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o,o ' M. A. PA}t,Ir(t-4 & CO.

CFIAN,TER'ED ACCOUNTANTSI]{DEPENDENT AUDITOR'S REPORT

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To the Members of Air India Exnress Limited

1,. Qualified }pitdon

We have audited the accompanying Ind.AS financial staterrrents of Air Lrdia Express Limited ("theCornpany") which 'cornprises the Balance Slreet as at 31't Ndarch , 20!9 , *re 'Sta ernent of Profit andLoss (incl'rding OtFrer Compreir'ensive l-ncome), Statement of Changes in Equity and Sta.tement ofCash Florvs fol the year then ended, and notes to the financial sta,ternents, includireg a st-trnmaryof si.gnificant accounting policies and odrer explanatoly in$ormation.

- In'our opinion and to the best.of ,our information and according to.the explanations given to us,except for the effects of the ma,tters described in the Basis for Qualified Opinion section of oulreport, the a'foresaid trnd AS financial staternents give tl-re inforrnation required by the CornpaniesAct, 2013 ("the A.cf') in the manner so required and give a lrue and fair view in conformity withthe Companies (Indian Accounting Standards) Rules, 2015, as amended, (Ind AS) and otheraccounfing principles generally accepted in L:rdia, of thestate of affairs of the Company as at 3Lst

March, 2019, andproflt, totalcomprehensive irrconne, thechanges inequity and its cash flows fortl'le year ended on that date.

2. Basis for Qualified Opinion

In respect of non-contpliance uith certain proaisions of tlrc Act to tla extent stnted belou:

i. Sectiort 149(4) relatittg to appointntent of ltdepercdetd Directors.ii. Section 177(2) and Section 178 relating to composition of AtLdit Contntittee nnd Norc'tination

nnd Remunertztion Comruittee of the Boardiii. Second praaiso of Section L49{1,) relating to appoitttment of zlonlan clirector sil1ss gttt

Noaember,2A18.

We conducted our audit in accordance with the'Standards on Auditing (SAs) specified undersection 143(10) of the Act. Oul responsibilities under those Standards are further described in theAuciitor's Responsibilities for tl'.e Audit of the Financial Siatements section of our report. We areindepeirdent of the Company in accordance with the Code of Ethics issued by the Institute ofChartered Accountants of India (ICAI) together with the ethical r:equirements drat are relevant toour audit of the financial staternents under the provisions of the Act and the Rules madethereunder, and we have fulfilled our other ethical respor.lsibilities in accordance r,r'ith theselequirements and the ICAI's Code of Ethics. We believe that the auditevidence \4ze have obtainedis sufficient and appropriate to provide a basis for .our qualified opinion on the financials.tatements.

YUSUF BUILDING, 2ND FLOOR, 43, MAHA?MA GANDHI ROAD, FORT, MUMBAI . 4OO OO1.PHONE:22047078.22C.4385O. 2202e^187.4OO40828. 22029731 . E-lvfAIL: map@maparikh,co.in

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3. Ernphasis of Matter *We invite attention to the follor,r.'ing; -

i. In respect of non-compliance rvith Ilegulation 52 of Listing Obligation and f)is<-:losul'c$

Ilequirernents (Amendrnent) R.egulation, 2A17 PODR) regarding non subrnission <lf l-lerlf

yearly Financial Results to Bombay Stock Exchange. (Refer Note No.41,).

ti, Note No, 42 regarding acccunting of "Insurance Claim Receivable" pending confirmatiorr fclr

acceptance by the Insurance company rvhich is in deviation frorn the Accounting Policy r:f theCompany.

ii-i, Note No.43 regartiing penal interest amounting to P.s. 832-47Million for rJelayed pal, rl. ent of. Guarantee Commission to Government of India.

iv. Non-filling of forrn -q CEB for the F. y . ?A12-13 to F.Y. 2015-1.6 (Refer note no. 54).

v, Cargo Revenue, Fiight Interruption Manifest and Code-Shale revenue are consi&ered as

"lnterline Transecfions" and hence, GST liability in respect of the same is not charged and paidby the Company (Refer note no. 37)

wi. Note No 38 (c) regarding accounting of short booking of consumption of Rs.69.19 Million

vii" Note No 38 (d) regar:ding accounting of segregation of inventories between group cornpaniesresulting into reduction in inventory of Rs. 984.18 Million

viii. Note No 38(h) regarding provision for repairs expenditure of lls. 56.28 Milliorr

ix. Company had not claimed Input Credit of Service Tax amounting to Rs. 71.9 Million relatingto reimbursement of expenses for F.Y. 2012-13 in the service tax return but it had clairrrecl the

sarne in Trans-1 and hence, it continues to be considered as good for recovery.

x. The Company has not deducted income tax at source while making provision for expenses buthas deducted the same and paid to the governrnent at the tirne o{ making payment of expenses,

the impact of such non-cornpliance has not been ascertained anci provided.

Our opini,rn is not qualified in respect of these matters.

4. 'Key Audit Matters

Key Audit Matters are those matters that, in our professionai judgement, were of moslsignificance in our audit of the Ind AS financial staterner,rts of the current period" These

matters r,r'ere addressed in the context of our audit of the Ind AS financial statenents as a

whole and in formfurg our opinion thereon, anci. u'e do not provide a separate opirrion on

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these matters"

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i K*y Audit h{atters

I llassenger RevenuePassenger revenue is not recordediminediately on sale of flight tickets but isdelerred to be recorded at a later time as

Itevenue in the statement of profit and loss

rviren passengers are flolvn. Such deferredrevenue is presented in the FinancialStatement as Forward Sales under: Ot-her

Liabilities.As a result of the complexity in determiningthe levenue to be recognized on flight dates,

this is a key focus area in our audit.Leases

The Compury hur to adopt Ind-AS 116 l.eases

from l.t Aprtl.,2019 andis required to disclosethe expected impact of adopting Ind-AS 116

in the financial statement for the year ended31't Marclu 2020.

In ne'w lease accounting standard lessees are

required to recognize a right-to-use assets

and a iease liability arising from the lease onits baiance sheet

The adjustments arising from applying Ind-AS 116 are rnaterial for the Company andhence it is a key focus area in our auditProvision for lte-deliveryCompany operated 8 aircraft under operatingiease arrangements at 31"t March 2019.

Under the terms of the operating lease

arrangernents with the lessors, Companv iscontractually cornrnitted to either return theaircraft and/or engines in a certain conditionor to compensate the lessor based on theactual ccndition of the aircraft and/orengrnes at the date{s) of return.

check basis and relied also upon the report I

received from an external charteled I

accr:untant opining that the desigrr anc{ |

Conepany has appointed outsourcecl agt'ncy'for reconciliation and accounting thcr

passenge{ revenue lransactions ascertai:"1 rrs t'tr

ra'hether the potricy of recognition the r(:vcnucis consistently f611o*ud. We have verifi.cci thcdata leceirzed frorn the said agency c>lr tcst

eflecfiveness of controls in respect revenuereconciiiation proc€ss pr:ovide reascrnable

assurance about their effectiveness.

As explained to us and disclosed in thefinancial staternents, the Companv curlentlyin the process evaluating the Ind-AS 116 on itsfinancial staternents for the year ende d 31s1

March,2020

I

C"*pr"..1redeliver expenses based on the infornaation

available from vendor for new aircraft taken

on lease by discounting the present valuethereof for future liability.

We have verified the documents provitled tous for cost r:f contractual"coinmitment and

v,rorking for calculating the present vaEu'e ofthe said liabilit1'.

Accordi:rg1y, provision of Rs.56.55 1\4il1ion

for the costs associated urith redelivery of thesaid aircraft has been made during the lease

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term ancl is included under Provisions. _i

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lrtealissThe Company has materiallitigated dernands

We have reviewed the disciosures madcltl-re financial statements in this regard.

5. Responsibilities of Managernent and those charged with governance for the Ind ASfinancial statements

The Company's Board of Directors is responsible for the nratters stated in section 134(5) of the

Act with respect to tl'le preparation of these Ind AS financial statements that give a true and fairview of the financial position, financial performance, total comprehensive incorne, changes inequitv and cash flor,r's of the Company in accordance with the ind AS and other accountingprinciples generally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of the assets ofthe Company and for preventing and detecting frauds and other irregularities; selection andappiication of appropriate accounting policies; making judgments and estirnates that are

reasonabLe and pruden| ancl design, implementaCon and maintenance of adequate internalfinancial controls, that r,vere operating effectivell'for ensuring the accuracy and completeness ofthe accounting records, relevant to the preparatio;r and presentation of the Ind AS financialstatement that give a true and fair view and are free from materiai misstatement, r,r'hether due tofraud or errol'.

In preparing the Ind AS financial statements, management is responsibie for assessing theCornpany's ability to continue as a going concern, disclosing, as applicable, rnatters related togoing concern and using the going concern basis of accounting unless manag€ment either intendsto iiquidate the Company or to cease operations, or has no realistic alternative but to rio so.

The Board of Directors are also responsible fol overseeing the company's financial reportingprocess.

6. Auditor"s Responsibilities for the Audit of Ind AS Financial Staternent

Our objectives ale to obtain reasonable assurance aboui whether the Ind AS financial staternents

as a whole are free from mateiial misstatement, n'hef.her due to fraud or errol', and to issue an

auditor's report that includes olrr opinion. Reasonable assurance is a high level of assrirance, butis not a guarantee that an audit conducted in accordance r,r'ith SAs rn'ili always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are consideredmateriatr if, individualiy or in the aggregate, they could reasonably be expected to infiuence the

econornic decisions of users taken on the Ind AS financial statements.

As part of an audit in accorclanr:e r.n'ith SAs, wr: exercise professionan judgment and nrajntairrprofessional skepticism drroughout iire aurlit. IA'e also:

. identify and assess the risks of rnaterial nrisstatement of the financial statertrents, whe thcr cluc

to fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence ihat is suJficient and appropriate to provide a basis for our opinion. The risk of notdetecting a materiai misstatement resulting from fraud is higher than for one resulting from error',

as fraud rnav involve collusioru forgery, intentional omissions, misrepresentations, or the overlideof internal control.

n Obtain an understanding of internal financial control relevant to the audit in order tcr desigrr

audit procedures that are appropriate in the circurnstances. Under section 143(3Xi) of the

Companies Act, 2013, we are also responsible for expressing our opinion on whe ther the

Cornpan5r has adequate internal financial'controls system in place and the operating effecti'*reness

of such controls.

n Evaluate fhe appropriateness of accounting policies used and the reasonableness of accc.ru.nling

estimates and related disclosures made by management.

n Conclude on the appropriateness r:f management's use of the going concern basis of accourrtingand, based r:n the audit evidence obtained, whether a material uncertainty exists related Lo events

or conditions that mav cast significant doubt on the Company's abilifv to continue as a goirrg

concern. If we cor,rclurie that a material uncertainty exists, rve are requirecl to draw attention inour auditor's reporl to the relateci disciosures in the financial statements or, if such discl.osures are

inaclequate, to modifv our opinion. Ortr conclusions are based on the audit eviclence obta.ined upto the date of our auditor's report. F{owever, tufure events or conditions may cause the Corni:anyto cease to continue as a going concern,

. Evaluate the overali presentation, structure and content of the financial statements, includingthe disclosures, and whether the financial statements represent the underlf ing transactions and

events in a manner that acl'rieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, inchiding,anv significantdeficiencies in internal control that we irlentify during our audit.

l{e also provide lhose charged with governance with a staternent that we have complied n'ithrelerzant ethical requirements regarding independence, and to comrnunicate with them allrelationships and other matters that may reasonably be thought to bear olr our independence, and

where applicable, relateci safep;uards"

Frorn the matters conununicated r,r'ith those charged with governance, we determlne those

rnabters that were of n'rost significance in the audit of the financial staternents of the current periodand are therefore the key audit matters. We describe these r-natters in our auditor's report uniess

law or regrilation precludes pubtric cli matter or wherl in extremeh' rare

circurnstances, we determjne that a matter communicated in c-rur report because

ilre aclverse consequences of doing so would reasonably be expected to outweigh th<.' pulrliciirterest benefits of such commlrnication. ':

7" Report on Other Legal and Regulatory Requirements

C.

As required by the Companies (Auditor's Report) Orcler, 2016 ("theOrder"), issue cl by theCentral Gorrernment of India in terms of sub-section (11) of section 143 oi the Act, we givein the Annexure " A" a statement on the matters specified in paragraphs 3 and 4 of theOrder, to the extent applicable.

As required under Section 143(5) of the Act, we enclose herewith, as per ArTtrexztre "8",our report on the directions issued by the Comptroller & Auditor General of india.

As required by Section 143(3) of the Act, we report that:

We have sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audi!

in our opinion, proper books of account as required by law have been kept by the Companyso far as it appears frorn our examination of those books and refurns adequate for the purposesof our audit.

The BaLance Sheet, the Statement of Profit and l-oss (Including Other Con'rprehensive Irrcome),the Cash Fiow Statement and the Statement of Changes in equity read with Notes to Accountsdealt with by this Report are in agreement with the books of account and with the retuinsreceived from Business Areas rn'hich rvere not visited by us.

In our opinion, the aforesaid financial statements compty with the Indian AccountingStandards specified under Section L33 of the Act.

The Company being a Government Company as defined in section 2$5) of the CorlpamesAct,2013 is exempted from the applicability of the provision of the section 1.64 (2) of the saiAcf vide Circular No.G.S.R.463(E) dated Sft June 2015 issued by the i\4inistry of CorporateAffairs;

With respect to the adequacy of the internal financiai controls over financial reporting of theCornpany and the operating effectiveness of such controls, refer to our separate report inAnnexure "C"; aftd

g) l'he Company being a Government Company as defined in section 2(a5) at the Cornpaniesfuct,2013 is exernpted from the appiicability of dre provisicn o{ the section 1,97 af the said Act,vide Circular No.G.S"R.463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs.

A

B.

a)

b)

c)

d)

e)

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h) With respect to the other matters to be includr:d in the Auditor's Report in accordarrce withRule 1tr of tf,u Cornpanies (Audit and Auditors) Arnendment Rules, )OV,nour opirrion andto the best of our knowledge and belief and according to the information ancl explanations

,lli. The company has disclosed the impact of pending iitigation on its financial position in its

'ltement - Refer to Note No.32tlnanclal stil

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ii. The Comoany does not have any long-term contracts including derivative contracts forwhich there could be any material foreseeable losses and hence, the question of rnakingprovision for srrch'iosses does not arise.

iii. There were no arnounts which were required to be transferred to the Investor Education

tu#,N*lin SfretrFartner

' il{embership No.: 136978',, UDIN : 197369:78AAAACP3553:

Ptrace:,Delhi ,

Date: B0tr,JuLy,,V019

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.4.nnexure' A to the Auditors' ReportAs referred to in our Independent Auditols 'Repori to the menrbers of the Companv on tircfinanciai statements for the year ended 31't Ma::ch ?019, we report that :

ln respect of the Property, Plant and Equipmentct. The Contpanq is in tlrc process of updntiltg its Praperty, Plant and Equipment register zoitlt t't:sytt:f

to qwntitatiae. futails and locstion t!rcreof.

b. The Companv has a program of Physical Verification of Property, Plant and Eqr:ipmenton rotational basis so that every asset is verified once every four years whichr in ouropinion is adequate. As informed to us, physicai verification of Property, Plant andEquripment, has been conductecl by the management and an independent agenc;z duringthe year and discrepancies noticed during the verification were rectified.

c. According to the information and explanations given to us and on the basis ofexamination of the records of the Cornpany, there are no immovable properties in the

name of the Company.

According to the inJormation and explanations given to us, during the year physical verificationof inventory except inventory lying with third parties, has been conducted by the Managementand an inCependent agency and discrepancies noticed drlring the verification were rectified

{Refer Note No. 38). Houeaer, in respect of inuentoru lying zaith third pnrties, discrepancies, if eaty, rnny

Iuue remnined. undetected €t unaajusted.

The Compm)'has not granted loans to parties covered in the register maintaineri under: section'J.89 of the Act. Thus, paragraph 3(iii) of the Order is not applicable.

IV. According to the inforrnation and explanations provided to us, the Company has not rnade anyloans, investments, guarantees and securities, within the meaning of section 185 and 186 of the

Act, and hence paragraph 3(iv) of the Order is not applicable.

V. According to the information and explanations provided to us, the Company has not accepted

deposits within the meaning of Section 73 to76 or any other relevant provision of the CornpaniesAct,2A13, and hence paragraph 3(v) of the Order is not applicable.

VI. Based on the inJormation & explanation provided to us by the management, maintenance of cost

records has rrot been prescribed by the Central Government unCer sub-section (1) of section 148

of the Act in respect of the Company's Services.

VII. In respect of statutory dues:

According to the inforrnation and explanations given to us, the Company has been generaih;

regular in depositing undisputed statutory dues and there were no dues in arrears, as at 31ut

March, 2019 tc:rr a period of more than six months frr:m the date on which they became payable,except tlrc folloroing:

s. Frofession Tnx: Iis. 1.13 Million htcluding Rs.

of jurisdictionby tlrc concenrcd authority"ott' accotutt of pendency o.f dc terni na tion

b. Prorident F:wnd: Rs" A.44 Millian"

c. Payment of Tax Deducted at Source (TDS) u/s 194 C, 1"94 H, 194 I A 194 I of the Income 'l'nx' Acl ,

in respect of:

As the Company nmkes adhoc TDS payments for expenses otlur than salary euery month ztlilch nrc

pendfug reconcili.ation in sbsence of proper linknge betzueen deduction and deposit of TDS, rlc nrc

not in a position to offer any comrflents, as regards delay if any.

Unsscertained unount toruards interest and pennlty, if any, in respect delayed/unpaid TDS ort

nccount of Contpany's policy of not dtducting tax at source zuhile proaiding for expenses hutdeducting a.ndpaying zohile payment of expenses,

Statutory dtes, if'any; in-respect-of foreigrbustness-mess'notcouered during-ow-audit,- since tht-records are maintained at the respectiue business areas zuhich zoere not aaailable for aerifiaztion, rue

are unsble to camment zoltetlur the dues luuebeen depositud on a timely basis.

e. According to the records of the Company and information and explanations given to us,

there are no dues outstanding in respect of Income Tax, Wealth Tax, ServiceTax, Good and

Serv'ice Tax, Cess or other statutory dues on account of arrv dispute except as mentionedbetrow:

Sr"

No.Narne of the Statute Amount ** i Natule and forum r,vhere

(Rs. In Mitlion) | dispute is pending1 Service Tax for Financial Year

2007-08 to 201.4- 15

25"16 Comrnissioner of CentralExcise (Appeal)

2 Service Tax for Financial Year

2407-08 fi 2416- 17

852.11 Commissioner of Service

Tax

Customs Duty 8.16 Commissioner of CentralExcise, Customs & Service

Tax

4 Employees State InsuranceCorporation

5.55 Director of EmployeesState InsuranceCorporation

Ncrte :** Net of amount paid. under protest aggregating to Rs. 2.97 M:d.iion against the above

VIII. Based on our audit procedures and according to the informatiorr and explanations given to us,

r4'e are of the opinion that the Comparry has not defaulted in repayment of dues to its banks andto debenture holders except, inte.rest of Rs. 0.05 Million payable to a debenture lnlder due on 30th

September, 2018 snd zthich zoas unpaid ort 3L't March, 2019. Since than the same has been paid.Further, no loans or borrowings were taken from financial institution and government.

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IX. The Cornparry did not raise any(including debt instruments) andOrder is not applicable.

I^ray of initiai public offer or further public offerhence paragraph 3 (ix) of the

money byterrn loans duri the,year and

X' Tlo the best of our knowledge ar,rd according to thc. information and explanations given -to us, pcr

fraud by the Company or no material fraud on the Company by its officer and empioazccs hasbeen noticed oi' reported during the year ancl nor have we been informed of such cas e lryr thsrnanagement.

XI- As per the Notification GSR 463(E) of Minish'y of Corporate Affairs, Dated sth June 2015- Section197 of the Companies Act 2013 is not appiicable to Government Companies. Therefor<r, the ofparagraph 3 (xi) of the Companies (Auditor's Report) Order, 2016 is not applicable to theCompany.

,,:

XII. In our opinion ar'rd ac.orting to the information and explanations given to us, the Cornpany isnot a nidhi company. Thus, paragraph 3(xii) of the Order is not applicable.

XIII. According to the information and. explanations given to us and based on our examination of the' records of the Company, transactions with i:elated parties are in compliance with sectio ns -1.77 and,

188 of the Act and where applicable, the details of such transactions have been disclosed in thefinancial statements as required by Indian Accounting Standard 24.(Refer Note No.49)

XIV" According to the information and explanations give to us and based on our examination of therecords of the Company, during the year the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures.

XV" According to the information and explanations given to us and trasecl on our examinatic,rn of therecords of the Corrrpany, the Company has not entered into non-cash transactions r,r'ith dilectorsor persons connecteci with him and hence, paragraph 3(xv) of the Orcler is not applicable.

XVI. According to the urformation and explanations given to us and based on our examination of therecords of the Company it is not required to be registered under section 45-lA of the Reserrze Bankof India Act1934.

For M.A. Parikh & CoChartered AccountantsFirm Registration No: 107556W

Nali.n ShahPartnerMembership l.{o.: 736978UDIN: 1913697 8 AAA ACP3553Place: DelhiDate: 30th JuIy,2019

As referred to in our Independent Auditors 'Report to the meml'rers of the Company, on thc

financial statements for the year ended 31"t March 2019, w-e report that :

Based on the inforrnation and explanations obtained by us, we furnish our conunents; on thcDirections issued by the Comptroller and Auditor General of India relating to the accoull- ts of thcCornpany for the )rear ended 31't March,2019.

fL- Whether the Company hassystem in place to process allthe accounting transectionthrough IT system? If yes, theimplications of processing ofaccounting transection outsideIT system on integrity of theaccounts along with thefinancial implications, if any,may be stated

Whether there is anyrestruciuring of an existingloan or cases of waivey'writeoff of debts/oany'interest etc.made by a lender to thecompany due to thecompany's inability to repaythe loan? If yes, the financialirnpact may be stated

Based on the information and explanations gir.en to us, theCompany has a system in place to generally process all theaccounting kansactions through IT system ercept to the

extent as stated hereunder:

(i')

(iii)(i")

(v)

The entlies being made manually on periodic basis inrespect of sales/revenue with the accountilg software(SAP) basis reconciliation prepared by an independentoutside agency.Tili 3lsAugust, the Company used "RAMCO System"reports for manually recording inventory entries intothe SAP.Payroll records are partiall)r maintained manually.Depreciafion on PPE is computed manually and

thereafter, entered into SAP.Cargo revenue, flight interruption rnanifest and code

shade Revenue are accounted manually basis

information from the hoiCing company.

As per the information and explanations given to us, theabove records used from the outside SAP system are

verified before entering into SAP system for theirappropriate integration therein.

were no cases of restrucfuring of an existing loan or cases ofany waiverfwrlte off of debts/loan/i:rterest made bylender.

naS"A oo'"nf**utio" utt'f ""has not received any funds for specific schemes fromcentral/state agencies.

For M. A. Parikh;& CoCharteted Accountants(Firrn's Registration No: 1075-56W)

Date: 30u, luly,}a19

(9slti\fi')ru' fi

IAnnexure - C to the Auditors" Report

fteport on the Internal Financial Controls und.er Clause (i) of Sub-section 3 of Sectiorr 143 ofthe Companies Act,2013 {"the Act")

We have audited the internal financial contrcls over {inancial reporting of Air India ExpressLirnited ("the Company") as of 31't March 2019 in conjunction with our audit of the Financialstatements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal Financialcontrols based on the internal control over financial reporting criteria established b)' th"Company considering the essential cornponents of internal confuol stated in the Gr.ridance h(oteon Audit of Internal Financial Controls Over Financial Reporting issued b)' th" institute ofChartered Accountants of India (ICAI'). These responsibilities incluCe the design,implementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business, including adhelence toCompany's policies, the safeguarding of its assets, the prevention and detection of frauds anderrors, the accuracy and completeness of the accounting records, and the timely preparation ofreliable financiai information, as required under the Act.

Auditors' Responsibility

Oul responsibility is to express an opinion on the Company's internal financiai controls overfinanciai reporting based on our audit. We conducted our audit in accordance with the Gr.ridanceNote on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section143(10) of tl"re Act to the extent applicable to an audit of internal financial controls, both applicableto an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and theGuidance Note require that we compiy with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether adequate internal financial control over financialreporting r.tzas established and maintained and if such controls operated effectively in all rnaterialrespects"

Our audit involves performing procedures to obtain audit evidence about the adequacv of theinternal financial controls system over financial reporting and their operating effectiveness. Ouraudit of intemal financial controls over financial reporting included obtaining an understandingof intelnal financial controls over financial reporting, assessing the risk that a mater:ial weaknessexists, and testing and evaluating the design and operating effectiveness of internai coirtrol based

on the assessed risk" The procedures selected depend on the auditor's judgmenf including theassessment of the risks of material misstatement of the financial statements, whethel due to fraudoI elror.

\{e believe that thebasis for our auditreporting.

audit evidence rve have obtained is sufficient and appropriate to pi'ovide a

opinion on the Company's internal financiai contlols system over financial

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hdeaning of Internal Fi.nancial Controis iiinancial Reporting

A Cornpany's internal financial controireas'onable assurance regarding the

iallcial reporting is a process designed to provideiancial reporting iy1':nf financial repreporting and the preparatiorr of

financial statements for external purposes I accordance with generally accepted accountingprinciples. A Company's internal financial oI over financial reporting includes those policiesand procedures that (1)pertain to the mai of records that, in reasonable detail, accuratelyand faiqly reflect the transactions and dispositions of fie assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounfin| principles, a-nd thatreceipts and expendifures of the Company are beingmade only in accordance with authorisationsof rnanagement and directors of the Cornpany; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisitioO use, or disposition of the Cornpany'sassets that could have a material effect on the financial statements.

Inherent Linritations of Internal Financial ControXs Over Financial Reporting

Because of flre inherent limitafions of interr,ral financial controls over financial reporting,includir.rg the possitiility of collusion or imprope{ rnanagement override of conttols, rnaterialmisstatements due to error or fraud firay occur and not be cletected. Also, projections of anyevaiuation of the internal financial controls over financial reporting to ftrture periods are subjectto the risk that the intemal iina4cial control over financial-reporting r.nay become inadequatebecause of changes in conditions, or that the degree of compliance rvith the policies or proceduresmay deteriorate.

Qualified Opinion

According to the information ancl explanations given to us and based on our audit, rnaterialweaknesses have been identified in the Company's internal finarrcial controJs over financialrepor.ting as at 3ilst March,'20L9 in respect of:

a) The company did not have an effective interface between various functional softwarerelating to Reverule, Payroll and Inventory Management with the accounting software

, r€sulting in accountingrentries being made manually on periodical basis.b) The company did not have an appropriate internal control system for reconciliation of

C'onhol Accounts in relation to the Satres/Revenue, Inventory and Payroll.c) Controls over planning and monitoring of financial closing process.d) Controls over spreadsheets used in financial closing process.e) The company did not have an appropriate internal control system fbr deduction, timely

deposit aud reconciiiation of statutory dues.

0 The company did not have an appropriate internal control system for obtainingconlirmation of balances on a perioclic basis and reconciliation of unmatched Receivablesand Payables however the same has been done as at the end of the year.

g) The Company did not have an effective internal control s)zstem for reconciiiation ofonboard "BarSale" with consumption and realization.

h) The company did not have an et'fective system for timely accounting of entries"4 Lack of controls to prevent duplicate accounting and rnaker checker process.j) System of verification of reconciliation provided by outsourced agency relating to

revenue needs to be strengthened.

A'material weakness' is a deficiency, or a cornbination of deficiencies, in internal financiaL controiover financial reporting, such that there,i b1e possibility that a material mi,sstatementof the company's annual financial be prevented or detected on a timelv basis.

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3ctive interface between Y'?tt:T'g::tnal software

d ffifff,Xffi:"ffi$S:;,ffito*;ry Manage**ot *in. tt''u u"o#tifr 'or*u*

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conrrorAccountsinrelation-d;*:"tffi*f;tflffi ?r:".*l:t'"tControl Accounts 1r1 le'lalrurr' "" ** ;;;"f fi,.,*.i"t closing process.

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e) rhe companv dld not have an "e;Jfr;fi;;T;#; 'vstem for deducti"l:::

Er i"p"rifritta re.on iliauon of statutory dues'

;ral control syste.] for obtaining

0 The comp*y ;;;;i *t1--3. appropriate *i;t.*"""r',o*"t"r'uJnouiuuui"i

conf irmati""oruJ*eson"p.l'1f l1T^To;1-iiilriffi;;e;'v""''#,$ffif"Hffi"#H##ilffi;; at the end or the ve3'' rorrciliation or

s) The Comp"*y Jij.,.* hu.," * ir-"''"-i',t9*'t control system for re--.

onboard ,,gu, sj*l Jrh "o*o*ption

and realization':ly accounting of entries.

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'F-In our cpinion, the Company has, in all material respects, maintained adequate internal Financialcontrols over financial reportrng as of 31't March, 2019,based on the internal control over Financialreporting criteria established by the Company considering the essential components of intelr-ralconh'ol stated in the Guidance Note on Audit of lnternal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India, and except for effects/possihle

fficts of tlrc material zueaknesses described aboue on tlte qchieaement of the objectiaes of the controZ criterin,the Cornpany's internal financial controls over financial reporting were operating effectively asof 31't March,2019.

We have considered the material weaknesses identified and reported above in determining thenature, timing, and extent of audit tests applied in our audit of the financial statements of theCompany for the year ended 31't MarclL 2019, and these materiai weaknesses has affected ouropinion on the financial statements of the Company and we have issued a quali{ied opinion onthe financial statennents.

For M.A. Farikh & CoChartered AccountantsFirm Registration No: 107556WtrNalin ShahPartnerMembership No.: 13697eUDIN : 191369v8 AAAACP3553Piace: DelhiDate:30t1, Ju|y,201g

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A'01 ' A*nowledgement Receipt of Audit rnstrsctione and rndependence confirmation

ToThe Joint Statubry AuditorsAir India Umited

In connection with )our audit of the consolidated financr:al statements of Air India Limiterl fthe companf), iutPt'di:lf and iointly conturolled entities (oftectively .erenea lo ai'iAir. Indi" Group,r or \he Groupf as of 3tMar$ 2019 and for the year then ended, we conn#uraf* t'i"* fu.eiu.c and reviewed the Audit Instructionsrelating to our work on.Air India Express umned, .uGuiiry o1th- c";p";;l,r/€ further cohfirm that:

1) We will be ahte to comply with the nature and thetming of these instructiqns;

2) All rnemberu of our engageritent reain have confirdred that they are independent of and have nofinairial interests.in Air_Indh Express Limired ano ie rduted enuu*.:ai.ildi;;il we confirm ourindependence rgr tE pgflgq mvered by ttrc finarcial Iniormauon as of 31 March 20Ig on which we arereporting and through the date of ttris confirmation in accoruince wi$r the inaepencince requ-rementsas per the Code of Ethics issued by Instltute of Ctrartered eccountants of India Cfcefl.

3) we are not aw3re of ?ny past, e,xisting or potenHat pmfessional servir:es or business relationshipsbetween our firm and Aii tnail expiess 'togetner

with ib related entities that would impairindependence, inchding those arlsing from tlre pivision oinon-auCit servies,

4) we.will no!!fl roy.oJany relationships grat rnyo<istbetween the ftrm and Airlndh Express and itsrefated entities whicfr is expe*eo to have an lmpact on our firm's indepenoen." ina tne objectivity rifthe audit engagement team.

5) We are aware that tfre standalone finarrcial fnformatlon of Air India Express as of 31 March 2o1g thatwe luve audited are to be induded irt the mnsolidated financtat statemenE or G company on whichyou will report, and that our report ttrereon wifl be rerieo on uy vd. - '-'-

For lrl. A* parikh & Co "

Chafter€d Accountantswl{alin ShahParhrer

Date I Ol*Augusg 2019

YItsrlF BrrrLDrNG, 2ffD FLooR" {3, MAIIaTII{A GANDHI RoAr}, FSRT,.MUMBAT - 400 001.TELEPHONE : 2204 lolE -2204 3850 -2202 918?: FAXz 9r-22-2287 iSz4'E-MArLr rel".ikhp",.h.n*t

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HHPiY Tg p:f"j*3-nce materiality .nxed by us for audit of the srandatone finan<talstatements of the Air India Express timitbd for *re year enueJ 31i r,'rr"n, zb]g.r.';r f;iil*;.

A.02. MATERHLITY

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A.03 Key Audit lrtatters

For M. A. Farikh & CsCha,rtercd AacourtanE

Date I01*A.ugust, a0lf

rNalin ShahFartner

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4.04. COMPONENT AUDITOR AUDIT OF COMPONENT'SFINANCIAL INFORMATION SUMMARY ilIEMORANDUM

SUMMARY OF GOIT{G CONCERN REVIEW II{C!.UDI]TG CONCU'SION

summarize the going concem review, inctuding any conclusions reached.

STGNIFICANT CHANGES IN THE ENTITY AND ITS ENVIROI{MENT

lil{::.j:_.rgj:lgt .siqce your.lasr period audired and provide a summary ofslgnflcant tterns noted during your discussion with the component auditor engagement

teap .qeqbers regarding the susceptibility of the entitfs financiat statements tomaterial misstatements, including anyfraudlrelated rnatters anO related responses.

ISSUES REIATING TO FRAUD AI{D COMPUANCE WETH I.AWS ANDREGUI-ATIONS

Indicate below any items identified relatirrg to fraud and compliance with laws andregulauons, including your response and any additional proceJures performed.

SUBSEQUENT EVE[{T$

Indicate below the resutts ofyour subsequent evenb review (up to dre date of yourclearance memorandum) and your conclusions regardlng the ;*ect of subsequeptevents, if any, on the Group financial statements.

FOR INCtUSIOtt IN Tt{E cROUp AUDIT

Tho Company- hds been accounting the insurance claims recoverable from the Insuranc€|T:lflTf: -tlil1.J.^31,:|-1,T=

tolg"f tnei oi oeauaiures) upon-n*lng r"asonabty certain ofreceiving tre same as against the staied lir*"u"g-dil/ .# ili"i-trrj o chim receimbte onthe acceptance bythe inrurance co.npany. Howevei, based on p"iir-pii"nce of lhe company,the insurance chims receiveo suudeqdently have not mateiially been diflerent than thos€accounted.

During the coulse of our audit, no faud by the Company nor any material fraud on the Companyby its ofiicers and employees nras noticed 6rrepo-rteoouri,rg tne ylar. We have not been informedby any of sudr casee of the Managrlrnent.

Kindly refer note no. 57 of the Financial statements for the year ended 31st March, 2019

Thgru, y"lg no subsequent events noticed by us during fherourse of our audit whjcfr would havematerialeffec{ on the Financial Statemerlti oitte Oroufi. 'a - -

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SIGNIFIC,ANT MATTERS FOR COIqMUNICATION TO THOSE CHARGED WITHGOVERNANCE AND/OR MA[{Acfr,,rerlr OF THE cROUp

Describe any significant matters that need to be communicated to those chargedwith govemance or to Group *unugur.ni

OTHEK MATTERS OF SIGI{IFICANCE TOTHE GROUF

such maftens may incrude but are not rimited to the fofiowing:

r Fossible restatement for conection of an enor.affecting revenug netincomen or net worth

r Dlsagreemenb or differences in professionarjudgrnent among theengagement team members and/or with others Fom Hre m",ibui firm,

r *whistle-blowed'.letters relating to the reporting package, financial

accounting, or other mafters covered by iur au-dit opinion

r Matterc relating h litigaUon and claims

r Issues relating to the consolidauon/reporting package preparationprocess.

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For M. A. Parikh &CoGhailered Accountants

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Ine srgnlrrcant matters which-are required to be communicated to those charged w1h lhegovemanceand/orManagementoftheorouohavebe"n*r"t Jr,,'*r^^,i,8r,,ri.D^-^J.rr---,-il;;;ip:;ffi lil#i:x',,'il:Hllffi .',difr ,:xy.":ffi ,y$if 15,lf,T,tfi rilrulr,,r;

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per the infonnatiofl tThere was no possible restalement for coneetion of an onor afieciing rcvenue, net in.omeor net worth.

[t911 worq . no disagreements or differences in professional judgmerit among theengagement team members.

TherE was no ryhisue - blorer lettersreported which retated tp package, financial accountingor other matter covered by our Audit Team.There were ho mafters tl1l"F. q litigation and claims other than those disctosqd specificailybywayof Notes to Financial Satem-*nir.There were no issues rerating to consoridatian / report package preparation process,

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A.05 Subsequent Events Review

In arcordance with the Air rg: Ty.p Argn.T*li".s for the veal e$ed March 31, 2019,

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Based on tfie resulb of srrh proceoures, nothirry on"lto ou, ettention Hrai we befiore shor-rldbe repofted to you.

lj}ttffi-.iff intended solelv for the ihformation and use of the Joinr sraturory Audirors of Ap

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l{alin Shah, '

Paftner

Date: 01stAugust, 2019