equity shares outstanding – Basic and Diluted 384,600,000 384,600,000

Profit after tax for the year considered for the calculation of basic and diluted

earnings per share 75.31 67.11

Earnings per share – Basic and diluted (Rs) 1.96 1.74

40 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondences with its customer the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable of such enterprises as at 31 March 2015 has been made in the standalone financial statements based on information received and available with the Company. The dues to such enterprises which have provided goods and services to the Company and which qualify under the definition of Micro and Small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 is stated as under:



61

(in rupees crore)

Particulars 31 March 2015 31 March 2014

i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year:

Principal 2.09 0.99

Interest 0.01 0.02

ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, (the Act) along with the amount of the payment made to the supplier beyond the appointed day during each accounting 7.77 6.80 year

iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the said Act - -

iv) The amount of interest accrued and remaining unpaid on 31 March 2015 in respect of principal amount settled during the year 0.63 0.22

v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Act - -

The above information has been determined to the extent such parties have been identified by the Company, which has been relied upon by the auditors.

41 Corporate Social Responsibility

As per the section 135 of the Act, the Board shall ensure that the Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy. However, in the current year, due to delay in constitution of the CSR committee, formalisation of the CSR policy and identification of the projects for CSR spend; the Company has not been able to spend the required amount on the CSR activities during the financial year 2014-15.

42 Cost audit records

The Central Government of India has prescribed the maintenance of cost records under Section 148(1) of the Act, read with Rule 3 of the Companies (Cost records and audit) Rules, 2014, as amended in relation to Aeronautical services rendered by the Company. As the Rules were issued by the Central Government during the year, the Company will initiate the process of maintaining the cost records required as per the Rules for the applicable services. Currently, the Company has not maintained cost records, as applicable for the Aeronautical services.

for B S R and Company for and on behalf of the Board of Directors of Chartered Accountants Bangalore International Airport Limited Firm registration number: 128900W

S Sethuraman Partner Managing Director Director Membership number: 203491 (DIN : 00005882) (DIN : 2849971)

Place: Chennai Date: 20 April 2015 Director ChiefFinancialOfficer (DIN : 00005456)

Company Secretary


62

63

AUDITOR’S REPORT(CONSOLIDATED)

64

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Bangalore International Airport Limited (“the Holding Company”) and Bangalore Airport Hotel Limited (“the Subsidiary Company”) (Holding Company and its Subsidiary Company together referred to as “Group”), which comprise the Consolidated Balance Sheet as at 31 March 2015, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as”the consolidated financial statements”).

Management’s Responsibility for the Consolidated Financial StatementsThe Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (“the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group 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. The respective Board of Directors of the companies included in the Groupare responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Board of Directors of the Holding Company, as aforesaid.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

We conducted our audit in accordance with the Standards on Auditing specified under sub-section 10 of Section 143 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated 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 Holding Company has an adequate internal financial controls system over financial reporting in place 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 Holding Company’s Board of Directors, as well as evaluating the overall presentation ofthe consolidated financial statements.


To,The Members of Bangalore International Airport Limited

65

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditor in terms of their report referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

OpinionIn our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditor on separate financial statements of the Subsidiary Company incorporated in India, the aforesaid consolidated 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 case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Group as at 31 March 2015;

ii. in case of the Consolidated Statement of Profit and Loss, of consolidated profits for the year ended on that date; and

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

Emphasis of Matter

We draw attention to Note 26 (c) to the consolidated financial statements. The Holding Company, in the previous year, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Holding Company computed and accounted for deferred tax amounting to Rs 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Act.

During the current year, the Airport Economic Regulatory Authority (‘AERA’) in its Order No 08/2014-15 dated 10 June 2014 issued to the Holding Company has stated that it has initiated the process to issue a notification on the useful lives for airport specific assets based on the guidance provided in Part B of Schedule II of the Act. Accordingly, the circular resolution as mentioned in the above paragraph was cancelled during the Board of Directors meeting held on 4 August 2014. We have been informed by the Management that pending notification of such useful lives of fixed assets by AERA, the Holding Company would continue to follow the useful lives of fixed assets as per the existing accounting policy and has accounted for deferred tax as at 31 March 2015 aggregating Rs 158.70 crore in its books after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the current useful lives of fixed assets. Pending the aforesaid notification from AERA any impact on the depreciation, book value of fixed assets and the consequential impact on taxes including deferred taxes of the Holding Company is currently not ascertainable.Our opinion is not modified in respect of this matter.

Other MatterWe did not audit the financial statements of the Subsidiary Company incorporated in India (Bangalore Airport Hotel Limited), whose financial statements reflect total assets of Rs 463.21 crore as at 31 March 2015, total revenues of Rs 0.19 crore and net cash inflows amounting to Rs3.82 crore for the year then ended, as considered in the consolidated financial statements. These financial statements have been audited by other auditor whose report have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and

Report on the Consolidated Financial StatementsBANGALORE INTERNATIONAL AIRPORT LIMITED

66

disclosures included in respect of the Subsidiary Company incorporated in India, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far it relates to the aforesaid Subsidiary Company, is based solely on the report of the other auditor.

Our opinion on the consolidated financial statements, and our report on Other Legal and RegulatoryRequirements below, is not modified in respect of this matter with respect to our reliance on thework done and the report of the other auditor.

Report on Other Legal and Regulatory Requirements

i) 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, based on the comments in the auditor’s report of the Holding Company and the Subsidiary Company incorporated in India, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

ii) As required by sub-section 3 of Section 143 of the Act, based on our audit and on the consideration of report of the other auditor on separate financial statements of a Subsidiary Company incorporated in India, as noted in ‘Other Matter’ paragraph, we report, to the extent applicable, 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 of the aforesaid consolidated financial statements.

b) In our opinion, proper books of account as required by law relating to the preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the report of the other auditor.

c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements.

d) In our opinion, the aforesaid consolidated 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) In our opinion, the matter related to depreciation policy and deferred tax described under the Emphasis of Matter paragraph above, does not have an adverse effect on the functioning of the Group.

f) On the basis of written representations received from the directors of the Holding Company as at 31 March 2015 taken on record by the Board of Directors of the Holding Company and basis the relevant assertion contained in the audit report on separate financial statements of the Subsidiary Company incorporated in India, none of the Directors of the Group is disqualified as on 31 March 2015 from being appointed as a Director in terms ofsub-section 2 of Section 164 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 and based on the consideration of the report of the other auditors on the separate financial statements as also the other financial information of the Subsidiary Company incorporated in India, as noted in the ‘Other Matter’ paragraph:


Report on the Consolidated Financial Statements

67

i. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Holding Company and the Subsidiary Company incorporated in India– Refer Note 27 to the consolidated financial statements

ii. The Holding Company and the Subsidiary Company incorporated in India did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding Company and the Subsidiary Company incorporated in India.

for B S R and Company

Chartered Accountants

Firm registration number: 128900W

S Sethuraman

Partner


Place: Chennai

Date: 22 April 2015

BANGALORE INTERNATIONAL AIRPORT LIMITEDReport on the Consolidated Financial Statements

68

69

ANNEXURE TO AUDITOR’S REPORT(CONSOLIDATED)

70

As stated in Paragraph 1 of ‘Report on Other Legal and Regulatory Requirements’ in our Auditor’s Report of even date, the following statement is based on the comments in the respective auditor’s report on the standalone financial statements of the Holding Company and the Subsidiary Company incorporated in India:

i) (a) The Holding Company and the Subsidiary Company incorporated in India have maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Holding Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Holding Company and the nature of its fixed assets. In accordance with the programme,fixed assets have been verified during the year and no material discrepancies were noticed on such verification. The Subsidiary Company incorporated in India has conducted physical verification of fixed assets during the year and has not identified any material discrepancies during such verification.

ii) (a) The inventories of the Holding Company have been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable. The Subsidiary Company incorporated in India has no inventories, accordingly, the provisions of clause ii (a), ii (b) and ii (c) of paragraph 3 of the Order is not applicable.

(b) The procedures of physical verification of inventories followed by Management of the Holding Company are reasonable and adequate in relation to the size of the Holding Company and the nature of its business.

(c) The Holding Company is maintaining proper records of inventories. The discrepancies identified on physical verification of inventories between physical stocks and book records were not material.

iii) The Holding Company and the Subsidiary Company incorporated in India have not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act.

iv) In our opinion and according to the information and explanations obtained by the respective auditors of the Holding Company and the Subsidiary Company incorporated in India, having regard to the explanation by the Management of the Holding Company, that alternative quotes were not obtained for certain items owing to those being specialized and proprietary in nature, there is an adequate internal control system commensurate with the size of each Company and the nature of their business, with regard to purchase of fixed assets, inventories and sale of services. We have not observed any major weakness in the internal control system during the course of the audit. The activities of the Holding Company and the Subsidiary Company incorporated in India do not involve sale of goods.

v) The Holding Company and the Subsidiary Company incorporated in India have not accepted any deposits from the public.

vi) The Central Government of India has prescribed the maintenance of cost records under Section 148(1) of the Act, read with Rule 3 of the Companies (Cost records and audit) Rules, 2014, as amendedin relation to Aeronautical services rendered by the Holding Company. The Holding Company has informed that it will initiate the process of maintaining the cost records required as per the Rules for the applicable services. Therefore, we have not been able to examine the cost records (Refer Note 38 to the consolidated financial statements).The Subsidiary Company incorporated in India, is not required to maintain cost records under Section 148 (1) as it is yet to commence operations.

vii) (a) According to the information and explanations given to and on the basis of the examination of the records of the Holding Company and the Subsidiary Company incorporated in India by their respective auditors, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, wealth-tax, service tax, sales-tax, value added tax, customs duty, cess and other material statutory dues


ANNEXURE TO AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

71

have been generally regularly deposited during the year by each of these companies with the appropriate authorities. As explained to us, the Holding Company and the Subsidiary Company incorporated in India did not have any dues on account of employees’ state insurance and excise duty during the year.

According to the information and explanations given to the respective auditors of the Holding Company and the Subsidiary Company incorporated in India,no undisputed amounts payable in respect of provident fund, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to the auditors of the Holding Company, there are no dues of the respect of wealth-tax, sales-tax, customs duty which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given, the following dues of income-tax, entry tax, service-tax and property tax have not been deposited by the Holding Company on account of disputes:

Name of the statute Nature of dues

Amount (in Rs crore)

Period to which it relates

Forum where the dispute is pending

Income Tax Act, 1961

Tax deduction at source (including interest)

6.84 2005-06 High Court of Karnataka

Income Tax Act, 1961

Demand under Section 156 on account of disallowances

2.67* 2009-10 Income Tax Appellate Tribunal (ITAT)

Karnataka Special Tax on Entry of Certain Goods Act, 2004

Special Entry Tax 2.13 2006-07 High Court of Karnataka


Property tax 14.62 2010-13 Anneshwara Gram Panchayath


Property tax 1.53 2010-13 Bettakotte Gram Panchayat

Finance Act, 1994Service Tax in-cluding interest and penalty

9.15 2005-09Customs, Excise and Service Tax Appellate Tribunal, Bangalore


1.64 2009-10


0.72 2010-11Customs, Excise and Service Tax Appellate Tribunal, Bangalore


1.05 2009-12


72

* Out of the above, an amount of Rs 1.25 crore has been paid under protest

According to the information and explanations given to the auditors of the Subsidiary Company incorporated in India, there are no dues payable in respect of income-tax, wealth-tax, sales-tax, service tax, excise duty, customs duty which have not been deposited with the appropriate authorities on account of any dispute.

(c) According to the information and explanations given to and on the basis of the examination by the respective auditors of the records of theHolding Company and the Subsidiary Company incorporated in India, there are no amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and the rules thereunder.

viii) The Subsidiary Company incorporated in India has accumulated losses at the end of the financial year on a standalone basis and has incurred cash losses on a standalone basis in the current and immediately preceding financial year. The Holding Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year. On a consolidated basis, the Holding Company and the Subsidiary Company incorporated in India do not have any accumulated losses at the end of the year, and have not incurred cash losses during the year and in the immediately preceding financial year.

ix) In their opinion and according to the information and explanations given to the respective auditors of the Holding Company and the Subsidiary Company incorporated in India, none of the Companies has defaulted in repayment of their respective dues to its bankers during the year. The Holding Company and the Subsidiary Company incorporated in Indiadid not have any outstanding dues to any financial institution or debenture holders during the year.

x) According to the information and explanations given to their respective auditors, the Holding Company and the Subsidiary Company incorporated in Indiahave not given any guarantee for loans taken by others from banks or financial institutions.

xi) In their opinion and according to the information and explanations given to the respective auditors of the Holding Company and the Subsidiary Company incorporated in India, the term loans taken have been applied for the purposes for which they were raised.

xii) According to the information and explanations given to the respective auditors of the Holding Company and the Subsidiary Company incorporated in India, no fraud on or by each Company has been noticed or reported during the course of audits by the respective auditors of the Holding Company and the Subsidiary Company incorporated in India.

for B S R and CompanyChartered AccountantsFirm registration number: 128900W

S SethuramanPartnerMembership number: 203491

Place: Chennai Date: 22 April 2015


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FINANCIAL STATEMENTS

(CONSOLIDATED)

74

(in rupees crore)CONSOLIDATED BALANCE SHEET AS AT Note 31 March 2015

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDSShare capital 3 384.60

Reserves and surplus 4 467.25

851.85NON - CURRENT LIABILITIES

Long-term borrowings 5 1,981.53

Deferred tax liability 6 158.70

Other long-term liabilities 7 270.07

Long-term provisions 8 1.78

2,412.08

CURRENT LIABILITIESTrade payables 9 71.72

Other current liabilities 10 426.09

Short-term provisions 11 8.06

505.87TOTAL 3,769.80

ASSETS

NON-CURRENT ASSETSFixed assets 12

Tangible fixed assets 2,648.50

Intangible fixed assets 28.39

Capital work-in-progress 510.63

3,187.52

Long-term loans and advances 13 216.40

Other non-current assets 14 3.09

3,407.01CURRENT ASSETS

Inventories 15 16.72

Trade receivables 16 69.06

Cash and bank balances 17 208.21

Short-term loans and advances 18 36.16

Other current assets 19 32.64

362.79TOTAL 3,769.80


The notes referred to above form an integral part of the consolidated financial statements




S Sethuraman Managing Director DirectorPartner (DIN : 00005882) (DIN : 2849971)

Membership number: 203491Place: ChennaiDate: 22 April 2015 Director ChiefFinancialOfficer (DIN : 00005456)

Company Secretary


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(in rupees crore, except per share data)CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE Note Year ended 31 March 2015

Revenue

Revenue from operations 20 915.51

Other income 21 17.35

Total revenue 932.86

Expenses

Employee benefits 22 99.67

Finance costs 23 197.28

Depreciation and amortisation 12 208.97

Other expenses 24 214.53

Total expenses 720.45

Profit before tax 212.41

Income tax expense

Current tax / Minimum alternate tax (“MAT”) 41.56

MAT credit entitlement [Refer note 26(b)] (41.56)

Deferred tax expense [Refer note 26(c)] 137.20

Total tax expenses 137.20

Profit after tax 75.21

Earnings per equity share [nominal value of share Rs 10]

Basic and diluted 34 1.96

Weighted average number of equity shares

Basic and diluted 384,600,000


The notes referred to above form an integral part of the consolidated financial statements






Company Secretary


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(in rupees crore)CONSOLIDATED CASH FLOW STATEMENT FOR THE Year ended 31 March 2015

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 212.41

Adjustmentstoreconcileprofitbeforetaxtocashprovidedbyoperatingactivities

Depreciation and amortisation expense 208.97

Unrealised foreign exchange gain (4.25)

Interest income (16.83)

Finance expenses 197.31

Loss on sale of fixed assets (net) 0.02

OperatingProfitbeforeworkingcapitalchanges 597.63

Changes in assets and liabilities:

Inventories (1.54)

Trade receivables (28.88)

Loans and advances and other assets (3.12)

Liabilities and provisions 36.16

Cash generated from operations 600.25

Income tax paid (net of refund) (51.09)

Net Cash generated from operating activities 549.16

Cash flows from investing activities

Payment towards capital expenditure (194.41)

Interest received 21.43

Proceeds from sale of fixed assets 0.60

Redemption/maturity of bank deposits (having original maturity of more than three months) 170.05

Net Cash from investing activities (2.33)

Cash flows from financing activities

Repayment of loan taken from banks (265.24)

Proceeds from loan taken from banks -

Finance expenses (196.35)

Net Cash (used in) financing activities (461.59)


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(in rupees crore)CONSOLIDATED CASH FLOW STATEMENT FOR THE Note Year ended 31 March 2015

Net increase in cash and cash equivalents 85.24

Cash and cash equivalents at the beginning of the year 101.02

Cash and cash equivalents at the end of the year 17 186.26






Company Secretary


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Notes to the consolidated financial statements

1 Overview

Bangalore International Airport Limited (‘BIAL’ or ‘the Company’) together with its subsidiary Bangalore Airport Hotel Limited (‘BAHL’ or ‘the Subsidiary’) collectively referred as ‘the group’ is into designing, financing, construction, operation and maintenance of an international airport and construction, operation and maintenance of a Hotel at Devanahalli, Bangalore.

The Company has been incorporated on 5 January 2001 for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bangalore. Accordingly, a joint venture amongst Siemens Project Ventures GmbH, Germany (hereinafter ‘Siemens’), Flughafen Zurich AG, Switzerland (hereinafter ‘Zurich Airport’), L&T Infrastructure Development Projects Limited (hereinafter ‘L&TIDPL’), Karnataka State Industrial and Infrastructure Development Corporation Limited (hereinafter ‘KSIIDC’) and Airports Authority of India (hereinafter ‘AAI’) was entered into for the execution of this project.

Bengaluru International Airport (‘BIA’) has commenced commercial operations on 23 May 2008, the Airport Opening Date (hereinafter ‘AOD’). The Airport was renamed as Kempegowda International Airport (‘KIA’) on 14 December 2013 in the presence of Honourable Minister of Civil Aviation and Honourable Chief Minister of Karnataka.

During the year 2009-10, Bangalore Airport & Infrastructure Developers Private Limited (hereinafter ‘BAIDPL’) which is a step down subsidiary of GVK Power & Infrastructure Limited (hereinafter ‘GVK Power’) had acquired 17% of the outstanding equity shares from L&TIDPL and 12% of the outstanding equity shares from Zurich Airport. Further during the year 2011-12, BAIDPL acquired 14% of the outstanding equity shares from Siemens. Thus making BAIDPL the single largest shareholder in the Company with 43% stake in aggregate.

During the year 2013-14, the Company entered into a “Share Purchase Agreement” dated 20 December 2013 to acquire 74% of the outstanding equity shares of L&T BAHL from L&T Urban Infrastructure Limited (“LTRL”) and 26% from EIH limited (“EIH”), for aggregate purchase consideration of Rs 2.00 crore.

The Company changed the name of L&T BAHL to Bangalore Airport Hotel Limited (BAHL) which was approved by the Ministry of Corporate Affairs on 14 March 2014. Thus, BAHL is a 100% subsidiary of the Company w.e.f 20 December 2013.

2 Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these consolidated financial statements.

2.1 Basis of preparation of consolidated financial statements

The consolidated financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting except for certain financial instruments which are measured at fair values and comply 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, other pronouncements of the Institute of Chartered Accountants of India (‘ICAI’), and the provisions of the Companies Act, 2013 (“the Act”). The financial statements are prepared in Rupees in crores unless otherwise stated.

2.2 Principles of consolidation

The consolidated financial statements include the financial statements of BIAL and its 100% subsidiary BAHL.


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“The financial statements of the Company and its wholly owned and controlled subsidiary have been combined on a line-by-line basis by adding together the book values of all items of assets, liabilities, incomes and expenses after eliminating all inter-company balances/transactions. The consolidated financial statements are prepared using uniform accounting policies for similar transactions and other events in similar circumstances.”

2.3 Use of estimates

The preparation of consolidated financial statements in conformity with the Generally Accepted Accounting Principles (“GAAP”) in India requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of income and expenses of the year, assets and liabilities and disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

All assets and liabilities have been classified as current or non-current as per the Group’s normal operating cycle and other criteria set out in the Schedule III of the Act

2.4 Revenue recognition

Revenue from airport operations are recognised on accrual basis, net of service tax, applicable discounts and collection charges, when services are rendered and it is probable that an economic benefit will be received, which can be quantified reliably.

Aeronautical Revenue (net of credit notes) includes revenue from all regulated charges levied at the KIA, i.e., landing fees, parking and housing fees, passenger service fee (facilitation component) and user development fees at the rates prescribed by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing, housing and parking charges are recognised, when such services are provided. Passenger service fees - facilitation component and user development fees are recognised in respect of each embarking passenger at a specified rate. Passenger service fees - security component collected as per MoCA / AERA orders are not recognised as revenue of the Group since the same is collected in a fiduciary capacity.

Non-Aeronautical Revenue means all revenue streams other than Aeronautical Revenue. The same consists of (i) revenue from concessions, which includes retail, fuel throughput charges, cargo handling charges, flight catering charges, aerobridge charges and ground handling charges; (ii) landside traffic charges; (iii) rents and land leases; (iv) information communication technology services; (v) food and beverage concessions; (vi) utility charges; and (vii) other non-aviation related charges.

Interest is recognised using the time proportion method based on rates implicit in the transaction. Award fees and tender fees are recognised on an accrual basis in accordance with the terms of the relevant arrangement. Utility charges includes power and water charges which are recovered from users of such utilities and are adjusted against the relevant expenses.

2.5 Tangible fixed assets and depreciation

Tangible fixed assets are stated at their original cost of acquisition less accumulated depreciation. The cost includes cost of subsequent improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned.

Advances paid towards acquisition of fixed assets, outstanding at each balance sheet date are shown under capital advances. The cost of fixed assets not ready for its intended use on such date is disclosed as Capital work-in-progress.

Notes to the consolidated financial statements (continued)


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Depreciation is provided on a Straight Line Method (‘SLM’) over the useful lives of the assets estimated by the management. Depreciation for assets purchased / sold during a period is proportionately charged.

Pursuant to this policy, the rates of depreciation determined by the Management are as set out below:

Class of Asset Rate of depreciation per annum*

Building 3.33%-5%

Engineering structures 3.33%-5%

Plant and machinery 4.75%-16.21%

Office equipment 10.34%-25%

Computers 16.21%-25%

Furniture and fixtures 6.33%-10%

Vehicles 9.5%-20%

Leasehold Improvements are amortised over the primary period of lease.

*For these class of assets, based on Management’s internal assessment, the Management believes that the useful lives as given above best represent the period over which Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Act. Further, the Airport Economic Regulatory Authority (‘AERA’) in its order dated 10 June 2014 has mentioned that that it has separately initiated the process to issue a notification on useful lives for airport specific assets based on the Part B of Schedule II of the Act (Also refer Note 26(c)).

2.6 Intangible assets and amortisation

Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

Computer software licenses are capitalised on the basis of costs incurred to acquire and bring to use the specific software. Operating software is capitalised and amortised along with the related fixed asset. Other software is amortised, on a straight line method, over a period of three to five years based on Management’s assessment of useful life.

The Group had incurred certain legal and other expenses during the construction period towards various agreements, viz. Concession Agreement, Communication, Navigation and Surveillance and Air Traffic Management (CNS/ ATM) Agreement, Operations and Management Services Agreement, State Support Agreement and Land Lease Agreement which are capitalised as ‘Intangibles – Others’ and are amortised over a period of seven or thirty years.

The amortisation period and method used for intangible assets are reviewed at each period end.

2.7 Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

Notes to the consolidated financial statements (continued)BANGALORE INTERNATIONAL AIRPORT LIMITED

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2.8 Lease accounting

Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Operating lease expenses/income is recognised in the Statement of Profit and Loss on a straight line basis over the lease term.

2.9 Foreign currency transactions

The Group is exposed to foreign currency transactions including foreign currency expenses and payables. With a view to minimize the volatility arising from fluctuations in currency rates, the Group enters into foreign exchange forward contracts and other derivative instruments. Additionally, the Group enters into interest rate derivatives to minimise its interest costs.

Foreign exchange transactions are recorded in Indian rupees using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are accounted for using the guidance in Accounting Standard (‘AS’) 11, ‘The effects of changes in foreign exchange rates’. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and purpose of the contract, either the contracts are recorded based on the forward rate/ fair value at the reporting date, or based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium or discount at the inception is amortised as income or expense over the life of the contract.

The Group has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements.

In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the Statement of Profit and Loss upon the occurrence of the hedged transaction.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Statement of Profit and Loss.

2.10 Inventory

Inventory consists of spares for machineries, which are charged to the Statement of Profit and Loss as and when they are consumed. The inventories are valued using the weighted average cost method.

Notes to the consolidated financial statements (continued)BANGALORE INTERNATIONAL AIRPORT LIMITED

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2.11 Retirement and other Employee Benefits

Definedcontributionplans

The Group has defined contribution plans (where Group pays pre-defined amounts and does not have any legal or informal obligation to pay additional sums) for post employment benefits namely Provident Fund, and the Group’s contributions thereto are charged to Statement of Profit and Loss every year. The Group’s contributions to State plan, namely, Employee Pension Scheme, 1995, is charged to Statement of Profit and Loss every year.

Definedbenefitplans

The Group’s gratuity benefit scheme is a defined benefit plan administered by the Life Insurance Corporation. The Group’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Group’s obligation under the plan is performed annually by a qualified actuary using the Projected Unit Credit Method.

The Group recognises all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expenses in the Statement of Profit and Loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in Statement of Profit and Loss on a straight-line basis over the average period until the benefits become vested. The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

Compensated absences

Compensated absences are accrued based on an actuarial valuation as at the balance sheet date, carried out by an independent actuary using the Projected Unit Cost Method. The Group accrues for the expected cost of short term compensated absences in the period in which the employee renders service.

2.12 Concession fee

The Concession fee is computed as a percentage of gross revenue pursuant to the terms and conditions of the Concession Agreement for designing, financing, construction, operation and maintenance of an international airport at Devanahalli, Bangalore and is recognised in the Statement of Profit and Loss.

2.13 Income taxes

Income-tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The current income tax charge is determined in accordance with the relevant provisions of the Income-tax Act, 1961 applicable to the Group.

Deferred tax charge or credit are recognised for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and the profit as per the financial statements. Deferred tax in respect of timing difference which originate during the tax holiday period but reverse after the tax holiday period is recognised in the year in which the timing difference originate. For this purpose, the timing differences which originate first are considered to be reversed first. The deferred tax charge or credit and the corresponding



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deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realised.

In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Group is allowed to avail credit equal to the excess of Minimum Alternate Tax (‘MAT’) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.14 Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit/loss after tax, attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Group did not have any potentially dilutive equity shares outstanding during the year.

2.15 Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provisions are measured on an undiscounted basis.

Onerous Contracts

A contract is considered as onerous when the expected economic benefits to be derived by the Group from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

Contingencies

Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognised when it is probable that a liability has been incurred, and the amount can be estimated reliably.

2.16 Impairment of assets

The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to

BANGALORE INTERNATIONAL AIRPORT LIMITEDNotes to the consolidated financial statements (continued)

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its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognised.

2.17 Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Group are segregated.



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3 Share capital (in rupees crore, except as otherwise stated) Particulars As at 31 March 2015

Equity shares

Authorised:

700,000,000 equity shares of Rs 10 each 700.00

Issued, subscribed and fully paid up: 384,600,000 equity shares of Rs 10 each fully paid up 384.60 384.60

a Reconciliation of the number of equity shares outstanding at the beginning and at the end of the reporting year:

Particulars As at 31 March 2015

At the commencement of the year 384,600,000

Number of shares issued during the year -

At the end of the year 384,600,000

b Rights, preferences and restrictions attached to the equity shares

The Company has only one class of equity shares having par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company can declare and pay dividends. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. No dividends have been declared by the Company till date.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c Particular of shareholders holding more than 5% shares of a class of shares

Name of the shareholders As at 31 March 2015 No. of shares % held

Bangalore Airport & Infrastructure Developers Private Limited 165,378,000 43

Siemens Project Ventures GmbH, Germany 99,996,000 26

Karnataka State Industrial and Infrastructure Development Corporation Limited (KSIIDC) 49,997,997 13

Airports Authority of India 49,998,000 13

Flughafen Zurich AG, Switzerland 19,230,000 5

4 Reserves and surplus

(in rupees crore) Particulars As at 31 March 2015

Hedge reserve [Refer note 33]

At the commencement of the year 0.27

Additions during the year (0.17)

At the end of the year 0.10

Surplus (Statement of profit and loss)

At the commencement of the year* 391.94

Add: Profit for the year 75.21

At the end of the year 467.15

467.25

* Includes surplus of the subsidiary as at 1 April 2014 aggregating Rs 0.22 crore.


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5 Long-term borrowings (in rupees crore)


Secured loan

From banks:

Rupee term loan * 1,565.34

Foreign currency term loan ** 83.69

1,649.03

Unsecured loan

From other parties:

State financial support (Base amount) *** 272.25

State financial support (Contingent amount) *** 60.25

332.50

1,981.53

“* In March 2005, the Company had entered into a loan agreement with the ICICI Bank with a clause which specified the right with the rupee lender to assign, novate or transfer the loan. Based on the same, the loan has been assigned by ICICI Bank to the various banks on various dates. The Company had availed Indian currency term loan of Rs 1,229.21 crore. The rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all of the Company’s immovable properties located in the State of Karnataka; on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company (both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders). The principal amount of the loan is repayable in thirty equal quarterly installments which commenced from 31 October 2010. The interest rate on the above loan ranges from 9 percent to 13 percent payable at the end of each month. The Company has repaid 18 principal installments till 31 March 2015. Includes term loan taken by BAHL from YES Bank of Rs 305 crore which is secured by an exclusive charge by way of hypothecation of all movable and immovable assets of the BAHL both present and future including all the assets of the upcoming hotel project, mortgage of leasehold rights on the hotel project land and building. The principal amount of the loan is repayable in forty four equal quarterly installments from 13 December 2016. The interest rate is 11.25 percent payable at the end of each month.”

In December 2012, the Company had entered into a rupee loan agreement with ICICI Bank and Axis Bank for an amount of Rs.1,100 crore. This agreement specifies the right of these rupee lenders to assign, novate or transfer the loan. Based on this, the banks have novated the loans to various other banks on various dates. The Company had availed Indian currency term loan of Rs 1,100 crore as at 31 March 2015. This rupee term loan is secured by way of a first ranking mortgage and charge by deposit of all title deeds (present and future) with the Security Trustee in respect of all the Company’s immovable properties located in the State of Karnataka, on moveable assets (both, tangible and intangible), all revenue and receivables, project documents, clearances, insurance contracts, and all other assets of the Company both, present and future) and hypothecated to the Security Trustee (acting for the benefit of the lenders).The principal amount of the loan is repayable in fifty two quarterly installments commencing from 31 December 2013 (1% till quarter ended 31 March 2014; 1.5 % till quarter ended 31 March 2015 and 2% thereon till quarter ended September 2026). The interest rate on the above loan is presently at 11.75% p.a., payable at the end of each month. The Company has repaid 6 principal installments till 31 March 2015.

** The Company availed a foreign currency term loan of USD 5 crore from ICICI Bank Limited under a facility agreement. The foreign currency term loan is secured by way of a first ranking mortgage and charge with the Security Trustee in respect of all of the Company’s movable and immovable properties and assets (both, present and future); borrower’s right under each project documents; interest in



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all licenses, permits, approvals, assignments, concessions, easements and consents; all revenue and receivables; insurance contracts; letter of credit, guarantee or performance bonds issued in favour of the Company and hypothecated to the Security Trustee (acting for the benefit of the lenders), pari passu with the rupee term loan. The principal amounts are repayable in thirty equal quarterly installments commenced from 31 October 2010. The interest rate as per agreement is 6 months USD LIBOR rate plus 150 basis points. The interest is paid on half yearly installments on 31 January and 31 July every year respectively. The Company has repaid 18 principal installments till 31 March 2015.

*** The Company had entered into a State Support Agreement (hereinafter ‘SSA’) [for the development, construction, operation and maintenance of KIA] with the Government of Karnataka (GoK) on 20 January 2005 (as amended on 20 June 2006) whereby GoK, subject to other terms, would make available to the Company over the project period, Rs 272.25 crore (‘Base amount’) and Rs 77.75 crore (‘Contingent amount’), which is to be used exclusively towards financing of the ‘base project cost’ and ‘project contingency’ respectively. The amounts, being interest free, are repayable in twenty equal half yearly installments commencing from 30 April 2018.

The Management would identify/ recommend and the Board of Directors consider and approve such expenditure as can be categorized/ financed under project contingency. The SSA stipulates the mechanism for obtaining funding from GoK for such project contingency amounts.

6 Deferred tax liability [Refer note 26(c)] (in rupees crore) Particulars As at 31 March 2015

Excess of depreciation allowed under the Income Tax Act, 1961 over depreciation as per books 158.70

158.70

7 Other long-term liabilities (in rupees crore)



Purchase of fixed assets 1.40

Security deposits from service provider, right holders, etc. 97.34

Concession fee payable (Refer note below) 171.33

270.07

The Company has entered into a Concession Agreement (hereinafter ‘CA’) with the Ministry of Civil Aviation, Government of India on 5 July 2004 (as amended on 20 November 2006, to include scope of re-design) whereby the Government of India has granted to the Company exclusive right and privilege to carry out the development, design, financing, construction, commissioning, maintenance, operation and management of KIA [excluding the right to carry out the reserved activities as per CA or to provide Communication and Navigation Surveillance/ Air Traffic Management (CNS/ ATM) services, which are required to be provided by AAI] for an initial period of 30 years (and renewable for a further period of 30 years subject to stipulated conditions) from the date of commencement of commercial operations of air traffic and has provided for the payment of a concession fee by the Company.

The concession fee for the first ten financial years shall be payable in twenty equal half-yearly installments and first such installment being due and payable on 30 June and second of such installment being due and payable on 31 December (‘Reference Date’) on the eleventh financial year after the AOD. For the rest of the term, the installment shall be payable on the Reference Date falling thereafter.

8 Long-term provisions (in rupees crore) Particulars As at 31 March 2015

Provision for employee benefits

Gratuity [Refer note 29(a)] 1.78

1.78


88

9 Trade payables (in rupees crore)


Trade payables Due to micro and small enterprises [Refer note 36] 2.10

Others 69.62

71.72

10 Other current liabilities (in rupees crore)


Book overdraft 0.21

Current maturities of long-term borrowings

From banks:

Rupee term loans 256.19

Foreign currency term loan 41.68

Interest accrued but not due on borrowings 7.94

Security deposits from service provider, right holders, etc. 3.39

Income received in advance 0.23

Deferred revenue 0.15

Accrued salaries and benefits 13.34

Other payables

Purchase of fixed assets* 92.52

Withholding and other taxes payable 2.47

Mark-to-market loss on forward and options contracts 0.17

Other liabilities 7.80

426.09

*The Group is carrying an accrual for an amount of Rs 11.64 crore as at 31 March 2015 towards the Terminal expansion and Apron, and Rs 8.86 crore towards other sustaining projects based on the terms of the contract, purchase orders raised, and the best estimate of the Management as the final bills are yet to be received from the vendors as at the period end. The Group is of the view that the provision has been created based on the best estimates and will approximate the actual liability to be settled.

11 Short-term provisions (in rupees crore)


Provision for employee benefits Compensated absences 7.30

Provision for tax (net of advance tax) 0.76 8.06

BANGALORE INTERNATIONAL AIRPORT LIMITEDBANGALORE INTERNATIONAL AIRPORT LIMITED


89

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13 Long-term loans and advances(Unsecured, considered good unless otherwise stated)

(in rupees crore)


Capital advances 11.52

Deposits with government authorities 9.49

Other deposits 0.28

Minimum alternate tax credit entitlement [Refer note 26(b)] 93.18

Advance tax (net of provision) 56.22

Amount recoverable from Passenger Service Fee (Security Component)

Account [Refer note 25] 45.71

216.40

14 Other non-current assets (in rupees crore)


Other bank balances

Non-current portion of bank deposits* 3.09

3.09

*Bank deposit amounting Rs 3.09 crore being fixed deposit placed as security with bank for a bank guarantee

15 Inventories (in rupees crore)


Stores and spares 16.72

16.72

16 Trade receivables (in rupees crore)


ReceivablesoutstandingforaperiodexceedingsixmonthsfromthedatetheybecamedueforpaymentSecured, considered good 1.97Unsecured, considered good 1.62Total A 3.59

OtherreceivablesSecured, considered good 6.14Unsecured, considered good 59.33Total B 65.47

Total C=(A+B) 69.06

17 Cash and bank balances

(in rupees crore)


Cashandcashequivalents

Cash on hand 0.01

Cheques on hand 0.39

Balances with banks:

Current accounts 15.82

Deposit accounts (with original maturity of 3 months or less) 170.04

186.26Other bank balances

Deposit accounts (due to mature within 12 month of reporting date)* 21.95 21.95

208.21

*Bank deposit amounting Rs 10.93 crore being fixed deposit placed as security with bank for a bank guarantee



91

18 Short-term loans and advances (Unsecured, considered good unless otherwise stated)

(in rupees crore)



Prepaid expenses 12.16

Mark-to-market gain on forward and options contracts 17.45

Others 0.27

Service tax credit receivable 5.80

Balance with government authorities 0.12

Other deposits 0.36

36.16

19 Other current assets (Unsecured, considered good unless otherwise stated) (in rupees crore)


Interest accrued but not due on fixed deposits 1.94

Unbilled revenues 30.70

32.64

20 Revenue from operations

Particulars Year ended 31 March 2015

Sale of services

Aeronautical revenue 581.31

Non-aeronautical revenue 334.20

915.51

21 Other income


Interest from banks 16.83

Tender fees 0.30

Miscellaneous income 0.22

17.35

22 Employee benefits


Salaries, bonus and allowances 87.92

Contribution to provident and other funds [Refer note 29(a) and 29(b)] 6.29

Staff welfare 3.79

Staff recruitment and training 1.67

99.67 23 Finance costs


Interest - banks

Rupees term loan* 183.02

Foreign currency term loan* 12.96

Exchange difference to the extent considered as an adjustment to borrowing costs -

Other borrowing costs 1.30

197.28

*Net of recovery from Passenger Service Fee (Security Component) Account Rs 2.87 crore [Refer note 25]


92

24 Other expenses


Rent

Land lease *** 6.35

Others 0.39

Rates and taxes 27.17

Insurance 2.02

Power and water* 38.00

[Net of recovery Rs 19.39 crore]

Repairs and maintenance to buildings 26.04

Repairs and maintenance to machinery and others 28.65

Consumption of stores and spares 6.13

Concession fee 37.31

Legal and professional 3.62

Technical consultancy 6.61

Operations and management services fee 15.05

Advertisement 3.72

Travelling and conveyance 11.05

Communication [Net of recovery Rs 0.01 crore]* 0.23

Printing and stationery 0.43

Exchange loss (net) 0.18

Loss on sale of fixed assets (net) 0.02

Miscellaneous 1.56

214.53

* Net of recovery from Passenger Service Fee (Security Component) Account Rs 0.95 crore [Refer note 25]

** Land lease agreement

The Company has entered into a Land Lease Agreement (LLA) with KSIIDC on 20 January 2005 whereby, for the purposes of KIA, KSIIDC has leased to the Company approximately 3,884 acres of land situated within Devanahalli Taluk and Bangalore North Taluk. A Land Lease Deed (LLD), which supersedes the LLA (containing the same clauses as the LLA) has been signed between the aforesaid parties and registered with the local authority on 30 April 2005. The term of the LLD is concurrent with the term of the CA.

The land, valued at Rs 175 crore (referred to as ‘site cost’), carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

Out of the additional land of approximately 133 acres that KSIIDC had to acquire and lease to the Company as per the LLD, KSIIDC has handed over land aggregating to approximately 124 acres. The Company has entered into an additional Land Lease Deed (LLD) with KSIIDC on 31 December 2011. This additional land valued at Rs. 36.78 crore carried a nominal lease rent of one rupee per annum up to the AOD. The lease rent after the AOD is fixed at the rate of 3% per annum of the site cost for a period of seven years and 6% for the eighth year. Thereafter, the lease rent is escalated by 3% every year (over the preceding year’s lease rent) for the remainder of the lease period.

The Company has entered into arrangements for sub-lease of land to concessionaires for purposes of aeronautical and non-aeronautical activities.

25 Passenger Service Fee

Passenger Service Fee (PSF) collected from the departing passengers has two components, viz. Facilitation component (FC) and Security component (SC). As per orders issued by Ministry of Civil Aviation (‘MoCA’)


Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)

93

from time to time, PSF (SC) collections are held by the Company in fiduciary capacity for the Government of India and are deposited in an escrow bank account maintained for meeting security related expenses. As per the Airports Economic Regulatory Authority (‘AERA’) tariff order dated 10 June 2014, effective 1 July 2014, the PSF collected from the departing passengers will only include the SC. The FC of the PSF is merged along with the user development fee as per the Tariff Order.

The following is the Memorandum Account relating to PSF (SC) for which the books are maintained separately. The balances/transactions do not form part of the Company’s books of account.

(in rupees crore)

Income and Expenditure Account for the Year ended 31 March 2015

Income

PSF (SC) (net of service tax) 98.91

Other income 0.63 99.54

Expenditure 114.34

Excess of income over expenditure transferred to (14.80)

PSF (SC) Fund Balance Sheet As at 31 March 2015

Assets

Fixed assets (net of accumulated depreciation) 20.29

Current assets and advances 29.57

Trade receivables 20.04

Cash and bank balances

Cash on hand 0.01

Current accounts 0.07

Deposit accounts 7.78 7.86

77.76

Liabilities

Book overdraft 0.08

Payable to the Company 45.71

Current liabilities and provisions 13.91

PSF (SC) fund 18.06

77.76

The following capital and revenue expenditure have been transferred/ debited to PSF (SC) Account by the Company

and included in the above balances: (in rupees crore) Particulars Year ended 31 March 2015

Interest on bank loans relating to the security assets 2.87

Other security related expenditure 0.95

The Company had received observations from the Comptroller and Auditor General of India (‘CAG’) during the audit for the years 2010-2011, stating that the perimeter wall should not form a part of the PSF(SC) books based on Ministry of Civil Aviation (‘MoCA’) SOP and clarification dated 5 July 2010. The Company had replied to the CAG stating that the general clarification by MoCA in July 2010, stated that the 16 April 2010 order shall be applicable prospectively and should not be applied retrospectively and accordingly no adjustment is required to be carried out. The CAG had also sent their comments to the MoCA for the audit

BANGALORE INTERNATIONAL AIRPORT LIMITEDNotes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)

94

for the year 2010-2011 in the month of March 2012 with a copy of the same to the Company. During the audit for the year 2011-2012, the CAG had sought the latest position on this issue. The Company had once again justified the treatment of expenditure on the airport security wall as security related expenditure. In June 2013, the Company received a communication from MoCA in relation to the audit for the year 2011-12, which did not request for further comments on the issue related to treatment of expenditure on the security wall as security related expenditure. The CAG has during the audit for years 2012-2013 and 2013-2014 also did not request for any further information on the aforesaid expenditure on airport security wall. Accordingly, the Company has retained the security related capital assets (including perimeter wall) in the books of PSF (SC). During the previous year, the Company has received an order from MoCA dated 18 February 2014 directing the Company to reimburse all capital expenditure incurred out of the PSF(SC) within a period of one month together with the interest accrued. The Company has filed a writ petition with the High Court of Karnataka seeking a stay on MoCA’s order. The Honourable High Court has granted an interim stay on the said order. The Honourable High Court has also granted MoCA time to file their objections in the matter. The tax loss of the PSF(SC) books for the current year amounting to Rs 5.14 crore has been adjusted with the total income of the Company for the purpose of the minimum alternate tax for the year ended 31 March 2015.”

26 Taxation and Depreciation

a) The Finance Act, 2001 had introduced, with effect from assessment year 2002-03 (effective 1 April 2001), detailed Transfer Pricing regulations for computing taxable income and expenditure from ‘international transactions’ between ‘associated enterprises’ on an ‘arm’s length’ basis. The Finance Act, 2012 extended the transfer pricing provisions to specified domestic transactions (SDTs) along with the International transactions. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an ‘accountant’ within the due date of filing the Return of Income.

For the year ended 31 March 2014, the Company had undertaken a study to comply with the regulations for which the prescribed certificate of the Accountant has been obtained and that did not envisage any additional tax liability. For the year ended 31 March 2015, the Company is in the process of undertaking a study to comply with the said regulations.

b) The Company has opted to claim deduction under Section 80-IA of the Income Tax Act, 1961(“IT Act”) on the entire income effective year ended 31 March 2013, and had also claimed Minimum alternate tax (“MAT”) credit under Section 115JAA of the IT Act aggregating Rs 90.67 crore upto 31 March 2013. The MAT credit asset aggregating Rs 90.67 crore as at 31 March 2013, was based on the projected future profits of the Company from the real estate and other businesses which may not be eligible for a deduction under Section 80-IA of the IT Act; which is supported by the Land lease agreement, which gives the Company the right to use the land parcel for various Non-Airport activities for a period of 30 years from the Airport opening date (i.e. 23 May 2008), which the Company is committed to undertake. The Management believed that there will be sufficient future taxable profits to utilise the aforementioned MAT credit entitlement within the stipulated period prescribed as per the provisions of the IT Act. As per the provisions of the IT Act, the Company can avail and set off these MAT credits against normal tax within a stipulated period of ten years from the year of availment. Further, as per the prescribed accounting regulations, MAT can be recognised only if there is convincing evidence that the Company would be in a position to set off the carried forward MAT in future years. As at 31 March 2014, in the absence of convincing evidence of profits emanating from the non-eligible 80-IA businesses, the Management decided to write down the MAT credit entitlement aggregating Rs 71.06 crore which was availed upto 31 March 2012 as the same was to be utilised within the tax holiday period or else it would have lapsed. The Management believes that the Company would generate sufficient profits which will be subject to normal tax in the post-tax holiday period (effective 1 April 2022) and has retained the MAT credit recognised from the financial year ended 31 March 2013 aggregating Rs 93.18 crore (including Rs.41.56 crore availed for the current year).



95

c) The Company, in the previous year, accounted for depreciation as per its accounting policy which was in accordance with the requirements of Schedule XIV of the Companies Act, 1956. The Company computed and accounted for deferred tax amounting to Rs. 21.50 crore as at 31 March 2014, after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22, based on the revised useful lives of fixed assets, as approved by the Board of Directors vide a circular resolution dated 22 April 2014. The revised useful lives of fixed assets was effective from 1 April 2014 and was in accordance with Part C of Schedule II of the Companies Act, 2013 (“the Act”).

The Airports Economic Regulatory Authority (‘AERA’) of India’s Order No 08 / 2014-15 dated 10 June 2014 which is specific to the Company, mentioned that they have initiated the process to issue a notification on the useful lives for airport specific assets as per Part B of Schedule II of the Act. Accordingly, the Company continues to follow the useful lives of fixed assets in line with the earlier financial years based on Management’s assessment. The circular resolution which approved the revised useful lives which were in line with the useful lives of fixed assets as per Part C of Schedule II of the Act as mentioned above was cancelled during the Board of Directors meeting held on 4 August 2014. Pending notification of such useful lives of fixed assets by AERA, the Company would continue to follow the useful lives of fixed assets as per the exiting accounting policy and as at 31 March 2015 has also accounted for the deferred tax based on the current useful lives of fixed assets amounting to Rs 158.70 crore after considering reversal of temporary timing differences during the tax holiday period upto financial year 2021-22. The Management would change the useful lives of the fixed assets and record adjustments related to depreciation, book value of fixed assets and the consequential impact on taxes including deferred tax computation arising out of temporary timing differences on account of depreciation post notification of useful lives by AERA as per Part B of Schedule II of the Act as aforesaid. The Company has furnished the required disclosure as part of the accounting policy that the useful lives of fixed assets followed by the Company are different from the useful lives of fixed assets prescribed in Part C of Schedule II of the Act.

d) The Company had received a demand order dated 21 November 2013 from Anneswara Gram Panchayat to pay property tax amounting to Rs 19.50 crore for the period 2010-2014. The Company was of the view that its liable to pay property tax only for the period 2013-14 and paid an amount of Rs. 4.88 crore. Further, during the year the Company has received a demand order dated 21 October 2014 from Bettakotte Gram Panchayat for Rs 2.04 crore for the period 2010-2013 and 2014-2015 as per Karnataka Panchayat Raj Act, 1993. The Company has paid the property tax for the financial year 2013-2014 for all the Panchayats. Further, the Company had written to the Government of Karnataka seeking a waiver/reduction for the period 2010-2013. The Company has not received any demand order from the other Panchayats for the earlier years except as stated above. The Company based on the prescribed rates has accounted for the property tax for the earlier years and 2014-15 as at 31 March 2015 based on the best estimate of the liability.

27 Contingent liabilities and commitments (To the extent not provided for)

Contingent liabilities: (in rupees crore)


Claims against the Group not acknowledged as debts 0.36

a) The Company had issued Bank Guarantee to Customs authorities aggregating Rs 2.72 crore with respect to grant of project import license to extend concessional rate of duty for import of certain eligible equipments for use in KIA Terminal 1 Expansion project. Further, BAHL has issued Bank Guarantee to Director General of Foreign Trade aggregating to Rs 10.93 crore with respect to import of goods under Export promotion Capital Goods scheme.

b) The Company has filed an application to get itself impleaded as one of the aggrieved party against an appeal filed by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs 2.13 crore.


96

c) The Income Tax Department had filed an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of Development Costs to overseas promoters. The Company had earlier paid the TDS amount of Rs. 5.94 crore in 2005-2006 under protest before getting the relief from ITAT. This was refunded to the Company along with interest of Rs. 0.90 crore in 2008-2009 as a result of favourable ITAT order. The High Court heard the case on 1 July 2014 and remanded it back to Tribunal for reconsideration. The Income Tax Tribunal resumed the case on 7 January 2015 and has posted the matter for further hearing on 6 May 2015.

d) The Company has received demand orders from Commissioner of Service tax for the periods 2005-2009, 2009-2010, 2010-2011 and October 2009 to March 2012 for payment of service tax of Rs 3.19 crore as a recipient of service towards reimbursement of salary costs to Zurich Airport. The interest and penalty as per the above demand orders till 31 March 2015 amounts to Rs 3.14 crore and Rs 3.52 crore respectively. Further, show cause notice have been issued for period 2012-2013 for a sum of Rs. 0.29 crore (net of payment made amounting to Rs 1.18 crore) on the same account and few other matters. These payments relate to salaries of expatriates who were seconded to the Company. The Company has preferred an appeal against demand orders before the Custom, Excise and Service Tax Appellate Tribunal (“CESTAT”) and has challenged the show cause notice which is not confirmed by a formal demand as at the balance sheet date. During the previous period, the Company has obtained stay orders from the CESTAT on the demand orders in original and presently awaiting disposal on merits. The Company has challenged the demands based on the judicial precedence on the matter and is confident of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the Company which cannot be treated as services received by the Company. Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by Expatriate Remuneration Reimbursement Agreement between the Company and Zurich Airport. The Company has accounted these payments as salaries and discharged appropriate tax deducted at source as the economic employer of the said expatriates.

e) The Company received an Income-tax assessment order for AY 2010-11 in March 2013 from Deputy Commissioner of Income Tax, Bangalore for the assessment year 2010-11 with a net demand of Rs.15.59 crore. During the year, the Company preferred Rectification and Appeal before Commissioner of Income Tax (Appeals) and successfully obtained partial relief at the appellate stage. The net demand was reduced to Rs. 2.66 crore which was fully covered by the pre-deposit and refunds due to the company from the Department. The Company approached the Income Tax Appellate Tribunal (“ITAT”) for the balance relief and the department has also challenged the Commissioner of Income Tax (Appeals) Order. The case was admitted by the ITAT on 5 Feb 2015 and is posted for hearing on 29 April 2015.

The Group is not carrying provisions for all the above mentioned amounts in its books of account, as the Group is confident of successfully litigating the matters.

Commitments: (in rupees crore)


Estimated amount of unexecuted capital contracts (net of advances) 112.43

28 Auditors’ remuneration (included in legal and professional expenses) (in rupees crore)


Statutory audit (including limited reviews) 0.34

Others* 0.13 0.43

*including certification and other fees

Reimbursement of out-of-pocket expenses 0.01



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29 The disclosures as envisaged in AS 15 on ‘Employee Benefits’ are given below:

a) DefinedBenefitPlan

The Group provides for gratuity, a defined benefit plan (the gratuity plan) to its employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee’s last drawn salary and years of employment with the Group.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

(in rupees crore) Particulars As at 31 March 2015

Obligations at year beginning 4.41

Current service cost 0.88

Interest cost 0.47

Actuarial (gain)/ loss on obligations 1.04

Benefits paid during the year (0.44)

Obligations at year end 6.36

Change in the plan assets (in rupees crore)


Plan assets at year beginning 2.91

Expected return on plan assets 0.28

Actuarial (gain)/ loss (0.05)

Contribution 1.88

Benefits paid during the year (0.44)

Plan assets at year end 4.58

Reconciliation of present value of obligation and fair value of plan assets

(in rupees crore)


Fair value of plan assets at the year end (4.58)

Present value of defined benefit obligation at year end 6.36

Liability recognised in the balance sheet 1.78

Classified as:

Long-term provisions 1.78

Short-term provisions -

Total 1.78

Expense recognised during the year:

(in rupees crore)


Current service cost 0.88

Interest cost 0.47

Expected return on plan assets (0.28)

Actuarial (gain)/ loss 1.09

Past service cost 0.00

2.16


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Assumptions


Discount rate per annum 7.95%

Salary escalation rate 7%

Expected rate of return on plan assets 8.0%

Attrition rate Age 21-44:2%

Age 45-59:1%

Ceiling limit of Gratuity 0.10

Amounts for the current year and the previous four years are as follows: (in rupees crore)

Particulars As at

31 March 2015 31 March 2014 31 March 2013 31 March 2012 31 March 2011

Defined benefit obligations 6.36 4.41 4.26 3.08 2.27

Plan assets (4.58) (2.91) (1.87) - -

Surplus/ (deficit) (1.78) (1.50) (2.39) (3.08) (2.27)

Experience adjustment on plan liabilities 0.09 (0.13) (0.37) (0.09) 0.12

Experience adjustment on plan assets (0.05) (0.04) 0.07 - -

The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority,

promotion and other relevant factors.

b) DefinedContributionPlan

The Group has contributed Rs 5.56 crore (gross of amount transferred to Capital work-in-progress) towards provident fund during the year.

30 Segment Reporting

The Group is in the business of operations of the Airport at Bangalore. Consequently, disclosure under AS 17 “Segment reporting” has not been made, as, in the opinion of the Management, the Group does not have separate reportable business or geographical segments.

31 Related party

List of related parties:

Name of the party Description of relationship

Siemens Project Ventures GmbH, Germany Enterprises which exercise significant influence over the Group

Bangalore Airport & Infrastructure Developers Private Limited Enterprises which exercise significant influence over the Group

Mr. G V Sanjay Reddy Key Management Personnel

Orbit Tours and Travels Private Limited Enterprises in which directors have significant influence

GVK Projects & Technical Services Limited Enterprises in which directors have significant influence

GVK Power & Infrastructure Limited Enterprises in which directors have significant influence

PT GVK Services Indonesia Enterprises in which directors have significant influence

The details of amounts due to or due from related parties as at 31 March 2015 are as follows: (in rupees crore)

Name of the party Nature As at 31 March 2015

Orbit Tours and Travels Private Limited Trade payables -

GVK Projects & Technical Services Limited. Trade payables 4.20

Siemens Project Ventures GmbH, Germany Trade payables 0.08



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The details of related party transactions entered into by the Group for the year ended 31 March 2015 are as follows:

(in rupees crore)

Name of the party Nature of transaction Year ended

31 March 2015

Mr. G.V. Sanjay Reddy Remuneration 3.40

GVK Projects & Technical Services Limited (GVK PTSL) Travelling and conveyance and Technical

onsultancy (net of technical consultancy

cost reimbursed to GVK PTSL on behalf of

BAHL - Rs 9.69 crore) 5.95

Siemens Project Ventures GmbH, Germany Travelling and conveyance 0.62

32 Leases Operating lease (in rupees crore) Particulars Year ended 31 March 2015

Rent* 0.63

*The Group has entered into leasing arrangements for office and residential premises, which are generally cancellable in nature. Such leases are generally for a period ranging from eleven to one hundred eight months with options for renewal against increased rent, and premature termination of agreement with notice periods ranging between one to six months. The same also includes rent for expatriates which is included as a part of employee benefits expense.

The amount of lease rentals towards cancellable operating leases for office premises is Rs 0.05 crore.

Sub-lease of land to concessionaires:

The Group has entered into agreements for sub-lease of approximately 3.18 acres, with three concessionaires/ airline operators to use the land for commercial operations. The agreements provide for transfer of land back to the Group along with the buildings constructed by the concessionaires/ airline operators, at the end of the sub-lease term which ranges from seven to fifteen years. The Group has recognised revenue of Rs 3.63 crore as part of Non-aeronautical revenue (Also refer note 20).

33 Derivatives AS30andunhedgedforeigncurrencyexposure

The Group has unhedged foreign currency exposure of Rs 2.67 crore for payables as at balance sheet date.

As at 31 March 2015 Foreign Particulars currency Amount (Rs) amount

EUR 0.02 1.26 CHF 0.01 0.64 USD 0.01 0.77 Total 0.04 2.67

The Group has applied the principles of AS 30, as per announcement by ICAI except to the extent such principles of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006.

In accordance with the principles of AS 30, those derivative instruments (comprising foreign currency forward contract and swap) which qualify for cash flow hedge accounting have been fair valued as at balance sheet date and the resultant exchange gain/(loss) as at the year-end aggregating Rs 0.10 crore has been accounted in Hedge reserve (Also refer note 4).

Currency and interest rate swaps

The Group has also designated a dollar-denominated foreign currency borrowing amounting to USD 3.00

crore, along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument


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to hedge its interest rate risk on future interest payments in USD from floating rate risk on USD Loan.

The exchange gain on the above has been recorded in the statement of profit and loss amounting to

Rs. 0.91 crore.

34 Earnings per share (in rupees crore, except as otherwise stated) Particulars Year ended 31 March 2015

Nominal value of equity shares (Rs) 10 Weighted average number of equity shares outstanding – Basic and Diluted 384,600,000

Profit after tax for the year considered for the calculation of basic and diluted earnings per share 75.21

Earnings per share – Basic and diluted (Rs) 1.96

35 Reconciliation of bank deposits (in rupees crore) Particulars Year ended 31 March 2015

Bank deposits with original maturity of 3 months or less included under ‘Cash and cash equivalents’ 170.04 Bank deposits due to mature within 12 months of the reporting date included under ‘Other bank balances’ 21.95

Bank deposits/balances due to mature after 12 months of the reporting date included under ‘Other non-current assets’ 3.09

Total 195.08

36 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondences with its customer the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable of such enterprises as at 31 March

2015 has been made in the financial statement based on information received and available with the Group. The dues to such enterprises which have provided goods and services to the Group and which qualify under the definition of Micro and Small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 is stated as under:

(in rupees crore)

Particulars 31 March 2015

(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year

Principal 2.09

Interest 0.01

(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, (the Act) along with the amount of the payment made to the supplier beyond the appointed day during each accounting year 7.77(iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the said Act -(iv) The amount of interest accrued and remaining unpaid on 31 March 2015 in respect of principal amount settled during the year 0.63(v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Act -

The above information has been determined to the extent such parties have been identified by the Group, which has been relied upon by the auditors.



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37 Corporate Social Responsibility

As per the section 135 of the Act, the Board shall ensure that the Group spends, in every financial year,

at least two per cent of the average of the net profits of the three immediately preceding financial

years, in pursuance of its Corporate Social Responsibility (‘CSR’) Policy . However, in the current year,

due to delay in constitution of the CSR committee, formalisation of the CSR policy and identification

of the projects for CSR spend; the Group has not been able to spend the required amount on the CSR

activities during the financial year 2014-15.

38 Cost audit records

The Central Government of India has prescribed the maintenance of cost records under Section 148(1) of

the Act, read with Rule 3 of the Companies (Cost records and audit) Rules, 2014, as amended in relation

to Aeronautical services rendered by the Company. As the Rules were issued by the Central Government

during the year, the Company will initiate the process of maintaining the cost records required as

per the Rules for the applicable services. Currently, the Company has not maintained cost records, as

applicable for the Aeronautical services.

39 BAHL

“During the year 2013-14, the Company entered into a “Share Purchase Agreement” dated 20 December 2013

to acquire 74% of the outstanding equity shares of L&T BAHL from L&T Urban Infrastructure Limited (“LTRL”)

and 26% from EIH limited (“EIH”), for aggregate purchase consideration of Rs 2.00 crore. The Company changed

the name of L&T BAHL to Bangalore Airport Hotel Limited (BAHL) which was approved by the Ministry of

Corporate Affairs on 14 March 2014. Thus, BAHL is a 100% subsidiary of the Company w.e.f 20 December 2013.

The net worth of the BAHL on the acquisition date was Rs 2.00 crore which was acquired for a purchase

consideration of Rs 2.00 crore. Accordingly, the same did not result in goodwill or capital reserve on the

acquisition date in the consolidated financial statements of the Group. “

40 Other matter

The Group has presented complete set of consolidated financial statements for the current period

(i.e. 31 March 2015) which is in accordance with AS 21” Consolidated Financial Statements” for the

first time. Accordingly, the consolidated balance sheet, consolidated statement of profit and loss,

the consolidated cash flow statement and the related notes to the consolidated financial statements

for the comparable period of the immediately preceding financial year and consolidated balance

sheet as at 31 March 2014 are not presented.

for B S R and Company forandonbehalfoftheBoardofDirectorsof Chartered Accountants Bangalore International Airport Limited Firm registration number: 128900W

S Sethuraman Managing Director Director Partner (DIN : 00005882) (DIN : 2849971) Membership number: 203491

Place: Chennai Date: 20 April 2015 Director ChiefFinancialOfficer (DIN : 00005456)

Company Secretary


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