We have audited the accompanying Indian Accounting Standards (IND AS) financial statements of AFCOM HOLDINGS LIMITED
("the Company"), which comprise the Balance Sheet as at March 31, 2026, and the Statement of Profit and Loss (including
Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year ended on
that date, and notes to the financial statements, including a summary of material accounting policies and other explanatory
information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial
statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true
and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act, ("IND AS") and other
accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026 and its profit, total
comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards on Auditing (“SAs") specified under
section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibility
for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the
Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI") together with the ethical requirements that
are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe
that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the financial
statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have
fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed
to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the
accompanying financial statements.
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Key Audit Matter
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How our audit addressed the Key Audit Matter
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Accounting for aircraft leases under Ind AS 116
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Our audit procedures included, among others:
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The Company has taken aircraft on lease under
arrangements denominated in USD. As at March 31, 2026
the Company carries right-of-use assets of ^30,634.64
Lakhs and lease liabilities of ^33,839.56 Lakhs, and has
recognised depreciation / amortisation of the right-of-
use assets and finance costs on lease liabilities during
the year.
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• Obtaining and reading the aircraft lease agreements and
evaluating management's assessment of the lease term
and the existence of identified assets;
• Evaluating the appropriateness of the incremental borrowing
rate, including benchmarking against external market data
for comparable USD aircraft leases;
• Re-performing, on a sample basis, the computation of right-
of-use assets, lease liabilities, depreciation and finance
costs;
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Key Audit Matter
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How our audit addressed the Key Audit Matter
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The recognition and measurement require significant
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Assessing the accounting treatment of variable lease
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judgement in determining the lease term (including
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payments and other amounts arising under the lease
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extension, purchase and termination options), the
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arrangements, including maintenance reserves and
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incremental borrowing rate for long-duration USD-
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supplementary rent, with reference to the terms and
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denominated leases, and the treatment of variable lease
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conditions of the underlying agreements and the
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payments, maintenance reserves and supplementary
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requirements of Ind AS 116;
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rent, together with the foreign exchange retranslation of
the USD lease liabilities. Accordingly, we considered this
a key audit matter.
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Testing the translation of USD-denominated lease liabilities
at the closing rate and the recognition of the resulting
exchange differences in the Statement of Profit and Loss
under Ind AS 21;
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Assessing the adequacy of the related disclosures in the
financial statements.
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Provision for Aircraft re-delivery (return condition)
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Our audit procedures included, among others:
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The Company carries a provision for aircraft re-delivery /
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Obtaining an understanding of the process and controls
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return condition obligations of ^967.30 Lakhs as at March
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implemented by the Company for identification and
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31, 2026 (previous year ^564.76 lakhs). The measurement
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measurement of aircraft re-delivery / return condition
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of this provision involves significant estimation, including
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obligations;
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expected outflows, escalation, discount rates and the
expected timing of re-delivery, and the assessment of the
treatment of maintenance reserves and supplementary
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Inspecting significant aircraft lease agreements to assess
the contractual return conditions and related obligations
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rent. We considered this matter to be one of most
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Evaluating the assumptions used by management in
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significance in our audit because of the magnitude of the
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estimating the provision, including cost build-up, escalation
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provision and the significant estimation and judgement
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and discounting;
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involved in determining the amount of the obligation.
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Evaluating the Company's assessment of maintenance
reserves and supplementary rent and their impact on the
provision.
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Evaluating the adequacy of disclosures in respect of
provisions and contingencies.
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Capital raising and utilisation of proceeds - preferential
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Our audit procedures included, among others:
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allotment of equity shares and convertible warrants
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Tracing the receipt of funds to bank statements and verifying
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During the year, on December 17, 2025 the Company
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the allotment and warrant subscription records;
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allotted 12,10,390 equity shares of ^10 each and 11,65,000
convertible share warrants on a preferential basis, against
which 25% of the issue price has been received upfront
on the warrants. Securities premium of ^10,326.68 Lakhs
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Verifying the allotment of equity shares and convertible
warrants with reference to the relevant Board and
shareholders' approvals and other supporting records;
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and Share capital of ^ 121.04 Lakhs was recognised on the
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Verifying the utilisation of proceeds against the stated
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equity allotment and ^2,513.98 Lakhs is carried as share
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objects and the supporting documentation;
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warrants pending allotment.
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Evaluating compliance with Sections 42 and 62 of the
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Given the magnitude of the funds raised, the regulatory
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Companies Act 2013 and the applicable SEBI Regulations;
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framework governing preferential issues, and the
monitoring of the utilisation of the proceeds against the
stated objects, this was an area of audit focus.
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Evaluating the adequacy of the related disclosures, including
amounts raised, utilised and unutilised.
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Information other than the financial statements and Auditor’s report thereon
The Company's Board of Directors is responsible for the preparation of other information. The other information comprises
the information included in the Management Discussion and Analysis, Board's Report including annexures to Board's Report
but does not include the financial statements and our auditor's report thereon. The Other information is expected to be made
available to us after the date of our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained during the course of audit, or otherwise appears to be materially
misstated.
When we read the other information included in the above reports, if we conclude that there is material misstatement therein,
we are required to communicate the matter to those charged with governance and determine the actions under the applicable
laws and regulations.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the
preparation of these financial statements that give a true and fair view of the financial position, financial performance including
other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles
generally accepted in India, including the Indian Accounting Standards (“IND AS") specified under section 133 of the Act.
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 preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 financial statements
that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management and Board of Directors are responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout
the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion
on whether the Company has adequate internal financial controls with reference to financial statements in place and the
operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it
probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced.
We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the
results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal financial controls that we identify during
our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit 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 including Other Comprehensive Income, the Cash Flow
Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March 31, 2026 taken on record by the
Board of Directors, none of the directors is disqualified as on March 31, 2026 from being appointed as a director in
terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting with reference to financial
statements of the Company and the operating effectiveness of such controls, refer to our separate Report in
“Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the
Company's internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements
of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the
explanations given to us, the remuneration paid /provided by the Company to its directors during the year is in
accordance with the provisions of section 197 of the Act.
h) 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, as amended 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 financial statements.
ii. The Company do not have any long-term contracts including derivative contracts for which there were any
material foreseeable losses .
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by
the Company.
iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds have been
advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind
of funds) by the company to or in any other persons/entities, including foreign entities (‘Intermediaries'),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or
indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf
of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.
(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been
received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties),
with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, that
the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the representations under
sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. The Company has neither declared nor paid any dividend during the year.
vi. Based on our examination, which included test checks, the Company has used accounting software's for
maintaining its books of account for the financial year ended March 31, 2026 which has a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the
software. Further, during the course of our audit we did not come across any instance of the audit trail feature
being tampered with. The audit trail has been preserved by the Company as per the statutory requirements for
record retention.
2. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India in
terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of
the Order.
For P P N AND COMPANY
Chartered Accountants
ICAI Firm Registration Number: 013623S
Peer Review Certificate Number: 020690
Sd/-
D HITESH
Partner
MRN: 231991
UDIN: 26231991VBDKCU8863
Date: May 28, 2026
Place: Chennai
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