“FINANCE ACTIVITIES IN

AIRPORTS
AUTHORITY OF INDIA”

MASTER OF BUSINESS ADMINISTRATION

SEMESTER III

SUBMITTED

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR

THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

BY

SHUBHAM SHARMA

School of Economics Devi Ahilya Vishwavidyalaya Takshashila

Campus, Khandwa Road Indore, 452001 Madhya Pradesh,
INDIA.
 Declaration

I, MR SHUBHAM SHARMA the student of SCHOOL OF ECONOMICS Semester III

(2019-2020) hereby declare that I have completed the internship in “FINANCE
ACTIVITIES IN AIRPORTS AUTHORITY OF INDIA” The information submitted is
true and original to the best of my knowledge.

SIGNATURE OF STUDENT

(SHUBHAM SHARMA)

School of Economics Devi Ahilya Vishwavidyalaya Takshashila

Campus, Khandwa Road Indore, 452001 Madhya Pradesh,
INDIA.

2
 Certificate

Certified that the Internship project in Finance and Accounts, Airports

Authority of India presented by Mr. Shubham Sharma, M.B.A. (Business
Economics), School of Economics, DAVV represents his original work which
was carried out by her at Finance and Accounts Department of DABH AAI
Indore under my guidance and supervision during the period from 20.05.2019 to
03.07.2019.

Name of Guide/Mentor: J.M. PARAB,

Deputy General Manager (Finance),
AIRPORTS AUTHORITY OF INDIA
Western Region, Indore-452005.

Signature of Guide:

Date:

3
 Acknowledgement

I am grateful to DAVV University for giving me an opportunity to showcase

my interest and talent in the form of this internship project. I am also thankful to
the entire management of School of Economics for making all the facilities
available on time.

The success of my internship largely depends on the encouragement and

guidelines of Mr J.M. Parab (Deputy General Manager Finance) and Mr Manoj
Shastri (Manager Finance), my project guide who guided me despite their very
hectic schedule. Without their Support and Guidance this project would not
have been completed.

Also, would like to thank Mr Shiva Palli for giving me timely information
whenever needed.

Hence, I take this opportunity to express my gratitude to thank my Family

Members, Faculty Members & Friend as they have been instrumental in the
successful completion of this project.

Shubham Sharma

4
 Table of Content

Sr. No Name of the Topic Page No

1 Preface 2
2 Introduction to Airports Authority of India 6
3 Vision and Mission 8
4 Functions of Airports Authority of India 10
5 Work culture 12
6 Organisational Structure 13
7 Finance and Accounting department 16
8 Revenue department 19
9 Credit facility 26
10 Monitoring of Sundry Debtors 29
11 Treasury Function 32
12 Investment of Surplus funds 34
13 Expenditure department 36
14 EPF /Gratuity 43
15 Compilation of Accounts 46
16 Finance cell at Security Directorate 48
17 SWOT Analysis 49
18 Recommendation 50
19 Case Study 51
20 Conclusion 53
21 References 54

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CHAPTER 1
Introduction to Airports Authority of India
Airports Authority of India (AAI) came into
existence on 1st April 1995. AAI has been constituted as a statutory
Authority under the Airports Authority of India Act 1994. It has been
created by merging the erstwhile International Airports Authority of
India and National Airports Authority of India with a view to
accelerate the integrated development, expansion and modernisation
of the air traffic services passenger terminal, operational areas and
cargo facilities at the airports in the country.

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 AAI owns and maintains 125 Airports comprising 69
operational airports 25 Civil Enclaves, i.e. civil air terminals at
defence controlled airports where AAI handles civil flight operations
and 31 non-operational airports. In additional, AAI provides Air
Navigation Service (ANS) at all civil airports in the country. AAI
manages the designated Indian air space measuring 2.8 million
square nautical miles which includes land area measuring 1.05
million square nautical miles and oceanic airspace measuring 1.75
million square nautical miles.
Air Navigation Services are also provided by the
AAI at joint venture airports (e.g. Delhi, Mumbai, and Nagpur),
Greenfield airports (e.g. Bengaluru, Shamshabad, Cochin, and
Durgapur), State Government airports (e.g. Lengpui, Diu and Andal)
and private airports (e.g. Mundra, Nanded) as per the terms and
conditions of CNS/ATM agreement agreed between AAI and the
airport operation concerned.

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CHAPTER 2

Vision and Mission of Airports Authority of India

Vision

“To be a world-class organisation providing leadership in air traffic services and airports
management and making a major hub in Asia Pacific Region.”

Mission

“To achieve highest standard of safety and quality in air traffic services and airport
management by providing state-of-the-art infrastructure for total customer satisfaction,
contributing to economic growth and prosperity of the nation.”

The authority has constantly been increasing its investment in upgrading and
modernisation of its airport infrastructure and air navigation services needed for achieving its
Vision and Mission.

AIRPORTS AUTHORITY OF INDIA operates & maintains the

Airport Facilities to be extended to the various airlines’ operators,
which Operates in AAI Airports. ATC and CNS facilities are
extended to the airline operators for all the Airports in India.
It is bifurcated into 18 Departments at Regional Headquarter level:
Air Traffic Control (ATC)
Communication, Navigation and Surveillance (CNS)
Terminal Management
Engineering
HR
Finance
Commercial
Land Management
Legal
Security

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Cargo
Information and Technology
Technical
Fire Safety
Material Management
Airport System
Vigilance
Official Language

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CHAPTER 3
Functions of Airports Authority of India

Control and management of the Indian air space (excluding

special user air space) extending beyond the territorial limits
of the country as accepted by International Civil Aviation
Organisation (ICAO).
Provision of Communication, Navigational and Surveillance
Aids
Expansion and strengthening of operational areas viz.
Runways, Aprons, Taxiways, etc. and provision of ground
based landing and movement control aids for aircrafts and
vehicular traffic in operational area.
Design, development operational and maintenance of
passenger terminals.
Development and management of cargo terminals at
international and domestic airports.

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Provision of passenger facilities and information system in
the passenger terminal.
Provide air safety services, search and rescue facilities in co-
ordination with other agencies.
Establishing schools or institutions or centres for the training
of its employees.
Construct residential building for its employees.
Establish and maintain hotels, restaurant and rest rooms at or
near airports.
Establish warehouse and cargo complexes at the airports for
storage of processing of goods.
Arrange for postal, money exchange, insurance and telephone
facilities for the use of passengers and other persons at the
airports and civil enclaves.
Make appropriate arrangements for watch and ward at the
airports and civil enclaves.
Regulate and control plying of vehicle, entry and exit of
passengers and visitors with due regards to the security and
protocol functions of the government of India.
Develop and provide consultancy, construction or
management services and undertake operations in India and
abroad in relation to airports, air navigation services, ground
aids and safety services or any facilities there at.
Establish and manage heliports airstrips.

11
CHAPTER 4
Work Culture

HRD Training- A large pool of trained and highly skilled manpower is one of the major
assets of Airport Authority of India. Development and Technological enhancements and
consequent refinement of operating standards and procedures, new standards of safety and
security and improvements in management techniques call for continuing training to
update the knowledge and skill of officers and staff. For this purpose AAI has a number of
training establishments, via NIAMAR in Delhi, CATC in Allahabad, Fire Training
Centres at Delhi & Kolkata for in-house training of its engineers, Air Traffic controllers,
Rescue & Fire fighting personnel etc.
Job security – Job security is the probability that an individual will keep his or her jobs a
job with a high level of job security is such that a person with the job would have a small
chance of becoming unemployed.
Rewarding environment – Various reward and recognition programs ensure that
innovation, creativity, leadership and team work is rewarded along with individual
contributions. Fast track growth paths are created for high performers. Parenting,
relationships counselling, child psychology workshops help build a bond with families of
employees
Healthcare and other benefits – With a strong focus on employee’s health and overall
well-being, lifestyle assessment checks, dental/medical/eye check-ups, life-skill
workshops, stress management are undertaken.
Security – The continuing security environment has brought into focus the need for
strengthening security of vital installations. With this in view, a number of steps were
taken including deployment of CISF for airports security, CCTV surveillance system at
sensitive airports, latest and state-of-the-art X-ray baggage inspection systems, premier
security & surveillance systems. Smart cards for access control to vital installations at
airports are being considered to supplement the efforts of security personnel at sensitive
airports.

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CHAPTER 5
Organisational Structure

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Under General Manager there are:
Joint General Manager
Deputy General Manager
Asst. General Manager
Senior Manager
Manager
Asst. Manager
Junior Executive
Senior Superintendent Finance
Supervisor Finance
Senior Assistant Accounts
The Corporate Headquarter for AAI is at New Delhi. There are total
of 6 Regions of AAI. They are:
Northern Region
Southern Region
Eastern Region
Western Region
North Eastern Region
Civil Aviation Training College (CATC)

There are two Major Airports Chennai and Kolkata

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Western Region has its Regional Headquarters in Mumbai.
The different airports under Western Region are:

Ahmedabad
Aurangabad
Mumbai
Juhu
Indore
Nagpur Self Accounting Units
Rajkot
Vadodara
Bhopal
Goa
Pune
Surat

Bhavnagar
Jabalpur
Kandla
Keshod
Kolhapur Non-Self Accounting Units
Porbandar
Bhuj
Jamnagar
Nanded
Gondia

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CHAPTER 6
Finance and Accounting Department

In order to achieve the vision and mission of the Authority, F&A directorate has taken upon
itself certain measurable objectives. Some of the objectives are as under:

Facilitating all departments of the authority with speedy clearance of the proposals
while ensuring financial propriety.
Timely payments to outside agencies that supply goods or render services to AAI.
Timely payment to the statutory authorities.
Proper accounting of invoices raised and realized (Aero and Non-aero charges).
Disbursement of staff related payment as per schedule.
Compilation and monitoring of various MIS reports required by Management, GOI
and other agencies.
Compilation of Annual Accounts
Presenting the Accounts for Audit by Government Auditors(C&AG), Tax Audit and
other statutory Government agencies.

Attainment of Mission as well as the objectives of individual department can be ensured only
when careful planning, speedy accurate recording, monitoring and controlling functions exist
as part of the system. In other words, role of Finance & Accounts department, in particular,
must transform quickly into controllership from mere book keeping. These can happen only
with greater integration of activities with facilities for easy processing of accounting data by
avoiding lengthy procedures and processing time.

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Structure of Finance Department

GM

JT,GM-2
JT,GM-1
EXPENDITU
REVENUE
RE

AGM-1 AGM-2 AGM-3 SM-1 AGM-4 AGM-5 AGM-6 SM-2

MGR MGR MGR AM MGR MGR MGR AM

Jr.
EXECUTIVE(F)/Sr.SUPERVISOR/SUPERVISO
R /ACCOUNTS ASSISTANT

17
Responsibilities of Finance and Accounts

Cash and funds management

Financial scrutiny of proposals/financial concurrence
Formulation of proposal for tariff determination (Aeronautical charges)
Formulation of Annual Revenue and capital Expenditure Budgets
Maintenance of Cash book, Bank book, General ledger and Subsidiary ledgers
Compilation of Annual Accounts
Annual Report for AAI
Introduction of appropriate accounting policies
Compilation of Management Information Systems (MIS)
Debtors Management
Timely remittance of statutory and other deductions
Timely filing of statutory returns as per Income Tax, Sales Tax, Service Tax,
Service Tax, Foreign trade policy etc.
Corporate Taxation & statutory levies
Administration of CPF/Gratuity trusts/Pension
Safe custody of financial instruments and timely actions for deposits and
encashment etc.
Monitoring of Joint Venture Companies
Internal Auditing

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CHAPTER 7

REVENUE

STRUCTURE

REVENUE

NON TRAFFIC REVENUE

TRAFFIC REVENUE
NON-AERONAUTICAL
AERONAUTICAL SERVICES
SERVICES COMMERCIAL REVENUE

LAND
LANDING & RENT & SERVICE PORTRAGE SHOPS
PSF/UDF/WATCH HRS
PARKING/RNFC/TNLC/OVE SNACK BARS & RESTAURANT TELEPHONE/WIFI/ADVERTISIN
R FLYING X-RAY BAGGAGE COUNTER SPACE G AND HORDING
CAR PARK

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Responsibilities of Revenue Department

Creation of Bill to various Airlines & Concessioner in respect of Airport Services &
Commercial Contract.
Transfer of Bill in respect of Foreign Airlines i.e. Landing & Overflying to IATA
Collection of Sundry Debtors
Bank Reconciliation.
Providing Credit Facilities to Aircraft Operator
Preparation of Revenue Budget
Reply of Audit Reports & Observation.
Provision of Bad Debts etc.

Main sources of revenue

Sources of revenue that accrue to AAI can be classified into three categories that are as
following

1. Traffic Revenue
2. Non Traffic Revenue
3. Cargo Revenue
4. Airport Leasing Revenue

1. Traffic Revenue comprises of the following

I. Route Navigation Facilities Charges-This is charged for navigating the

aircraft to its destination from the departed airport. Route navigation is also
provided to all overflying aircraft in the Indian airspace. Basically, the
charges are charged on weight (All Up Weight) of the aircraft and the
distance flown. ATC Radar Controllers provide route navigation.
II. Route Navigation Facility Charges (RNFC)
III. a) RNFC for Landing Flights:
IV. RNFC = Rs.( R x D x W )
V. R = Rs.4620/-
VI. D = √ (GCD/100) with GCD cap as 1200 NM

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 VII. W = √ (AUW/50000) with AUW cap as 2,00,000
Kilograms
VIII. Abbreviations used:
IX. R=Service Unit Rate
X. D=Distance Factor
XI. W=Weight Factor
XII. GCD= Great Circle Distance in NM
XIII. AUW = All Up Weight of aircraft in Kilograms
XIV. b) RNFC for Overflying = Rs.( R x D x W ) + Rs.
4,400/-
XV. c) RNFC for Small Aircrafts registered in India:
XVI. Route Navigation Facility Charges (RNFC) in
respect of aircrafts with maximum All-Up Weight: -
XVII. (a) Up to 10,000 Kg’s Shall be levied @ 20% of
the applicable rates of weight–cum–distance
formula; and
XVIII. (b) More than 10,000 Kg’s to 20,000 Kg’s shall be
levied @ 40% of the applicable rates of
XIX. weight-cum-distance formula

II. Terminal Navigation Landing Charges- This is charged for guiding the
aircraft up to the point of touch down. TNLC is applicable at International
airports and civil enclaves. Airports which are owned by Defence are
categorised as civil enclaves. Generally, ATC Tower controller provides
terminal navigation of the aircraft.
XX. a) Major International Airports including
Goa International Airport (Civil Enclave)
XXI. Weight of Aircraft For each landing /
Domestic flight /
XXII. International flights Amount in Rs.
XXIII. Below 10,000 kg’s. 1087.90
XXIV. 10,000 kg’s and above 6546.10

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 XXV. b) Civil enclaves (other than Goa
International Airport)
XXVI. (i) International Flights
Weight of Aircraft Amount in Rs
Up to 10,000 kg’s Rs. 15.40 per 1,000 kg’s
10,001 kg’s to 20,000 Rs. 154/- Plus Rs. 23.10 per 1,000 kg’s in excess of
kg’s 10,000 kg’s.
20,001 kg’s to 50,000 Rs. 385/- Plus Rs. 46.20/-per 1,000 kg’s in excess of
kg’s 20,000 kg’s
50,001 kg’s to Rs. 1,771 Plus Rs.55/- per 1,000 kg’s in excess of
1,00,000 kg’s 50,000 kg’s
Over 1,00,000 kg’s Rs. 4,521/- Plus Rs. 61.60 per 1,000 kg’s in excess of
1,00,000 kg’s

III. Landing charges- This is charged from the point of touchdown to its
ultimate parking in the bay. Apron control guides the aircraft from the
point of touch down to its ultimate parking in the bay.
IV. Parking charges- This is charged for permitting the aircraft to be
parked and a half hour in the aprons.
V. Housing charges- This is charged for permitting the aircraft to be
parked inside the hanger owned by AAI.
VI. Passenger service fees- this is charged for the facilities provided in the
terminal as well as for the security arrangements at the airports. The
same is collected from all embarking passengers at specified rate from
time to time. Bills for PSF are to be raised based on the passenger
manifest submitted by the Airlines.
VII. User development fee- UDF is charged to cover any deficit in revenues
so as to ensure fair return on investment. Bills for UDF are to be raised
based on the passenger manifest submitted by the Airlines.

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2. Non-Traffic Revenue compromises of the following:
I. Trading concessions
II. Rent & Services
III. Car parking
IV. Other commercial services
V. Cargo operations
VI. Miscellaneous services

I. Trading concessions- Space management on account of various services

to the passenger in the terminal is categorised as a Trading Concession.
Various parties are allowed to do business within the terminal building to
cater to the needs of a passenger at the airport. Passenger may need
Restaurants, hotels, snack bars, travellers, Requisite stall (TR Stalls), duty
free shops, etc.

II. Rent and services- Different agencies like airlines, concessionaires utilize
the land, hangars, building and other facilities allotted by the Authority on
Long/Short Term agreement. These agencies are charged rental for the
land/space allotted to them.

III. Car parking- This is the charge for parking vehicles at the airports in the
space specially created. This facility is also outsourced to a licence on
basis of competitive bidding through open tender.

IV. Other commercial services- Various facilities to the passengers like

Ground Handling, Advertisement rights, Lounges etc. are being created at
the terminal. These facilities are being rented out to
concessionaires/airlines. AAI charges licence fee and royalties from the
licensee.
AAI also throughput charges from the oil companies for supply of
fuel to the airlines at the airport premises. The land is allotted normally to
the oil companies for carrying out fuel supply to the aircrafts. In addition,

23
 AAI charges utility charges (Electricity & Water) provided to the various
agencies operating at the Airports.

V. Cargo facilities- AAI is performing the following functions at Cargo

terminal managed by it in the country.
 Custodian of international cargo on behalf of customs.
 Grounds Handling Agents for airlines related functions on behalf
of the airlines.
 Facilitator to the International trade by creating/providing various
ancillary facilities at cargo Terminal.

VI. Miscellaneous services- major sources of revenue under this head are:
Left luggage
Retiring room
Trolley retrievals contracts
Interest on staff advance
Sale on tender
Extension of Service hours- In airports not having 24 hours watch
open i.e. generally ATC watch hours are kept at the specified
duration. In case, any operator wants to utilise the airport beyond
the watch hours are kept at the specified duration. In case, any
operator wants to utilise the airport, they are charged “Extension of
service hour charges” for keeping the airport open during the
operation beyond its normal watch hours. Charges for extension of
services houses (Airports/ATC) are categorised into a) instrument
landing system operating stations (ILS Station) and b) Non-ILS
operating stations (Non-ILS station). The charges are payable as
per tariff approved by AAI from time to time.

3. Cargo Revenue

Cargo revenue towards custodian related functions is being generated on accounts of

services provided to the concessionaires/Importers/Shippers their agents for handling
International Cargo including the cargo which requires special handling.

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The charges are levied on the consignee/importers on the following basis as per the schedule
of charges.

a) Chargeable/volume wt. In Kg whichever is higher.

b) Nature of cargo/commodity
c) Demurrage charges, if cargo remains in the custody of AAI beyond the free period.
Cargo revenue is also generated by creating ancillary facilities in the Terminal viz.
providing of space for airlines and customs, regulatory and facilitating agencies,
dedicated parking space for incoming and outgoing transporting vehicles, provision of
cafeteria and public amenities/services etc.

4. Revenue from leasing of Airports

In term of the OMDA (Operations, Management and Development Agreement)
entered with Joint venture Companies at Delhi and Mumbai Airports, AAI receives
revenue share from these JV companies every month.

Traffic Revenue Billing Cycle

1. Bills are raised for each and every landing of the aircraft. In respect of
an international flight, the distance is to be considered up to the exit
point of Indian airspace on its return.
2. In case of overflying, the bills are raised by the Region in which
aircraft enters Indian airspace the first for the entire distance flown up
to the exit point of Indian airspace.
3. Bills are raised on fortnightly basis for all operations who have credit
facility
4. Other operators who do not have credit facilities have to pay for the
services immediately before their take off.
5. Data for raising RNFC overflying by IATA to be provided by region.

6. All cash bills have to be raised on completion of the operation. The

operator will not be allowed take off unless the charges are paid. This
will be ensured by ATC tower controller/Briefing officer.

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CHAPTER 8

Credit Facility

Operations can avail credit facilities on submission of a security deposit as provided

in the AAI credit policy. Approved credit policy of AAI is enclosed as Annexure
Grant of credit facility
1. In case the Airlines operate at more than one region the grants of credit facility
will be done at CHQ.
2. CHQ to intimate the region the level of operation considered for Grant of
credit facility at each station along with security deposit amount for proper
monitoring whenever the operations of the airlines are getting increased at the
station/Regional level, the same needs to be intimated to CHQ by the Region
to take up the airlines for enhancement of security deposit.
3. In case the airlines operate within the region, the grant of credit facility will be
done at Region.
4. Region to intimate the Airports the level of operation considered for grant of
credit facility at each station along with security deposit amount for proper
monitoring. Whenever, the operations of the airlines are getting increased at

26
 the station/airport level the same needs to be intimated to Region for taking up
with the airlines for enhancement of Security deposits.

Non-Traffic Billing

All non-traffic bills are to be raised by the concerned Directorate (Land/commercial)

as per contract.
A copy of the bills to be forwarded to Department of finance for revenue accounting
and debtors’ management.

Invoicing for Airport Charges (Traffic revenue)

1. Scheduled/Non-scheduled Airlines (with credit facility)

a) Bills to raise on fortnightly basis
b) In case of withdrawal of credit facility on account of default in
payments, the Airline shall be allowed to operate flight on “cash and
carry basis.
2. Non-scheduled Airlines/operators (without credit facility)
Collection of Airport charges in cash by respective Airport (briefing
office) against CA-12 form
3. Non- scheduled operators (without credit facility) but provides advance
payments
a) Bills are to be raised fortnightly for adjustment against advance
payment
b) Briefing office at the Airport shall maintain record of Airport charges
against the advance payment.
c) Accounting unit shall collect the details of flight operation from
briefing for invoicing and adjustment against advance payment
d) Accounting unit shall issue the statement of account on monthly basis
to the operator for confirmation/intimation of balance
4. Ensure E-filling on “AIMS” programme being monitored by IT department of
CHQ.
5. The details of Aircraft Movement to be provided by ATM/Operations
Department.

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 6. The data for parking charges to be provided by operations directorate
7. PSU/UDF-passenger manifest data to be provided by Airlines
8. Tariff : The tariff to be charged are as per approved schedule of
9. charges from time to time
10. Use of AIMS billing package.
a) All stations to ensure that all bills (aero /non-aero) are raised only
through the bills package of AIMS.
b) No manual bill to be raised.

Invoicing for Non-traffic Revenue

The contract for allotment of space/and lease of land are awarded by Directorate of
Commercial/Land management /Cargo department.

1. Bills for licence fee are to be raised concerned directorate (Commercial/Land

department etc. as the case may be) as per terms and conditions of contract
agreement.
2. The bills for royalty/GTO shall be raised by the concerned directorate based on
terms of contract.
3. In case of expiry of contracts, but the licensee not vacation the space/land allotted,
the bills for “damages” for the “unauthorised” occupation needs to be raised by
the concerned directorate in consultation law department or as per the guidelines
issued by the CHQ on the subject from time to time.
4. Ensure e-billing on “AIMS” programme monitoring by IT directorate/CHQ.
5. Annual escalation in licence fee to be made effective as per agreement.
6. Concerned directorate shall forward a copy of the bills raised to directorate of
finance for Revenue Accounting and debtor’s management.

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CHAPTER 9

Monitoring of Sundry Debtors

Dues on account of traffic revenue (from Airlines/operators

scheduled/ Non-scheduled)

Finance officers at Airports/RHQ are required to ensure that:

1. Bills for Airport charges are raised and presented to the Airlines for payment
in time as per policy guidelines.
2. Airlines who have been granted credit facility by the CHQ level/Airport
directors /RED’s at regional level, are making payment of bills due dates.
3. Adequate security deposits is available with AAI for securing dues during
credit period.
4. Airlines having all India operations have been granted credit facility by
AAI/CHQ and the share of security deposit have been allocated to Airport
Region.
5. Airlines not having credit facility are on cash and carry basis only
6. Airlines not making payment of bills by due dates are required to be issued
with notices for payments and in case of continued default, the credit facility
already granted needs to be reviewed as per credit policy.
7. Dues are not to be allowed to accumulate beyond the security deposit at any
point of time.

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 8. Advances action is initiated to en-cash the bank guarantee as well withdrawal
of credit facility in case of habitual defaulting Airline/operators.
9. Bank guarantee shall not be allowed to expire. The advance action for its
renewal to be ensured.
10. Remedial action in case of defaulting airlines: Timely remedial action needs
to be initiated by concerned office so that AAI revenue is realised in time.

Dues on Account of Non-Traffic Revenue

For contract awarded by Commercial/Land Management Department /Concerned

Directorate)

The Finance officer at Airport/RHQ are to ensure that:

1. Accounting of bills raised by concerned directorate in time

2. The regular follow-up for payment of bills
3. In case of default in payment, the report is to be sent to Commercial/Land
Management Department/APD/RED as the case may be, for initiation of action in
terms of agreement,
4. Dues should not exceed the security deposits deposit at any point of time. However
delayed payments would attract penal interest even though they are within Security
Deposit level.

30
5. Advice concerned directorate to raise interest claims as per agreement in case the dues
are not settled in time. Accounting of interest will be on receipt basis.
6. Contract monitoring is the responsibility of Directorate of Commercial/Land
Management/Concerned Department which execute the agreement. Finance officials
are required to submit periodical report on default in payment to the concerned
directorate for taking action in terms of agreement, for recovery of dues.

31
CHAPTER 10

Treasury Function

Fund management is an important function to be discharged by the

Directorate of finance. The function is directly monitored by CHQ to ensure that funds are
promptly transmitted to CHQ at the end of the day to ensure that the funds are available to
ensure optimum utilisation.

Member (F) is the competent authority for opening of bank accounts.

Airports/Regions to ensure that accounts are opening/closing only with the approval of
Member (F).

Management of Collection of Funds:

1. Proper receipts of all cheques/DDs/cash/foreign currency/RTGS etc should be issued.

2. No withdrawals are permitted from collection account under any circumstances.
3. All money and money’s worth collected (like cheques/DDs etc) received on behalf of
AAI should be deposited in authorised account of AAI on the same day and remitted
to CHQ as per the direction issued in this regard.
4. Ensure that banks give credit to AAI on time.
5. Ensure that the funds are remitted to the notified account of the notified account of
AAI on the same the day without fail. Otherwise the matter should be promptly taken
up with bank.

32
6. Ensure that in case if there is any dishonour of cheques any party/airlines it should be
immediately taken up with the concerned directorate/party/airlines. It may be ensured
that prompt action is taken for recovery of dishonoured cheques from the concerned
party/airlines or initiate action as per the provision of Negotiable Instrument Act,
1881.
7. Remittances in transit between units and headquarters have to be monitored
meticulously.
8. Bank account should be reconciled with the bank book at regular intervals
discrepancy if any has to be taken up with the concerned bank for collection if any.

33
CHAPTER 11

Investment of Surplus Funds

In terms of Chapter V section 23(3) OF AAI Act,1994, all moneys standing at the credit
of the Authority which cannot be immediately applied as provided in sub-section (2) shall be:

a) Deposited in the SBI or any such Scheduled bank or banks or other public financial
institution subject to such conditions as may, from time to time, be specified by the
Central Government and
b) Invested in the securities of the Central Government or in such manner as may be
prescribed

Manner of Investment of Funds

The manner of investment of funds has been specified in the AAI (Manner of Investment of
funds) Rules, 2002 according to which the Authority may invest its funds (including any
reserve fund)

a. In the securities of the Central Government or

b. In fixed deposits with-
I. The state bank of India constituted under the State bank of India Act
1955 (23 of 1955) or

34
 II. Any subsidiary bank constituted under the state Bank of India Act,
1959 (38 of 1959). Or
III. Any corresponding new bank specified in column 2 of the First
Schedule to the Banking Companies (Acquisition and transfer of
undertakings) Act, 1970 (5 of 1970) and column 2 of the First
Schedule to the Banking Companies (Acquisition and Transfer of
Undertakings) Act 1980 (40 of 1980) or
IV. Any bank as specified in Schedule II of the Reserve Bank of India
Act, 1934(2 of 1934) or
V. Any other public financial institution (as defined in clause 4-A of the
companies Act 1956),
Subject to such conditions as May, from time to time, be specified by
the Central Government.

35
CHAPTER 12

Expenditure

Pay, allowance & other staff cost

The payments relating to salary, wages and other allowances etc. to employees is to be in
compliances with the provisions of the relevant rules on entitlement, ceiling and pre-
requisites for the payment and also adherence to provisions of DOP and any other
instructions in this connection.

Records to be maintained

i. Pay bill Register

ii. Staff advances Register
iii. Last pay Certificates-for transfer in/out in the prescribe format.
iv. Sanction copy of House building loan, car, scooter and computer Advance.
v. TA/DA Register
vi. Leaves records sanction bundle received from HR department.

Salary Register/Individual Salary Record

i. The salary register/individual salary record (pay bill register) is to be

properly maintained and updated regularly and authenticated.
ii. Registers/records are to be in safe custody.

36
Pay Roll-General

i. Ensure every elements of payroll shall find a place in the ledger account.
ii. Additional/delegation/changes in payroll should be supported with approval
authorised person.
iii. To ensure that no payments are made for unauthorised absence
iv. Release the increment/DA as and when due based on the communication received
from HR directorate
v. No payment of HRA is to be made where employee/spouse is provided with leased
accommodation/Government Quarter
vi. Subsistence allowance are paid to employees under suspension as per order received
from HR Directorate in this regard.
vii. Honorarium paid as per the order received in this respect.
viii. To ensure recoveries are made on account of house rent, electricity water and other
charges based on occupation report, electricity consumption statement etc. Received
from Engineering Department/Administration Department
ix. To ensure recoveries are made on account of tour/transport, trunk call, hospital and
diet charges in case of inpatient treatment as per advices.
x. For leased accommodation provided to employees ensure the amount is paid as
provided in the agreement
xi. Ensure that the statutory deduction such as provident fund, FPF and income tax etc.
are made.
xii. To issue form 16 issue to all the employees
xiii. Make recoveries towards advances paid to employees in accordance with the schedule
/procedure prescribed.
xiv. To ensure remittance of statutory recoveries is made in time.

xv. To make payment to the gratuity fund.

xvi. As far as possible all payments including salary to employees may be released
directly thoroughly their Bank Account. In case of bank transfer, a cheque/RTGS in
favour of the bank, for the entire amount will be made. A list showing the details of
Name of employee, Employee No. ,designation, Bank account number of the
employees and the amount to be transferred will be sent to the bank one day in

37
 advance to the date of disbursement of pay along with data in electronics form for
speedy transfer on due date.
In the cases where pay is disbursed by cheque payment, separate cheques will be
drawn in favour of the employee. If for any reason cheques are made out more than
one day in advance, an endorsement “payable on or after.........” will be made and the
due date for payment shall be specified therein. Cheques are handed over to the
employees through cheque handing Over Register and stamped acknowledgement
should be obtained from the employees on the Register.

Overtime payment Checklist:

i. Check Overtime (OT) with reference to sanction from competent authority.
ii. Verify correctness of OT rates and amount.
iii. Cross check claims with duty roster certified by the concerned officer in
charges.
iv. Check correctness of OT hours of duty performed during long off, weekly off,
restricted holiday, night weight-age etc.
v. Check that the ceiling on OT, night weight-age etc., have not been exceeded

There are two types of Payments:

1) Regular: E.g. Salaries
Regular Salary Slips Contains Earnings and Deduction as
follows:

Earnings Deduction
Basic Pay Provident Fund Contribution
Dearness Allowances Profession Tax
Family Planning Income Tax
HRA GSLIS Contribution
Medical Allowance B Fund Emp. Contribution
Med Out Chronic SOCI NAD Mumbai (Staff
Society)
Honorarium
Stress Allowance
Perks Consolidated
Rating Allowance

38
 2) Non-Regular:
E.g.
a) Leave Encashment
b) Loan Payment
c) Overtime
d) Night Shift Allowance
e) Out of Pocket Expenses only for Executives

Non-Regular Salary Slips Contains Earnings and Deduction

as Follows:

Earnings Deduction
EL Encashment Income Tax
Overtime
Loan Payment
Night Shift Allowance
Out of Pocket Expenses

Travelling Allowance (TA) Advance:

i. The journey is authorised by competent authority.

ii. Amount of advance is correctly calculated within the prescribed limit and as per
entitlement.
iii. Review advances/claim for transfer TA.
iv. Travelling allowance advances may be adjusted within prescribed time limits.

Passing of Travelling allowance Claim:

i. Tour adheres to approved programme; claims are preferred in the prescribed

formats.
ii. Claims towards fare is supported by ticket number/ticket counterfoil and the
class of travel is in accordance with entitlement.
iii. That payment of fare for train/air/bus journey is to be made by shortest
route/approved tour programme.
iv. Lodging and boarding is in accordance with the TA rules in force.

39
 v. Advance drawn from other offices must be indicated in the TA bill and
adjusted.
vi. In case of delay in submission of claims, interest may be charged as per the
policy in vogue.
vii. Claims are to be recovered in the register maintained for this purpose.
viii. There should not be any delays in payment of claims
ix. TA advance ledgers are to be reconciled with the trial balance preferably on
quarterly basis and schedules drawn accordingly.

Foreign tour TA Claims:

i. Foreign tour must be approved by the competent authority and release of foreign
exchange should be with the approval of Member (F).
ii. For stay exceeding 30 days DA (Food Allowance) is allowed at 75% of the admissible
rate. In case of payment of consolidated rate expenditure for hotel charges,
conveyance charges and communicated expenditure is not to be reimbursed
separately.
iii. In case of partial and full hospitality reduction in DA has to be made as per rules
depending upon the quantum of hospitality. In case of hotel charges include breakfast,
the DA has to be reduced by 10%.
iv. To pay DA/consolidated DA correctly based on country to be visited and a per the
entitlement of the official concerned.
v. For domestic portion of travelling, if required to reimburse has to be made based on
entitlement as per domestic tour.
vi. Transit expenditure has to be reimbursed correctly as per ceiling supported by self-
certification.
vii. Foreign tour to be accounted at CHQ/Region as per instructions issued on the subject
matter. It may be ensured that expenditure on Visa Fee, Medical insurance etc. Is also
considered while processing bills of foreign tour.
viii. Transit expenditure has to be reimbursed correctly as per ceiling supported by self-
certification.
ix. Foreign tours to be accounted at CHQ/Region as per instructed issued on the subject
matter. It may be ensured that expenditure on Visa fee, Medical insurance etc. Is also
considered while processing bills of foreign tour.

40
 Perks Allowance and Medical allowance:

i. Option for payment of Perks and Allowance is to be submitted by the employees

within stipulated time as per instructions issued by HR Department. If no option is
exercised by the due date the perks and allowances under cafeteria approach are to be
paid on a lump sum basis.
ii. Ensure reimbursement of chronic diseases is certified by AAI Medical Officer. At
airports where AAI Medical Officer is not available, chronic diseases are based on
recommendation of the concerned Doctor.

Medical payments to retired employees:

The payment to retired employees towards medical may be regulated as per instructions
issued by CHQ from time to time.

Loans and Advances:

i. The loans /advances to be released in accordance with the sanction orders received
from HR directorate.
ii. Payments to be recorded in the concerned registers of advances
iii. Recoveries to be affected promptly and correctly as per sanction order
iv. Interest is to be calculated and recovered
v. In the case of loans for house building, loans to be released as per the terms and
conditions order issued by the HR Directorate and the loans to be recovered
accordingly.
vi. Ensure recovery of HBA insurance at the prescribed rates at the time of release of
payment/each instalment.

Encashment of EL:

i. Leave encashment amount to be released in accordance to the sanction order issued

by the competent Authority/HR department.
ii. Income tax applicable is to be recovered from the amount of encashment.

41
 Payments of Ex-gratia, PRP etc.:

i. The payment of rent is to be made every month as per entitlement and agreement.
ii. Payment are not to be made for periods the employee is not on the rolls of the Airport
and / or after vacation of residence by the employee.
iii. Lease rent paid in excess of entitlement as per sanction order issued is to be recovered
along with the standard rent.
iv. Amount paid as brokerage is to be restricted to half the month’s rent as per the
entitlement and excess if borne by the employee.
v. Security deposit is to be adjusted/deducted before the employees vacates the
accommodation.

Final Payments

i. Payment for final settlement of dues to ex-employees are to be made in time.

ii. Final settlements are to be made at after obtaining “No Demand” certificates
from the concerned departments.

Subsidiary records-

For various advances and other payments

i. Registers are to be properly maintained.

ii. All debits and credits have to be correctly posted.
iii. Reconciliation with the general ledger is to be done regularly preferably every month.

42
CHAPTER 13

EPF Trust /Gratuity Trust

Under employees Contributory Provident Fund Rules, the authority shall pay all
expenses incurred by the trustees. The Secretary of the Trust is responsible for
maintaining the accounts. These two rules read together imply that the company on
behalf of the Trust maintains the accounts. Practicing Chartered Accountant are
appointed as Auditors for audit of the Provident Fund (PF) accounts.

A. Functions:
i. Deposit of PF contribution with the trust
ii. Deposit of pension contribution with RPFC
iii. Investment of PF monies
iv. Realisation of interest on investments
v. Realisation of investment on maturity
vi. Advances to members
vii. Part-final withdrawal
viii. Final settlement of member’s dues

B. Records to be maintained:
i. Monthly contribution statement
ii. Investment Register
iii. Guidelines of RPFC for investment of funds
iv. Inspection reports of RPFC and replies thereof
v. Member’s ledger
vi. Nomination by members
vii. Documents in support of loan to member
viii. List of parties empanelled for calling offers for investments

C. Provident Fund
General:

43
 i. Maintain all registers/records as required under Employees Provident
Fund Rules.
ii. Timely deposits of Subscription recovered from the employees with
the CPF(Contributory Provident Fund) trust
iii. AAI’s contribution is correctly worked out after deduction deposit
towards Employee Pension Scheme with the appropriate authority
iv. Postings in individual member’s accounts.
v. Interest calculations.
vi. Preparation and distribution of Statement of account to members.
vii. Regular updating of payments and receipts in bankbook
viii. Preparation of monthly bank reconciliation statement.
ix. Investments out of the total collections as per the ratio prescribed.
x. Investing trust funds without delay to avoid loss of interest.
xi. Empanelment of firms/arrangers dealing in securities eligible for
investment by PF and updating of the same at regular intervals.
xii. Adhere to the norms while inviting quotation for investment.
xiii. Ensure the following:
a) Investments are made in approved securities
b) Deliveries for the purchase of investments are obtained
immediately
c) Investments are en-cashed immediately on maturity and
discharged securities are sent to issuers in time before maturity
to avoid delay.
d) Investments are lodged in safe custody
e) Interest due are realised on due dates
f) Investment are kept in DE mat form.
g) Update entries in the investments register.
xiv. Securities are to be physically verified (in case securities are in
physical form) and for securities lying with the bankers a detailed
certificate is to be obtained.
xv. Collect the nomination details of members in the prescribed forms,
and check the nominations through HR directorate and keep in safe
custody after due note in the register of nominations. If nominations

44
 are revoked, appropriate note is to be made in the relevant records for
cancelling old nominations.
xvi. Refundable loans are granted as per rules and prompt recovery of
instalments is to be ensured. Interest on loans is recovered as per rules.
xvii. Non-refundable loan/part final withdrawal is to be given only for the
approved purpose, necessary documents are too be obtained and
conditions are satisfied before sanction. A certificate or declaration
supported by proof of utilisation of money for the declared purpose is
obtained and failure action is taken as per rules.
xviii. Before preparation of final payments, it may be ensured that all
withdrawals are accounted for.
xix. At the time of final withdrawal ensure final settlement is in order and
ensure the employees dues, if any are recovered.
xx. For employees joining other organisation accumulations are to be
transferred to another organisation.
xxi. Income and expenditure account and balance sheet are to be drawn.
xxii. Compliance /implementation of the decision taken by the Board of
trustee’s action from time to time.
xxiii. Returns are to be correctly submitted to the Inspector/Commissioner
of provident funds.
xxiv. Review reports of external auditors and see that necessary action is
taken on observation made in the report.

D. Reconciliation of accounts AAI

i. Inter unit account with of AAI with PF trust are to be reconciled with AAI
periodically.
ii. There should not be pending old dues against/of trust.

45
CHAPTER 14

Compilation of accounts

Compilation of Accounts Section plays an important role in compiling the Accounts of the
Authority annually and presenting it to the board.

The government of India in consultation with the comptroller and Auditor General of India
(C&AG) has prescribed the rules for preparation of Annual by AAI. These rules are called
the Airports Authority of India (Annual Reports and Annual Statement of Accounts) rules
2008.

The rules stipulate that

 The Authority shall prepare its Annual Statement of Accounts including the profit and
loss accounts and balance sheet showing the financial result by 30th June each year
and submit the same duly authenticated by the authorised signatory and duly passed
by the Authority, to the Comptroller and Auditor General of India (C&AG) not later
than 31st July every year.
Provide that the Central Government may, for reason to be recorded in writing and in
consultation with the comptroller and Auditor general of India, extend the date of
submission of the Annual Statement of Accounts by such period as it may consider
necessary.
 After certification of the Annual Statement of Accounts by the Comptroller and
Auditor General of India or any other person authorised by him in this behalf, the
Annual Statement of Accounts together with the Audit report thereon shall be
forwarded annually to the Central Government within a period of three months from
the date of submission of the Annual Statement of Accounts of the Comptrollers and
Auditor General of India.
 Submission of Annual Report- The Authority shall prepare the Annual Report as soon
as may be after the end of each financial year giving an account of its activities during
that financial year and also giving an account of the activities which are likely to be
undertaken by the authority during the next financial year and forward it to the
Central Government before 1st December: provided that the central government may,

46
for reason to be recorded in writing, extend the date of submission of Annual Report
by such period, as it may consider necessary on request from the Authority in this
behalf.
A. Records to be maintained
1. Payment, receipt and journal vouchers
2. General ledgers
3. Trial balance
4. Schedules to accounts
5. Details of contingent liability
6. Fixed Assets Register
7. Creation/Deletion of Account code record (CHQ
Level).
B. General
I. Vouchers: After receipt of Payment and receipt vouchers from
payment section and cash section check the following
i. All the payment and receipt vouchers, journal
vouchers are serially numbered properly
authorized by the designated/competent
authority and incorporated in trial balance for
the respective month.
ii. Check the vouchers including JVs prepared by
the various sections with reference to the
supporting documents narration and link them
with entries in the journal and ledger.

II. Trial balance and ledger: Review the following

a) Irregular balance are not appearing under any head of

account and take action to rectify such balances.
b) Reviews the trial balance regularly for rectification of
operation of wrong code heads and misclassification by
different sections.
c) Ensure trial balance contains all liabilities pertaining to the
period.

47
CHAPTER 15

Finance cell at Security Directorate

The passenger service fee (Security component) is being collected by AAI in the fiduciary
capacity of the Government to meet the security related expenditure for providing security at
the airports. In order to have a proper control over collection and expenditure it was decided
to create a separate cost centre. Accordingly, finance cell is created and attached to security
directorate. In order to facilitate smooth functioning of the cell a standard operating
procedure has been devised which is underlined below

Standard operating procedures

a) The officials posted at finance cell are placed under Administrative Control of
Director (Security) and Functional control of ED (F&A), CHQ.
b) The Head of the Finance Cell shall be responsible for carrying out all the finance
function in respect of security Directorate except Salary & Allowances.
c) The cell shall be responsible for maintaining Bank accounts for PSF (Security
Component) as per Guidelines issued by MoCA/AAI from time to time.
d) The expenditure proposals (both Capital & Revenue in nature) shall be processed by
the cell for record of financial concurrence by the competent authority as per DOP.
However, the cases where financial concurrence is required to be accorded by the
higher authority than the officer posted at cell as per DOP shall only be referred to
CHQ Finance Directorate along with local concurrence.
e) The cell shall prepare revenue and Capital Expenditure budget in respect of security
and submit the same to CHQ finance Directorate for consolidation.
f) The cell shall Co-ordinate with various Regions/Airports/units of AAI for release of
payment to CISF are other security agencies as per agreements/MOU etc. For the
services rendered by them.
g) Cell shall be responsible for compilation of all MIS PSF collection Expenditure
incurred, etc relating to finance in respect of security Directorate.
h) The cell shall monitor the revenue and expenditure in respect of PSF with reference to
budget provision.

48
CHAPTER 16

SWOT ANALYSIS

Strength

• Large land holdings

• Network of airports across the country

• Expertise in providing air navigation services

• Consistent profitability and strong financial resources

• Experienced manpower

Weakness

• Low share of non-aeronautical revenue

• Stagnant growth of cargo business

• Manpower shortage and training

• Limited focus on MIS

• Limited focus on Marketing

Threat

• Reliance on revenue beyond the control of AAI

• Obligation to implement RCS

• Competition from other airport developers

• Stricter environment and safety norms

49
Opportunities

• Enhancing non-aeronautical services at passenger terminals

• Expanding the cargo business

• Monetizing land assets

• Adoption of state-of-art technology

• Marketing initiatives to improve engagement with customers

• International opportunities for consulting and other services

RECOMMENDATION

The environment in which AAI operates is dynamic and changing and hence the Corporate
Plan should be able to respond to changes in the environment. The Corporate Plan should act
as a compass and not as an inflexible blueprint for action. To meet this objective, the
monitoring and review exercise is critical for AAI.

50
CASE STUDY

The Competent Authority is hereby pleased to M/s Lite Bite Foods Pvt.Ltd. a non-exclusive
Concession to Develop, Market, Setup, Operate, Maintain and Manage the Retail Outlets in
Indore Airport, at the designated locations mentioned in the RFP on the following board term
& conditions:

GENERAL

1. The Selected Applicant/Bidder shall submit/produce binding MOU with International

and Domestic brands, within 30 days of issues of LOIA which shall be a Minimum of
01(One) International branded outlet and minimum of 01(one) Domestic outlet.
2. The Concessionaire shall in consideration of concession agreement granted by
Authority, pay to the Authority, Concession fee of Rs. Xxxxxxx per month or 24% of
monthly net sales, whichever is higher plus applicable taxes and other payment in
accordance with the Concession Agreement.
3. The Concession Fee bills however will be raised by the Authority in accordance with
the terms and conditions of the Concession Agreement by 10th of every month.
Irrespective of the receipt of the bills from AAI, the Concessionaire is bound to remit
the Licence fee on 25th day of the current month as per the concession agreement. The
concessionaire has to pay the bill by the 25th of the same month failing which interest
at the rate of 12% per annum shall be charged for a period for 90 days thereafter.
4. On or before the date of execution of the concession agreement, Security Deposit in
the form of Bank Guarantee (BG) for Rs. Xxxxx equivalent to 8 (Eight) Months
License fee of the first year with validity up to 4 (four) years from the date of
commencement of Licence should be deposited with Airport Authority of India. The
BG from the bank shall only be accepted from a scheduled/Nationalize banks and BG
from co-operative banks not acceptable.
5. AAI reserves the right to modify the definition of security deposit and enhance the
same according to prevailing AAI policies and guidelines from time to time.

51
Usage of IT software’s / Hardware in Finance and Accounts
Jobs/Departments
Usage of Software’s like:
 SAP
 AIMS
 EPIS
 ESS
 E-Tendering Portal etc.

Usage of Hardware:
 Computer Network connecting CHQ and other AAI Units all over India
 Servers are at CHQ

52
Conclusion

In review this internship has been an excellent, productive and rewarding

experience. I have been able to meet and network with so many people that I am sure will be
able to help me in my carrier in the field of finance and accounts.

One main thing that I have learned through this internship is time management
skills as well as self-motivation. I have learnt about various aspect in the field of finance and
Accounts including self-accounting units at AAI.I got to know about SAP and its application
and utilisation for accounting purpose. A step towards paperless office.

From this internship I learned how to motivate myself through being in office
for so many hours. Airports Authority of India attracts, motivates and retains the most
qualified employees and guides them towards the areas where they can get maximum
exposure and where they can work efficiently. They have excellent job environment and
employee friendly work culture.

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References

I. Finance Manual
II. aai.aero website
III. delegation of power

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