Kannur International Airport Limited Shares

Annual Report Summary

Here's a detailed summary of the Kannur International Airport Limited's 12th Annual Report (2020-21), capturing all significant information as requested.

Overview:

The 12th Annual Report for Kannur International Airport Limited (KIAL) provides a comprehensive overview of the company's performance, financial standing, and key activities for the financial year ended March 31, 2021. The report covers a period marked by the continuing challenges of the COVID-19 pandemic and its impact on air travel and airport operations.

Financial Highlights:

• Revenue from Operations: Decreased from ₹11,589.80 lakhs in the previous year to ₹4,477.06 lakhs, reflecting the significant disruption to air travel.
• Other Income: Increased to ₹550.93 lakhs compared to ₹185.57 lakhs in the previous year.
• Total Income: Reduced to ₹5,027.98 lakhs from ₹11,775.37 lakhs.
• Total Expenses: Remained relatively consistent at ₹22,876.31 lakhs (previous year: ₹22,617.32 lakhs).
• Loss Before Tax: Increased to ₹(17,936.84) lakhs from ₹(10,885.97) lakhs.
• Total Tax Expenses (Benefit): Resulted in an expense of ₹562.84 lakhs compared to a benefit of ₹(1382.11) lakhs in the previous year.
• Loss for the Year: Increased to ₹(18,499.68) lakhs compared to ₹(9,503.86) lakhs in the previous year.
• Total Accumulated Loss: Reached ₹(32,453.69) lakhs.
• Aero Revenue Composition: User Development Fee (UDF) contributed the largest share at ₹1466.91 lakhs, followed by Landing Charges at ₹511.16 lakhs, and Parking Charges at ₹422.67 lakhs.
• Non-Aero Revenue Composition: Space Rentals contributed the most at ₹672.18 lakhs, followed by Revenue share from Concessionaires at ₹380.67 lakhs.
• Expenditure Breakdown: Airport operating expenses were the largest component at ₹4505.73 lakhs, followed by Finance costs at ₹8905.19 lakhs.
• **The company has started generating operational revenue effective from 9/12/2018, which consists of Aero Revenue and Non Aero Revenue.

Management & Governance:

• Board of Directors: The report lists the Board of Directors, including key figures such as Sri. Pinarayi Vijayan (Chairman) and Dr. V. Venu IAS (Managing Director).
• Committees: Details on various committees like CSR Committee, Stakeholder Relationship Committee, Audit Committee, Nomination and Remuneration Committee, HR & Selection Committee, Share Allotment & Transfer Committee, and Strategic Management Committee are provided along with their members.
• Board Meetings: Four Board of Directors meetings were held during the year.
• Independent Directors: Sri. M. Madhavan Nambiar and Smt. K. Parvathy Ammal are the Independent Directors.
• Directors' Responsibility Statement: The directors affirm their responsibility for the preparation of the financial statements in accordance with the Companies Act, 2013, and applicable accounting standards.
• Internal Auditors: M/s Varma & Varma Chartered Accountants, Kannur
• Secretarial Auditor: M/s PMA & Associates, Company Secretaries Kozhikode
• Cost Auditor: M/s Sankara Kumar Associates, Cost Accountants, Thiruvananthapuram

AGM Notice and E-Voting Information:

• The 12th Adjourned Annual General Meeting (AGM) was scheduled for June 6, 2022, to be held through Video Conferencing (VC) / Other Audio Visual Means (OAVM).
• The notice outlines the ordinary business to be transacted at the AGM, including the adoption of the annual accounts.
• Detailed instructions are provided for members regarding e-voting procedures, accessing the AGM through VC/OAVM, and related technical assistance. The e-voting period began on 03 June 2022 and ended on 05 June 2022.

Auditor's Report:

• Deloitte Haskins & Sells LLP issued a qualified opinion on the standalone financial statements, citing concerns about the evaluation and accuracy of cost (including direct costs eligible for capitalization) for recording Property, Plant and Equipment.
• Adverse opinion given regarding Internal Financial Controls over Financial Reporting.

Key Audit Observations & Management Responses:

The report details several key observations from the statutory auditor and the management's responses, including:

• Capitalization of Property, Plant, and Equipment (PPE): The auditor noted a lack of validation regarding completeness and accuracy of cost for PPE. The company had completed Capitalization of Property Plant and Equipment in FY 2018-19 with the help of CA firm which was also reviewed.
• Deferred Tax Assets: The auditor questioned the de-recognition of deferred tax assets. The company said It has not recognized Deferred Tax Assets as a matter of prudence during the current year and previous year Deferred Tax Asset (DTA) has been de-recognised.
• Land on Lease: The 353.98 acres of land given on lease to the Company has not been recognised.

Other Significant Disclosures:

• Frauds Reported by the Auditor: No frauds have been reported by the auditors.
• Related Party Transactions: Details on contracts/arrangements with related parties (BPCL-KIAL Fuel Farm Pvt Ltd).
• Employees and Related Disclosures: There were no employees of the Company who have drawn remuneration in excess of the limits set out under Section 197 (12) of the Companies Act, 2013.
• Risk Management: The Company has adequate system for business risk evaluation and management.
• Corporate Social Responsibility (CSR): The company had spent Rs. 7,86,625/- towards Corporate Social Responsibility during the year under consideration.
• Sexual Harassment Policy: The Company has a policy for prevention of Sexual Harassment at the workplace.

Additional Points:

• The report includes annexures such as Form AOC-1 and MGT-9, providing further details on subsidiaries/associates and shareholding patterns.
• Details of amounts for security deposit related deployment of CISF personnel at the airport and company efforts to recoup the same.
• Disclosure is made relating to an instance where 353.98 acres of land given on lease to the company have not been recognized in these standalone financial statements as the Company is yet to enter into any lease agreement with the Government of Kerala.

Key Actionable Insights and Recommendations (Implied):

• Address internal control deficiencies identified by the auditor, particularly regarding PPE capitalization and revenue recognition processes.
• Continue efforts to negotiate favorable terms for the land lease agreement with the Government of Kerala.
• Closely monitor and manage liquidity to ensure the company can meet its obligations.
• Continue efforts to grow revenue and optimize operations.
• Continue to engage with relevant government bodies (MoCA, NASFT) to resolve pending issues like the PSF recoupment and security deposit refund.

This summary aims to provide a detailed and exhaustive representation of the key information contained within the Kannur International Airport Limited's 2020-21 Annual Report.