Home  »  Company  »  Spicejet Ltd.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Spicejet Ltd.

Mar 31, 2016

B. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.

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

C. Aggregate number of bonus shares, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:

The Company has issued total 1,732,865 shares (March 31, 2015 - 1,732,865 shares) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option (‘ESOP’) plan wherein part consideration was received in form of employee services.

The shareholders in the annual general meeting held on September 24, 2014, approved the issuance of 189,091,378 warrants having a nominal value of Rs. 10 each to the Erstwhile Promoters, for consideration aggregating Rs. 3,082.19 million, with an option to apply for and be allotted equivalent number of equity shares of the face value of Rs. 10 each at a premium of Rs. 6.30 each.

The Board of Directors in their meeting held on January 29, 2015, approved the issuance of up to 3,750,000 nonconvertible redeemable preference shares (“CRPS”) of Rs. 1,000 each to the Erstwhile Promoters on a preferential basis for a consideration aggregating Rs. 375,000,000.

Amounts aggregating Rs. 1,785.92 million which was disclosed as short term borrowings in the previous year, have been appropriately disclosed as advances received against securities to be issued in the current year as per the terms of the underlying agreement (as amended). Also refer Note 44.

a. The vehicle loan has been availed from Yes Bank Limited and is repayable in equal installments over a period of three years commencing from March 2016, and carries an interest rate of 10.25%. The loan is secured by the related vehicle purchased by the Company.

b The external commercial borrowing (“ECB”) relates to the acquisition of “Bombardier Q400 Aircraft”. The ECB has been approved by the Reserve Bank of India and is granted through a finance lease structure between the Company and the lesser with lending from Export Development Canada. The related aircraft are owned by the lesser until the repayment of all outstanding by the Company under the terms of the respective lease agreements (also refer note 12). As per the terms of these lease agreements with the lesser, the Company may opt for either fixed or a floating rate of interest benchmarked to LIBOR for each drawdown, which coincides with the delivery of each aircraft. The interest on these borrowings ranges from 2.4% to 4.1%. Under each lease agreement the Company is required to make payment of lease rentals over a period of forty-eight quarters to lesser or its nominees.

During the previous year, in view of overdue payments of interest and repayment of principal of ECB to the lender, the Company had entered into an agreement with the lender for the forbearance of defaults and the discharge of overdue amounts of principal and interest aggregating Rs. 897.54 million. Under the terms of this agreement, the Company had to make 12 equal monthly payments of this overdue amount, commencing from April 2015. There were no changes to any of the terms and conditions of the original agreement with the lender including repayment terms of other installments as well as interest rates applicable on the ECB. Pursuant to this, the Company has made all such monthly payments under this agreement as at March 31, 2016.

Provision for aircraft maintenance:

Certain heavy maintenance checks for the aircraft engines need to be performed at specified intervals as enforced by the Director General of Civil Aviation in accordance with the Maintenance Program Document laid down by the aircraft manufacturers. In this regard, the Company estimates the expected costs at the time of such check factoring expected drawdown of supplemental rentals and other contributions receivable from the lesser wherever applicable. As required by Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets” given below is the movement in provision for aircraft maintenance.

The Company has, having regard to its obligation to maintain engines under aircraft lease agreements, finalized the terms of service contracts and has also entered into new contracts for maintenance of engines on its Boeing and Q400 aircraft in the current year. Based on such finalized contracts / terms, as also such factors as scope and timing of maintenance and repairs of engines including firm fixed costs of maintenance at different intervals, expected drawdown from the supplemental rentals under the relevant lease agreements (wherever applicable), etc, management undertook a comprehensive exercise to re-estimate its liabilities in respect of engine maintenance obligations as at March 31, 2016. Arising from the foregoing, the Company has made additional accruals of Rs. 1,495.50 million resulting from changes in estimates as explained above.

** Provision for aircraft maintenance

Provision for aircraft redelivery:

As required by Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets” given below is the movement in provision for aircraft redelivery.

The Company has in its fleet certain aircraft on operating lease. As per the terms of the lease agreements, the aircraft are to be redelivered to the lesser at the end of the lease term in technical condition as stipulated under the lease agreements. Such redelivery conditions include costs for technical inspection, maintenance checks, repainting costs prior to its redelivery and the cost of ferrying the aircraft to the location as stipulated in the lease agreements.

The Company, therefore, provides for such redelivery expenses, as contractually agreed, in proportion to the expired lease period.

The Company has also accounted for costs relating to early termination of Boeing aircraft leased by the Company which were retired from commercial use in the previous year. Such accrual is based on management estimate of these liabilities, having regard to various factors including lease terms, age of the aircraft and past experience of aircraft redelivery costs incurred by the Company. Further liabilities in this regard, if any, will be accounted for in the period they are determined to be payable.

During the current year and the period since then till date, the Company has concluded / substantially agreed the terms of settlement with these aircraft lesser. Accordingly, and based on their assessment and best estimates of the likely final financial effect of these settlement terms, management has made adjustments in the financial statements as follows:

(a) Additional accrual of Rs. 497.31 million under Aircraft redelivery costs disclosed in Note 23; and

(b) Write back of provisions made in earlier periods of Rs. 830.33 million recorded under Liabilities / provision no longer required written back disclosed in Note 22.

After giving effect to the above, the Company carries provisions of Rs 1,679.28 million as at March 31, 2016, towards its obligations in respect of such redelivered aircraft.

Note:

During the year, one Bombardier Q400 aircraft of the Company sustained damage during operations. The determination of the financial effects thereof was pending in view of the highly technical nature of the assessment involved. Upon completion of such technical assessment, this aircraft has been assessed as being beyond economic repair and declared a total loss. Accordingly, the carrying value of that aircraft as at the date of the incident of Rs 1,037.75 million, net of unrecognized incentive credits of Rs 16.37 million, has been recorded as a loss in the current year. The Company has recognized insurance claims of Rs. 1,658.32 million based on the in-principle approvals received from the insurers of such aircraft. The net loss on account of the damage to the aircraft and the related proceeds receivable from the insurance company, as discussed above, have been disclosed as extraordinary items (net). The amount payable to the relevant aircraft’s lesser / financier as at March 31, 2016, of Rs. 737.90 million has been disclosed under current liabilities.

Extraordinary items for the year ended March 31, 2015, represent insurance claims and the related loss accounted for by the Company pertaining to another Bombardier aircraft that sustained extensive damage and was declared a total loss.

1. Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter directors and executive directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employees Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options - one year from the date of grant

- 25% of the options - two years from the date of grant

- 25% of the options - three years from the date of grant

- 15% of the options - four years from the date of grant

Pro-forma Disclosures

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for ESOS 2007 been recognized based on the fair value at the date of grant in accordance with the Black-Scholes method, the amounts of the Company’s net profit / (loss) and earnings per share would have been as follows:

2. Gratuity - benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs. 1.00 million. The scheme is unfunded.

The following tables summaries the components of net benefit expense recognized in the profit and loss account and amounts recognized in the balance sheet for gratuity.

3. Deferred Tax Asset

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs. 4,706.09 million as at March 31, 2016 (Rs. 4,408.66 million as at March 31, 2015).

4. Leases

Operating lease: Company as a lessee

The Company has taken on lease aircraft, aircraft spares, engines and premises from third parties. Lease charges for aircraft and engines for the year ended March 31, 2016 amounts to Rs. 8,054.47 million (Previous year Rs. 8,643.88 million), supplemental lease charges amounts to Rs. 3,155.91 million (Previous year Rs. 3,340.20 million) and rental expense on premises for the year ended March 31, 2016 amount to Rs. 250.65 million (Previous year Rs. 160.45 million)

The Company has taken aircraft through dry operating lease from lesser. Under the aircraft lease agreements, the Company pays monthly rentals in the form of base and supplementary rental. Base rental payments are either based on floating or fixed interest rates. Supplemental rentals are based on aircraft utilization and are calculated with reference to the number of hours flown or number of cycles operated during each month. Both base and supplemental lease rentals have been charged to the statement of profit and loss. The lease terms vary between 3 and 10 years. There are no significant restrictions imposed by lease arrangements.

The Company has also taken aircraft on wet lease for lease terms which vary between 3 to 5 months.

The future minimum lease rentals payable under non-cancellable leases (except supplementary rental which are based on aircraft utilization and calculated on number of hours flown or cycle operated) are as follows:

Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole.

5. Capital and other commitments

a. At March 31, 2016, the Company has commitments of Rs. 176,555.98 million (March 31, 2015 - Rs. 166,595.76 million) relating to the acquisition of aircraft.

b. The Company has commitments in the nature of non-cancellable operating leases. The future minimum lease payments expected to be incurred over the remaining lease term are detailed in Note 33.

c. Under certain long-term maintenance contracts for the management, maintenance, repair and overhaul of aircraft components and spares, the Company incurs an agreed power-by-the-hour cost based on aircraft / component utilization. In addition, some contracts provide for compensation upon pre-mature termination, as applicable.

6. Litigations and claims a) Note 1 :

i) Matters wherein management has concluded the Company’s liability to be probable have accordingly been provided for in the books. Also refer note 11.

ii) Matters wherein management has concluded the Company’s liability to be possible have accordingly been disclosed under Note 2 Contingent liabilities below.

iii) Matters wherein management is confident of succeeding in these litigations and have concluded the Company’s liability to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process

9 Assessment relating to Assessment Year 2010-11 is pending with CIT(A) in respect of certain additions made to returned loss by the Assessing Officer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil. Though there is no demand for payment of tax arising out of above assessments, the Assessing Officer (‘AO’) has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

i. Under a suit filed by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit (‘ICD’) aggregating Rs. 50 million, the Company had deposited the amount of Rs. 50 million on November 30, 2001 with the Hon’ble Bombay High Court and the Hon’ble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Hon’ble Court at the time of the final decision of the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit with Hon’ble High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company had hitherto not accrued interest payable of Rs. 74.71 million up to the date of deposit of the amount with the Hon’ble Court on account of its defense in the court proceedings. Pursuant to the review process by the Qualified Audit Review Committee (‘QARC’) constituted by the SEBI, the Company has been directed to rectify the qualifications in the auditors’ report. Accordingly, and without prejudice to its legal defense on this matter, such interest of Rs 74.71 million has been accounted for in the previous year.

ii. In another case, M/s Hindustan Development Corporation Limited (“HDCL”) (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 million by way of inter-corporate deposit to the Company, has filed a Review Petition against the Scheme of Settlement passed by the Hon’ble Delhi High Court wherein the Company’s liability was fixed at Rs. 35 million. The Company had made a deposit of Rs. 35 million to the Official Administrator of the Scheme in accordance with approved Scheme. Pending disposition of the review petition, the likelihood of the balance amount of Rs.15 million devolving on the Company is not probable. Also, the interest (if any) on the same is not ascertainable.

iii. The Company has received a demand notice from the Regional Provident Fund Commissioner, Gurgaon for Rs 79.91 million in respect of provident fund (“PF”) dues for international workers vide Notifications GSR 706(E) dated 1st October 2008 and GSR 148 dated 3rd September 2010, for the period from November 2008 to February 2011. The Company has responded to the notice disputing the demand and, without admitting any liability towards the same, has deposited an amount of Rs 1.96 million towards the PF contributions in respect of international workers for the period from November 2008 to July 2011 under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (‘PF Act’). Since August 2011, the Company has been making provident fund contributions in respect of international workers under the provisions of the PF Act. During the year ended March 31, 2012, the Company has filed a writ petition with the Hon’ble Delhi High Court contending that the above notifications relating to international workers are unreasonable and ultra vires the PF Act. The Court has directed that this matter be put up in the regular list and the interim order in favor of the Company has been made absolute till disposal of the petition. Pending disposal of the petition, the Company has not accrued for any additional liability in respect of provident fund contributions to international workers.

iv. The Company has received a demand order for a sum of Rs. 77.28 million, and applicable interest, as well as penalty of Rs. 77.28 million from the service tax department for non-remittance of service tax on reverse charge mechanism on certain payments made during the period April 18, 2006 to March 31, 2012. The Company is contesting the order on the grounds that the services obtained by the Company were not liable to service tax under the categories determined by the authorities and are hence not taxable services. Effective July 2012, pursuant to the enactment of the negative list of taxable services, the Company has been paying service tax on these services received on reverse charge basis under the relevant provisions of the Finance Act, 1994. Based on advice by its tax consultants and internal evaluation, the Company has provided an amount of Rs.

67.09 million (including a portion of applicable interest) on a conservative basis during the previous year (also refer note 11). However, the Company continues to contest the entire demand and has filed an appeal against the adverse order with the CESTAT and is confident of its success. The balance amount of the matter under litigation, (including interest and penalty) of Rs. 170.70 million, has not been accrued pending final outcome of this matter and has been disclosed as a contingent liability.

v. During the previous year, the Company received a demand from one of its aircraft lesser in relation to four aircraft which were redelivered during the previous year of Rs. 744.20 million, of which Rs. 368.66 million relates to cost of storage of the aircraft from the date of deregistration of the aircraft till the date of redelivery of the aircraft, and the remaining Rs. 375.54 million relates to damages claimed by the lesser. Management had accounted for claims aggregating Rs. 368.66 million during the previous year, as these are costs incurred under the terms of the lease agreement (also refer note 11), and has not admitted the liability in respect of damages claimed by the lesser of Rs. 375.54 million. Subsequent to the reporting date, the management has finalized the terms of settlement with the concerned lesser and pursuant to this, based on their assessment and best estimates of the likely final financial effect of these settlement terms, management has made an additional accrual of Rs. 233.18 million under Aircraft redelivery costs.

vi. During the current year, one of the Company’s vendors has filed an arbitration claim against the Company before the International Court of Arbitration of the International Chamber of Commerce claiming payment of overdue amounts with applicable interest aggregating Rs. 1,923.65 million. The Company has served a counter-claim against the vendor to the tune of Rs. 4,178.92 million which it intends to pursue in the course of the arbitration proceedings, and without prejudice to its defense, has accrued for the amounts claimed by the vendor. The Company has not made any adjustments to the financial statements in respect of its counter-claim.

vii. The Company has received a show cause notice from the service tax authorities during the current year, citing various defaults, including failure/delay in remitting service tax collected, over past financial years as well as alleged failure in remittance of service tax on certain other items. Based on their assessment of the contentions of the service tax authorities, management has submitted a detailed reply to the notice, and based on legal advice obtained, believes that the likelihood of this liability devolving on the Company is low, and accordingly has made no adjustments to the financial statements.

viii. During the year, the Competition Commission of India (“CCI”) passed an order dated November 17, 2015 against, inter alia, the Company, which included a demand of Rs 424.80 million on the Company. The Company’s appeal against this order with Competition Appellate Tribunal (“COMPAT”) was disposed of by the COMPAT, which set aside the impugned order on technical grounds and has referred the matter back to the CCI for fresh adjudication based on the COMPAT’s directions. Based on legal advice received, management is confident of a favorable outcome in this matter and accordingly no adjustments are considered necessary in the financial statements.

ix. During the current year, the Assistant Commissioner of Income-Tax (“ACIT”) has filed a complaint against the Company and its erstwhile Chairman and Managing Director in their individual capacity, over delayed payment of tax deducted at source in contravention of section 276B of the IT Act, 1961 for financial years 2013-14 and 2014-15. The matter is sub-judice as on date and based on professional advice, the management is confident of a favorable outcome in this matter in so far as it relates to the Company. Accordingly, no adjustments are considered necessary in the financial statements.

c. Based on the legal advice obtained by the management, no provision is required to be made for the above contingent liabilities

7 Dues to Micro, Small and Medium Enterprises

Management has determined that there are no overdue amounts payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006 based on information available with the Company as at March 31, 2016, and March 31, 2015. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current year.

8 Un-hedged foreign currency exposure

Particulars of un-hedged foreign currency exposure as at the reporting date

9. Status of advance money received against securities proposed to be issued

The Company had during the previous financial year and in the current financial year, received amounts aggregating Rs. 5,790.89 million (including amounts of Rs. 1,785.92 million disclosed as short term borrowings in the previous year, which have been appropriately disclosed as advances received against securities to be issued in the current year) in relation to (a) 189,091,378 share warrants of Rs.10 each approved by shareholders and (b) 3,750,000 CRPS approved by the Board of Directors, for issuance to the Erstwhile Promoters. Under the terms of relevant approvals, and the agreements inter-se the Company and the Erstwhile Promoters, these amounts will be adjusted against amounts payable upon allotment of the said securities. While the Company is awaiting approval of regulatory bodies / shareholders (as the case may be) the time limit for completion of the Company’s obligations under applicable rules and regulations has expired as of date, attracting the consequent provisions (including penal provisions) of applicable rules and also the deeming provisions relating to acceptance of deposits. The management is in the process of taking steps to cure these defects, and is of the view that any consequential effects, including penal consequences, will not have a material impact on the financial statements of the Company. Accordingly, no adjustments have been made for any consequential penal effects in this regard.

10. Dissolution of the Audit Committee

Two independent directors of the Company resigned effective September 21, 2015, pursuant to which the Company’s Audit Committee was dissolved due to inadequacy of constituents. Subsequent to this, another independent director who was appointed on May 21, 2015, resigned effective November 17, 2015. After receipt of requisite approvals, the Company has appointed a new independent director to its Board on December 1, 2015 to fill-up one of the above vacancies. However as on date, the Audit Committee continues to remain dissolved as detailed above due to inadequacy of independent directors. The Company has initiated steps for appointing additional independent directors and is awaiting security clearances for identified candidates for independent directors from the Ministry of Civil Aviation, Government of India (“MoCA”) as required under the Civil Aviation Requirements. As a result, the Company is in non-compliance with the requirements of the Companies Act, 2013 as well as SEBI (Listing Obligations and Disclosure Requirements) with regard to constitution of an audit committee and related requirements including the review of these financial statements by the audit committee as per applicable requirements. Based on legal advice obtained by the Company, the Board of Directors of the Company has approved the financial statements at their meeting held on May 19, 2016, and no material adjustments or consequences are expected in relation to this matter, affecting these financial statements.

11. Previous year figures

Prior year comparative amounts in these financial statements have been reclassified wherever applicable to conform to current year’s presentation. As per our report of even date


Mar 31, 2015

A. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.

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

B. Aggregate number of bonus shares, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:

The Company has issued total 1,732,865 shares (March 31, 2014 - 1,732,865 shares) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option ('ESOP') plan wherein part consideration was received in form of employee services.

C. Shares held by shareholders holding more than 5 percent shares in the Company.

As discussed in note 1, during the current year, the outgoing promoters have sold and transferred their entire shareholding to Mr. Ajay Singh pursuant to the SSPA.

The shareholders in the annual general meeting held on September 24, 2014, approved the issuance of 189,091,378 warrants having a nominal value of Rs. 10 each to the Outgoing Promoters, for consideration aggregating Rs. 3,082.19 million, with an option to apply for and be allotted equivalent number of equity shares of the face value of Rs. 10 each at a premium of Rs. 6.30 each. During the current year, the proposed subscribers to these warrants have paid sums aggregating Rs. 2,304.68 million against such proposed warrants.

The board of directors of the Company in their meeting held on January 29, 2015, approved the issuance of up to 3,750,000 non-convertible CRPS of Rs. 1,000 each to the Outgoing Promoters on a preferential basis. This proposed issue of securities is subject to the approval of the shareholder of the Company. Subject to such approval, the proposed subscribers to these CRPS have paid sums aggregating Rs. 1,200.29 million against such proposed CRPS.

Money received against share warrants as at March 31, 2014 represents 25% advance money received towards warrants which entitles the warrant holders, the option to apply for and be allotted equivalent number of equity shares of the face value of Rs.10 each of an aggregate nominal amount up to Rs. 1,332.15 million at an issue price of Rs. 20.76 per equity share. During the current year, pursuant to the exercise of options attached to these warrants and the receipt of the balance consideration of Rs. 999.11 million, the Company has issued 19,169,000 equity shares to Mr. Kalanithi Maran and 45,000,000 equity shares to M/s KAL Airways Private Limited, having a nominal value of Rs. 10 each.

As per records of the company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

D. Shares reserved for issue under options

i. For details of shares reserved for issue under ESOP, refer Note 29. ii. For details of shares reserved for share warrants, refer note 4 below.

a. Term loan from banks is repayable in unequal installments from April 2012. This interest on this loan ranges from 12.25% to 12.86%.

The loan and other facilities granted by the lender are secured by exclusive charge on current assets both present and future excluding lien marked deposits, second charge on movable fixed assets, both present and future, and pledge of shares of the Company owned by the promoter of the Company, Mr. Ajay Singh.

b. The external commercial borrowing ("ECB") relates to the acquisition of "Bombardier Q400 Aircraft". The ECB has been approved by the Reserve Bank of India and is granted through a finance lease structure between the Company and the lessor with lending from Export Development Canada. The related aircraft are owned by the lessor until the repayment of all outstanding by the Company under the terms of the respective lease agreements (also refer note 12). As per the terms of these lease agreements with the lessor, the Company may opt for either fixed or a floating rate of interest benchmarked to LIBOR for each drawdown, which coincides with the delivery of each aircraft. The interest on these borrowings ranges from 2.4% to 4.1%. Under each lease agreement the Company is required to make payment of lease rentals over a period of forty-eight quarters to lessor or its nominees.

During the current year, in view of overdue payments of interest and repayment of principal of ECB to the lender, the Company has entered into an agreement with the lender for the forbearance of defaults and the discharge of overdue amounts of principal and interest aggregating Rs. 897.54 million. Under the terms of this agreement, the Company will make 12 equal monthly payments of this overdue amount, commencing from April 2015. There are no changes to any of the terms and conditions of the original agreement with the lender including repayment terms of other installments as well as interest rates applicable on the ECB.

As per the terms of the SSPA, the short term loan from outgoing promoter does not bear any interest and is to be adjusted against future subscription money due from the outgoing promoter in connection with issuance of proposed securities mentioned in Note 4, subject to necessary approvals.

Aircraft redelivery:

As required by Accounting Standard 29, "Provisions, Contingent Liabilities and Contingent Assets" given below is the movement in provision for aircraft redelivery.

The Company has in its fleet certain aircraft on operating lease. As per the terms of the lease agreements, the aircraft are to be redelivered to the lessors at the end of the lease term in technical condition as stipulated under the lease agreements. Such redelivery conditions include costs for technical inspection, maintenance checks, repainting costs prior to its redelivery and the cost of ferrying the aircraft to the location as stipulated in the lease agreements.

The Company, therefore, provides for such redelivery expenses, as contractually agreed, in proportion to the expired lease period.

The Company has also accounted for costs relating to early termination of Boeing aircraft leased by the Company which have been retired from commercial use. Such accrual is based on management estimate of these liabilities, having regard to various factors including lease terms, age of the aircraft and past experience of aircraft redelivery costs incurred by the Company. Further liabilities in this regard, if any, will be accounted for in the period they are determined to be payable.

* Represents margin money deposit placed with banks for non-fund based facilities sanctioned to the Company.

Note:

During the current year, one of the Company's Bombardier Q400 aircraft sustained extensive damage during operations and has been assessed as being beyond economic repair after technical review and declared a total loss. The carrying value of the aircraft as at the date of the incident, net of unrecognized incentive credits, was Rs. 1,003.77 million, which the Company has recorded as a loss in the current year. The Company has received approvals from the insurers of such aircraft for an insurance claim of Rs. 1,617.24 million, which has been recognized as income, of which Rs. 835.04 million is payable to the relevant aircraft lessor / financier relating to outstanding liabilities there against. The net gain on account of the damage to the aircraft and the related proceeds receivable from the insurance company, as discussed above, have been disclosed as an extraordinary item.

1. Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter directors and executive directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employees Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options – one year from the date of grant

- 25% of the options – two years from the date of grant

- 25% of the options – three years from the date of grant

- 15% of the options – four years from the date of grant

The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The summary of the movement in options is given below:

Pro-forma Disclosures

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for ESOS 2007 been recognized based on the fair value at the date of grant in accordance with the Black-Schools method, the amounts of the Company's net profit / (loss) and earnings per share would have been as follows:

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

2. Gratuity - benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs. 1 million. The scheme is unfunded.

The following tables summaries the components of net benefit expense recognized in the profit and loss account and amounts recognized in the balance sheet for gratuity.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

3. Deferred Tax Asset

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs. 4,408.66 million as at March 31, 2015 (Rs. 3,672.01 million as at March 31, 2014).

4. Leases

Operating lease: Company as a lessee

The Company has taken on lease aircraft, aircraft spares, engines and premises from third parties. Lease charges for aircraft and engines for the year ended March 31, 2015 amount to Rs. 8,643.88 million (Previous year Rs. 10,531.74 million), supplemental lease charges amount to Rs. 3,340.20 million (Previous year Rs. 4,244.82 million) and rental expense on premises for the year ended March 31, 2015 amount to Rs. 160.45 million (Previous year Rs. 163.89 million).

The Company has taken aircraft through dry operating lease from lassoers. Under the aircraft lease agreements, the Company pays monthly rentals in the form of base and supplementary rental. Base rental payments are either based on floating or fixed interest rates. Supplemental rentals are based on aircraft utilization and are calculated with reference to the number of hours flown or number of cycles operated during each month. Both base and supplemental lease rentals have been charged to the statement of profit and loss. The lease terms vary between 3 and 10 years. There are no significant restrictions imposed by lease arrangements. The future minimum lease rentals payable under non-cancellable leases (except supplementary rental which are based on aircraft utilization and calculated on number of hours flown or cycle operated) are as follows:

5. Related party transactions

Relationship Name of the party

Party exercising control Kal Airways Private Limited (up to February 23, 2015)

Mr. Kalanithi Maran (up to February 23, 2015) Mr. Ajay Singh (from February 23, 2015)

Enterprises over which parties Sun TV Network Limited A

above or their relatives have control Kal Publications Private Limited / significant influence (Affiliates) Udaya FM Private Limited

Sun Direct TV Private Limited

Kungumam Publications Private Limited

Sun Distribution Services Private Limited

Kal Investments (Madras) Private Limited

Kal Holdings Private Limited

Sun Foundation

Murasoli Maran Family Trust V (up to February 23, 2015)

D K Enterprises Private Limited

Kungumam Nithyagam Private Limited

Kal Comm Private Limited

Kal Media Services Private Limited

Kal Cables Private Limited

Sun Business Solutions Private Limited

South Asia FM Limited

Kal Radio Limited

Digital Radio (Delhi) Broadcasting Limited J

Crosslink Finlease Private Limited A

Greenline Transit System Private Limited

Spice Homes Private Limited

Argentum Electric Vehicles Private Limited

Argentum Defence Systems Private Limited

i2n Technologies Private Limited (From February 23, 2015)

Greenstar Mobility Private Limited

Greenvolt Technologies Private Limited

Greenline Communication Private Limited

Pan India Motors Private Limited

Key management personnel Mr. S Natrajhen, Managing Director (up to January 29, 2015) Mr. Sanjiv Kapoor, Chief Operating Officer

During the year, as already mentioned, the Company has issued to Mr. Kalanithi Maran and Kal Airways Private Limited on a preferential basis 64,169,000 equity shares at a price of Rs. 20.76 per share for a total consideration aggregating Rs. 1,332.45 million.

6. Capital and other commitments

a. At March 31, 2015, the Company has commitments of Rs. 166,595.76 million (March 31, 2014 - Rs. 150,707.25 million) relating to the acquisition of aircraft.

b. The Company has commitments in the nature of non-cancellable operating leases. The future minimum lease payments expected to be incurred over the remaining lease term are detailed in Note 32.

c. Under certain long-term maintenance contracts for the management, maintenance, repair and overhaul of aircraft components and spares, the Company incurs an agreed power-by-the-hour cost based on aircraft / component utilization. In addition, some contracts provide for compensation upon pre-mature termination, as applicable.

7. Litigations and claims

a) Note 1:

i) Matters wherein management has concluded the Company's liability to be probable have accordingly been provided for in the books. Refer note 11.

ii) Matters wherein management has concluded the Company's liability to be possible have accordingly been disclosed under Note 2 Contingent liabilities below.

iii) Matters wherein management is confident of succeeding in these litigations and have concluded the Company's liability to be remote. This is based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process.

12 Assessment relating to Assessment Year 2010-11 is pending with CIT(A) in respect of certain additions made to returned loss by the Assessing Officer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil. Though there is no demand for payment of tax arising out of above assessments, the Assessing Officer ('AO') has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

i. Under a suit filed by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit ('ICD') aggregating Rs. 50 million, the Company had deposited the amount of Rs. 50 million on November 30, 2001 with the Hon'ble Bombay High Court and the Hon'ble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Hon'ble Court at the time of the final decision of the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit with Hon'ble High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company had hitherto not accrued interest payable of Rs. 74.71 million up to the date of deposit of the amount with the Hon'ble Court on account of its defence in the court proceedings. Pursuant to the review process by the Qualified Audit Review Committee ('QARC') constituted by the SEBI, the Company has been directed to rectify the qualifications in the auditors' report. Accordingly, and without prejudice to its legal defence on this matter, such interest of Rs 74.71 million has been accounted for in the current year.

ii. In another case, M/s Hindustan Development Corporation Limited ("HDCL") (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 million by way of inter-corporate deposit to the Company, has filed a Review Petition against the Scheme of Settlement passed by the Hon'ble Delhi High Court wherein the Company's liability was fixed at Rs. 35 million. The Company had made a deposit of Rs. 35 million to the Official Administrator of the Scheme in accordance with approved Scheme. Pending disposition of the review petition, the likelihood of the balance amount of Rs.15 million devolving on the Company is not probable. Also, the interest (if any) on the same is not ascertainable.

iii. The Company has received a demand notice from the Regional Provident Fund Commissioner, Gurgaon for Rs 79.91 million in respect of provident fund ("PF") dues for international workers vide Notifications GSR 706(E) dated 1st October 2008 and GSR 148 dated 3rd September 2010, for the period from November 2008 to February 2011. The Company has responded to the notice disputing the demand and, without admitting any liability towards the same, has deposited an amount of Rs 1.96 million towards the PF contributions in respect of international workers for the period from November 2008 to July 2011 under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ('PF Act'). Since August 2011, the Company has been making provident fund contributions in respect of international workers under the provisions of the PF Act. During the year ended March 31, 2012, the Company has filed a writ petition with the Hon'ble Delhi High Court contending that the above notifications relating to international workers are unreasonable and ultra vires the PF Act. The Court has directed that this matter be put up in the regular list and the interim order in favour of the Company has been made absolute till disposal of the petition. Pending disposal of the petition, the Company has not accrued for any additional liability in respect of provident fund contributions to international workers.

iv. The Company has received a demand order for a sum of Rs. 77.28 million, and applicable interest, as well as penalty of Rs. 77.28 million from the service tax department for non-remittance of service tax on reverse charge mechanism on certain payments made during the period April 18, 2006 to March 31, 2012. The Company is contesting the order on the grounds that the services obtained by the Company were not liable to service tax under the categories determined by the authorities and are hence not taxable services. Effective July 2012, pursuant to the enactment of the negative list of taxable services, the Company has been paying service tax on these services received on reverse charge basis under the relevant provisions of the Finance Act, 1994. Based on advice by its tax consultants and internal evaluation, the Company has provided an amount of Rs. 67.09 million (including a portion of applicable interest) on a conservative basis (also refer note 11). However, the Company continues to contest the entire demand and has filed an appeal against the adverse order with the CESTAT and is confident of its success. The balance amount of the matter under litigation, (including interest and penalty) of Rs. 160.16 million, has not been accrued pending final outcome of this matter and has been disclosed as a contingent liability.

v. During the current year, three aircraft lessors had served notice of termination of leases in respect of eleven aircraft, citing events of defaults by the Company under the terms of the relevant lease agreements. These lessors also sought repossession of these aircraft, and filed petitions in Court, seeking relief. During the final quarter of the current year, the Company has entered into (a) settlement agreements with two lessors in respect of six aircraft, under which the lessors have withdrawn court proceedings and deregistration process of aircraft, and (b) a letter of intent with the lessor in respect of the other five aircraft, most of whose conditions have been satisfied by the Company as of date, and management is confident of fulfilling the remaining conditions in due course, consequent to which no adjustments have been made to the financial statements in this regard.

Additionally, the Company has received a demand from another lessor in relation to four aircraft which were redelivered during the current year of Rs. 744.20 million, of which Rs. 368.66 million relates to cost of storage of the aircraft from the date of deregistration of the aircraft till the date of redelivery of the aircraft, and the remaining Rs. 375.54 million relates to damages claimed by the lessor. Management has accounted for claims aggregating Rs. 368.66 million, as these are costs incurred under the terms of the lease agreement (also refer note 11), and has not admitted the liability in respect of damages claimed by the lessor of Rs. 375.54 million. Management is of the view that a claim for damages is not tenable and no adjustments have been made to the financial statements in this regard pending final outcome of this matter, and has disclosed this amount as a contingent liability.

c. Based on the legal advice obtained by the management, no provision is required to be made for the above contingent liabilities.

8. Dues to Micro, Small and Medium Enterprises

Management has determined that there are no overdue amounts payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006 based on information available with the Company as at March 31, 2015, and March 31, 2014. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current year.

9. During the year, (a) the shareholders had approved the issuance of 189,091,378 share warrants of Rs. 10 each to the outgoing promoters, and (b) the Board of Directors has approved the issuance of up to 3,750,000 non-convertible cumulative redeemable preference shares ("CRPS") to the outgoing promoters, in respect of which the approval of shareholders is awaited. In respect of these securities, the Company has received amounts aggregating Rs. 3,504.97 million during the year. Under the terms of the relevant approvals and having regard to the terms of the SSPA, these advances are to be adjusted against amounts that fall due upon allotment of share warrants and CRPS to the outgoing promoters. Accordingly, these have been disclosed in the balance sheet as advances money received against securities proposed to be issued. However, as the time limit for the completion of the company's obligations under the relevant provisions of the Companies Act 2013 (the "Act") has expired as of date, it attracts the applicable consequent provisions, including penal, as well as the deeming provisions of the Act relating to acceptance of deposits. The Management is in the process of undertaking various actions, including the allotment of these securities and compounding of non-compliance referred to above, and is also of the view that any consequent effects will not have a material impact on the financial statements of the Company. Accordingly, no adjustments have been made for any consequential penal effects in this regard, or the balance sheet classification of the amounts.

10. Previous year figures

Prior year comparative amounts in these financial statements have been reclassified wherever applicable to conform to current year's presentation.


Mar 31, 2014

(All amounts are in millions of Indian Rupees except in respect of number and per share information and unless otherwise stated)

A.Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.

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

C. Aggregate number of bonus shares, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceeding the reporting date:

The Company has issued total 1,732,865 shares (March 31, 2013 - 1,732,865 shares) during the period of five years immediately preceeding the reporting date on exercise of options granted under the employee stock option (''ESOP'') plan wherein part consideration was received in form of employee services.

(All amounts are in millions of Indian Rupees except in respect of number and per share information and unless otherwise stated)

As per records of the company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

E. Shares reserved for issue under options

i. For details of shares reserved for issue under ESOP, refer Note 28.

ii. For details of shares reserved for issue on conversion of compulsorily convertible debentures, refer

note 6.c. iii. For details of shares reserved for share warrants, refer note 4 below.

Money received against share warrants represents amounts received towards warrants which entitles the warrant holders, the option to apply for and be allotted equivalent number of equity shares of the face value of Rs.10 each.

During the previous year, the Company had issued to its promoter 15,000,000 warrants of a face value of Rs.10 each, having option to apply for and be allotted an equivalent number of equity shares of the face value of Rs.10 each at a premium of 26.18 each determined in accordance with Regulation 76 of SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 ("SEBI ICDR Regulations"). During the current year, the promoter exercised his right to convert the warrants into equity shares, and consequently 15,000,000 equity shares were issued to the promoter for an aggregate consideration of Rs.542.70.

During the current year, the Company issued to its promoters 64,169,000 warrants of a face value of Rs.10 each, having option to apply for and be allotted an equivalent number of equity shares of a face value of Rs.10 each at a premium of Rs.10.77 each determined in accordance with Regulation 76 of SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 ("SEBI ICDR Regulations"). The holder of the warrants would need to exercise the option to subscribe to shares before September 12, 2015 upon payment of the balance amount of Rs. 999.75.

Notes to the financial statements for the year ended March 31, 2014

(All amounts are in millions of Indian Rupees, unless otherwise stated)

a. Term loan from banks is repayable in unequal installments from April 2012. This interest on this loan ranges from 12.25% to 12.86%.

The loan and other facilities granted by the said lender are secured by exclusive charge on current assets both present and future excluding lien marked deposits, second charge on movable fixed assets, both present and future, pledge of shares of the Company owned by KAL Airways Private Limited ("KAL Airways") and an unconditional and irrevocable guarantees from KAL Airways and Mr. Kalanithi Maran.

b. The external commercial borrowing ("ECB") relates to the acquisition of "Bombardier Q400 Aircraft". The ECB has been approved by the Reserve Bank of India and is granted through a finance lease structure between the Company and the lessor with lending from Export Development Canada. The related aircrafts are owned by the lessor until the repayment of all outstanding by the Company under respective finance leases. As per the terms of these lease agreements with the lessor, the Company may opt for either fixed or a floating rate of interest benchmarked to LIBOR for each drawdown, which coincides with the delivery of each aircraft. The interest on these borrowings ranges from 2.4% to 4.1%. Under each lease agreement the Company is required to make payment of lease rentals over a period of forty-eight quarters commencing from the date of delivery of the aircraft to the lessor or its nominees.

c. 13,000,000 14% unsecured compulsorily convertible debentures are convertible into 35,931,453 equity shares at a price of Rs 36.18 per equity share effective from April 1, 2013 and July 30, 2014, (being 18 months from the date of allotment). If the conversion option is not exercised, all of these debentures will compulsorily be converted into equity shares on the expiry of 18 months from the date of allotment.

During the year, upon exercise of the option by the debenture holder, these debentures have been converted into equity shares of the Company.

Short term loan from bank is repayable at the end of every quarter unless renewed, with the first repayment falling due in July 2013. The loan is secured by fixed deposits placed by third parties.

Working capital demand loan from bank is secured by the personal guarantee of the Company''s promoter, Mr. Kalanithi Maran and is repayable on demand. Also refer note 32.

The interest on these borrowings range between 11% to 14%.

Loan from promoter is repayable after one year from the date of commencement of the loan, with the repayment falling due in December 2014. The interest on this loan is payable at 14%.

* Margin money deposit have been placed with banks for non-fund based facilities sanctioned to the Company.

28. Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter directors and executive directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employees Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options – one year from the date of grant

- 25% of the options – two years from the date of grant

- 25% of the options – three years from the date of grant

- 15% of the options – four years from the date of grant

The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The summary of the movement in options is given below:

Pro-forma Disclosures

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for ESOS 2007 been recognized based on the fair value at the date of grant in accordance with the Black-Scholes method, the amounts of the Company''s net profit / (loss) and earnings per share would have been as follows:

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

2. Gratuity - benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one. The scheme is unfunded.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and amounts recognised in the balance sheet for gratuity.

Statement of profit and loss

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

3. Deferred Tax Asset

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs 3,672.01 as at March 31, 2014 (Rs. 3,145.16 as at March 31, 2013).

4. Leases

Operating lease: Company as a lessee

The Company has taken on lease aircrafts, aircraft spares, engines and premises from third parties. Lease charges for aircrafts & engines for the year ended March 31, 2014 amount to Rs.10,531.74 (Previous year Rs. 8,081.02), supplemental lease charges amount to Rs. 4,244.82 (Previous year Rs. 3,243.54) and rental expense on premises for the year ended March 31, 2014 amount to Rs. 163.89 (Previous year Rs. 140.72).

The Company has taken aircraft through dry operating lease from lessors. Under the aircraft lease agreement, the Company pays monthly rentals in the form of base and supplementary rental. Base rental payments are either based on floating or fixed interest rates. Supplemental rentals are based on aircraft utilisation and are calculated with reference to the number of hours flown or number of cycles operated during each month. Both base and supplemental lease rentals have been charged to the statement of profit and loss. The lease terms vary between 3 and 10 years. There are no restrictions imposed by lease arrangements. The future minimum lease rentals payable under non-cancellable leases (except supplementary rental which are based on aircraft utilisation and calculated on number of hours flown or cycle operated) are as follows:

5. Related party transactions

Relationship :

Party exercising control Enterprises over which parties above or their relatives have control / significant influence (''Affiliates'')

Name of the party :

Kal Airways Private Limited Mr. Kalanithi Maran Sun TV Network Limited Kal Publications Private Limited Udaya FM Private Limited Sun Direct TV Private Limited Kungumam Publications Private Limited Sun Distribution Services Private Limited Kal Investments (Madras) Private Limited Kal Holdings Private Limited Sun Foundation Murasoli Maran Family Trust S & S Textiles D K Enterprises Private Limited Kungumam Nithyagam Private Limited Kal Comm Private Limited Kal Media Services Private Limited Kal Cables Private Limited Sun Business Solutions Private Limited South Asia FM Limited Kal Radio Limited Digital Radio (Delhi) Broadcasting Limited

Relationship :

Key management personnel

Name of the party :

Neil Raymond Mills, Chief Executive Officer (up to August 2, 2013) S Natrajhen, Managing Director Sanjiv Kapoor, Chief Operating Officer (from November 1, 2013)

During the year, as already mentioned, the Company has issued to Mr. Kalanithi Maran on a preferential basis:

(i) 35,931,453 equity shares at a price of Rs. 36.18 per share for a total consideration aggregating to Rs. 1,300.00.

(ii) 15,000,000 equity shares at a price of Rs. 36.18 per share for a total consideration aggregating to Rs. 542.70.

(iii) 19,169,000 warrants having option to apply for and be allotted equivalent number of equity sharesof the face value of Rs.10 each at a premium of Rs.10.77 each.

Further, the Company has issued to Kal Airways 45,000,000 warrants having option to apply for and be allotted equivalent number of equity sharesof the face value of Rs.10 each at a premium of Rs.10.77 each.

Further, Mr. Kalanithi Maran and Kal Airways, have on a free of cost basis, extended guarantees / securities for loans taken by the Company. Also refer notes 6and 9for details of the same.

Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole.

6. Capital and other commitments

a. At March 31, 2014, the Company has commitments of Rs.150,707.25 (March 31, 2013 - Rs. 153,902.47) relating to the acquisition ofaircrafts.

b. The Company has commitments in the nature of non-cancellable operating leases. The future minimum lease payments expected to be incurred over the remaining lease term are detailed in Note 31.

c. Under certain long-term maintenance contracts for the management, maintenance, repair and overhaul of aircraft components and spares, the Company incurs an agreed power-by-the-hour cost based on aircraft / component utilization. In addition, some contracts provide for compensation upon pre-mature termination, as applicable.

7. Contingent liabilities

a. Claims against the Company not acknowledged as debts

Particulars As at As at March March 31,2014 31,2013 1 Liability arising out of legal cases filed against the 47.40 29.50 Company in various Courts/ Consumer Redressal Forums, Consumer Courts,disputed by the Company.

2 Liability arising out of Arbitration proceedings 33.32 33.32 on account of cancellation of leased premises

3 Liability towards labour cases filed against the Nil 0.48 Company in various Courts, disputed by t h e Company.

4 Liability towards Penalty levied by customs 82.69 82.69 department on late payments which is disputed and is pending in the Hon''ble High Court of Delhi.

5 Liability towards additionalclaim received from a Nil Nil vendor who was already covered in the settlement scheme approved by the Hon''ble High Court of Delhi.

6 Unaccrued interest as explained in note (a) below. 74.71 74.71

7 Demand in respect of provident fund dues for 77.95 77.95 international workers as e xplained in note (iii) below

8 Show cause notice in respect of service tax dues 41.28 64.77 (excluding amounts in respect of penalty as these are not yet ascertainable)

9 Liability arising out of claim made for refunds on 5.42 Nil cancelled tickets

10 Liability arising out of other legal cases filed 11.66 Nil against the Company

11 Assessment relating to Assessment Year 2010-11 is pending with CIT(A) in respect of certain

additions made to returned loss by the Assessing Officer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil. Though there is no demand for payment of tax arising out of above assessments, the Assessing Officer (''AO'') has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

i. Under a suit filed by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit (''ICD'') aggregating to Rs. 50, the Company had deposited the amount of Rs. 50 on November 30, 2001 with the Hon''ble Bombay High Court and the Hon''ble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Hon''ble Court at the time of the final decision of the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit with Hon''ble High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company has not accrued interest payable of Rs. 74.71 up to the date of deposit of the amount with the Hon''ble Court on account of its defence in the court proceedings.

ii. In another case, M/s Hindustan Development Corporation Limited ("HDCL") (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 ICD to the Company, has filed a Review Petition against the Scheme of Settlement passed by the Hon''ble Delhi High Court wherein its liability was fixed at Rs. 35. The Company had made a deposit of Rs. 35 to the Official Administrator of the Schemein accordance with approved Scheme. Pending disposition of the review petition, the likelihood of the balance amount of Rs.15 devolving on the Company is not probable. Also, the interest (if any) on the same is not ascertainable.

iii. The Company has received a demand notice from the Regional Provident Fund Commissioner, Gurgaon for Rs 79.91 in respect of provident fund ("PF") dues for international workers vide Notifications GSR 706(E) dated 1st October 2008 and GSR 148 dated 3rd September 2010, for the period from November 2008 to February 2011. The Company has responded to the notice disputing the demand and, without admitting any liability towards the same, has deposited an amount of Rs 1.96 towards the PF contributions in respect of international workers for the period from November 2008 to July 2011 under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952(''PF Act''). Since August 2011, the Company has been making provident fund contributions in respect of international workers under the provisions of the PF Act. During the year ended March 31, 2012, the Company has filed a writ petition with the Hon''ble Delhi High Court contending that the above notifications relating to international workers are unreasonable and ultra vires the PF Act. The Court has directed that this matter be put up on regular list and the interim order in favour of the Company has been made absolute till disposal of the petition. Pending disposal of the petition, the Company has not accrued for any additional liability in respect of provident fund contributions to international workers.

b. Based on the legal advice obtained by the management, no provision is required to be made for the above contingent liabilities.

8. Dues to Micro and Small Enterprises

There are no overdue amounts payable to Micro and Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro and Small Enterprises during the current and previous year.

9. Transfer pricing

The Company has entered into transactions with certain related parties. For the year ended March 31, 2014, management confirms that it maintains documents as prescribed by the Income-tax Act, 1961, to prove that these transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

10. Previous year figures

Prior year comparative amounts in these financial statements have been reclassified wherever applicable to conform to current year''s presentation.


Mar 31, 2013

1. Corporate Information

SpiceJet Limited (''SpiceJet'' or the ''Company'') was incorporated on February 9, 1984 as a limited Company under the Companies Act, 1956 and is listed on the Bombay Stock Exchange Limited (''BSE''). The Company is engaged in the business of providing air transport services for the carriage of passengers. The Company is a low cost carrier (''LCC'') operating under the brand name of ''SpiceJet'' in India since May 23, 2005. The Company currently operates a fleet of 52 aircrafts across various routes in India as at March 31, 2013. SpiceJet has also obtained permission of the Directorate General of Civil Aviation (DGCA) to operate on selected routes outside India and has commenced international operations from October 2010.

During the year, the Company issued 42,900,000 shares to Mr. Kalanithi Maran, the promoter of the Company through a preferential allotment at a price of Rs. 23.18 per share aggregating to Rs. 994.42 million.

Further, the Company has also issued the following securities to the promoter of the Company on a preferential basis in the current year:

(i) 13,000,000 14% Unsecured Compulsorily Convertible Debentures of Rs.100 each aggregating to Rs.1,300.00 million which are convertible into equity shares of the Company at a price of Rs. 36.18 per equity share; and

(ii) 15,000,000 Warrants, which provide the option to apply for and be allotted equivalent number of equity shares of the face value of Rs.10 each at a premium of Rs.26.18 each.

Subsequent to the year end, the Promoter exercised his right to convert the 13,000,000 14% Unsecured Compulsorily Convertible Debentures into equity shares of the Company, pursuant to which 35,931,453 equity shares of the Company were allotted to the promoter at a price of Rs.36.18 per equity share.

2. Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter directors and executive directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employees Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options - one year from the date of grant

- 25% of the options - two years from the date of grant

- 25% of the options - three years from the date of grant

- 15% of the options - four years from the date of grant

3. Gratuity - benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is unfunded.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and amounts recognised in the balance sheet for gratuity.

4. Deferred Tax Asset

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs.3,145.16 million as at March 31, 2013 (Rs.1,291.28 million as at March 31, 2012).

5. Leases

Operating lease: Company as a lessee

The Company has taken on lease aircrafts, aircraft spares, engines and premises from third parties. Lease charges for aircrafts & engines for the year ended March 31, 2013 amount to Rs. 8,081.02 million (Previous year Rs. 6,019.07 million), supplemental lease charges amount to Rs. 3,243.54 million (Previous year Rs. 2,473.46 million) and rental expense on premises for the year ended March 31, 2013 amount to Rs. 140.72 million (Previous year Rs. 139.27 million).

The Company has taken aircraft through dry operating lease from lessors. Under the aircraft lease agreement, the Company pays monthly rentals in the form of base and supplementary rental. Base rental payments are either based on floating or fixed interest rates. Supplemental rentals are based on aircraft utilisation and are calculated with reference to the number of hours flown or number of cycles operated during each month. Both base and supplemental lease rentals have been charged to the statement of profit and loss. The lease terms vary between 3 and 10 years. There are no restrictions imposed by lease arrangements. The future minimum lease rentals payable under non cancellable leases (except supplementary rental which are based on aircraft utilisation and calculated on number of hours flown or cycle operated) are as follows:

6. Capital and other commitments

a. At March 31, 2013, the Company has commitments of Rs. 153,902.47 million (March 31, 2012 - Rs. 151,323.36 million) relating to the acquisition of aircrafts.

b. The Company has commitments in the nature of non-cancellable operating leases. The future minimum lease payments expected to be incurred over the remaining lease term are detailed in Note 31.

c. Under certain long-term maintenance contracts for the management, maintenance, repair and overhaul of aircraft components and spares, the Company incurs an agreed power-by-the-hour cost based on aircraft / component utilization. In addition, some contracts provide for compensation upon pre-mature termination, as applicable.

d. The Company has entered into agreements with oil companies for the purchase of aviation turbine fuel. The commercial terms of these agreements are subject to the fulfilment of certain stipulated off-take commitments as specified thereunder.

7. Dues to Micro and Small Enterprises

There are no overdue amounts payable to Micro and Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro and Small Enterprises during the current and previous year.

8. Transfer pricing

The Company has entered into transactions with certain related parties. For the year ended March 31, 2013, management confirms that it maintains documents as prescribed by the Income-tax Act, 1961, to prove that these transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. Previous year figures

Prior year comparative amounts in these financial statements have been reclassified wherever applicable to conform to current year''s presentation.

As per our report of even date.


Mar 31, 2012

1. Corporate Information

SpiceJet Limited ('SpiceJet' or the 'Company') was incorporated on February 9, 1984 as a limited Company under the Companies Act, 1956 and is listed on the Bombay Stock Exchange Limited ('BSE'). The Company is engaged in the business of providing air transport services for the carriage of passengers. The Company is a low cost carrier ('LCC') operating under the brand name of 'SpiceJet' in India since May 23, 2005. The Company currently operates a fleet of 40 aircrafts across various routes in India as at March 31, 2012. SpiceJet has also obtained permission of the Directorate General of Civil Aviation (DGCA) to operate on selected routes outside India and has commenced international operations from October 2010.

During the previous year, KAL Airways Private Limited and Mr. Kalanithi Maran (collectively referred to as the 'Acquirers') had acquired 38.66% of the then paid-up capital of the Company, including the entire equity holding of Royal Holdings Services Limited (the 'Erstwhile Promoter'). Consequently, the Acquirers have become the largest shareholders in the Company and the Promoters of the Company.

During the year, the Company has issued 35,900,000 shares constituting 5% to Mr. Kalanithi Maran, the promoter of the Company through preferential allotment at a price of Rs.36.48 per share aggregating to Rs.1,309.6 million.

Further, subsequent to the year end, the Company has issued 42,900,000 shares to Mr. Kalanithi Maran, the promoter of the Company through preferential allotment at a price of Rs.23.18 per share aggregating to Rs.994.42 million.

2 SHARE CAPITAL

B. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

C. Terms of conversion / redemption of FCCBs

During the year ended May 31, 2006, the Company had issued 800 FCCBs with face value of US$ 100,000 aggregating to USD 80 million. These FCCBs were convertible into equity shares at a conversion price of Rs. 25 per equity share at a fixed exchange rate of Rs. 46.12 to US$ 1 till November 11, 2010. Unless previously converted, redeemed or purchased and cancelled, such bonds were redeemable at 140.499 % of the principal amount on December 13, 2010. These FCCBs were listed on Luxemburg Stock Exchange. Out of the above, 2 FCCBs were converted into equity shares during the financial year ended March 31, 2009. During the year ended March 31, 2011, pursuant to the exercise of the right to conversion by the holders of these instruments, the Company issued 147,215,040 equity shares of Rs. 10/- at a price of Rs. 25 per equity share against the 798 outstanding FCCBs. The difference between the amounts outstanding against such FCCBs as at the dates of conversion (including the exchange fluctuation on restatement of such FCCBs upto the conversion dates of Rs. 38.73 million) and the face value of the shares issued aggregating to Rs. 2,246.96 million was transferred to the securities premium account. Post such conversion, the Company does not have any FCCB's outstanding.

Further, on conversion of these instruments, the provision for premium on redemption of the above FCCBs created out of the securities premium account for the period from date of issue of bonds till the dates of conversion aggregating to Rs. 1,372.54 million was reversed back to the securities premium account in the previous year.

D. Terms of warrants

The Company allotted 15,360,715 warrants on December 12, 2008 to GS Investment Partners (Mauritius) I Limited. Each warrant was convertible into one equity share of the Company at a conversion / exercise price of Rs. 39.46 per resultant equity share, at any time before the expiry of 18 months from the date of allotment of the warrant. The Company received Rs.60.61 million (10% of the total subscription value) towards subscription of warrants, in accordance with the terms of the allotment. During the previous year, the holders of the warrants exercised the option for conversion on June 11, 2010 and consequently, the Company allotted 15,360,715 equity shares after receiving the balance subscription value of Rs. 545.52 million from the holder of the warrants.

E. Aggregate number of bonus shares, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceeding the reporting date:

The Company has issued total 1,732,865 shares (March 31, 2011 - 1,561,200 shares) during the period of five years immediately preceeding the reporting date on exercise of options granted under the ESOP wherein part consideration was received in form of employee services.

F. Shares held by shareholders holding more than 5 percent shares in the Company.

As per records of the Company, including its register of shareholders / members and other declarations recived from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

G. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the company, please refer Note 28.

3. Deferral / Capitalization of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 - The Effects of Changes in Foreign Exchange Rates, to allow companies the option to defer / capitalize exchange differences arising on long-term foreign currency monetary items.

The Company has elected to adopt the accounting treatment prescribed under paragraph 46 A of the said amendment to AS 11. In accordance with such amendment / earlier amendment to AS 11, the Company has capitalized exchange losses arising on the long-term foreign currency lease obligation amounting to Rs 321.39 million (March 31, 2011: Rs Nil) to the cost of the aircrafts. However, the said notification does not cover exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs as defined in paragraph 4 (e) of AS 16 - Borrowing costs. During the current year, the Company has not considered any part of the foreign exchange fluctuation on the underlying borrowings as interest cost as required under paragraph 4 (e) of AS 16 - Borrowing costs, as it believes that the recent movements in currency rates cannot be attributed to changes in interest rates in view of the high volatility in the currency rates.

Further, net exchange gains arising on other long-term foreign currency monetary items of Rs 58.31 million (March 31, 2011: Rs Nil) have been deferred in the "Foreign Currency Monetary Item Translation Difference Account".

4. Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter directors and executive directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employees Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options – one year from the date of grant

- 25% of the options – two years from the date of grant

- 25% of the options – three years from the date of grant

- 15% of the options – four years from the date of grant

During the year ended March 31, 2010, the remuneration committee made two grants out of its Scheme to the erstwhile Chief Executive Officer ("CEO") of the Company at an exercise price of Rs.10 /- per share. The first grant of 1,804,884 options made on October 5, 2009 has a vesting period of 1 year from the date of grant. Vesting of the second grant of 5,422,954 options made on December 23, 2009 will happen in nine equal instalments with first vesting on December 23, 2010, second on January 20, 2011 and thereafter remaining seven at quarterly intervals. Half the options in the second grant will vest with each successive completion of employment and half of the options vests on achievement of certain performance targets defined in his employment agreement. For the purpose of accounting of these options, the management has assumed that performance targets defined in the employment agreement will be achieved and all options will vest to him accordingly. It may be noted that the erstwhile CEO ceased to be in employment with the Company effective June 30, 2010.

Further, during the previous year, the remuneration committee has granted 100,000 options to an employee at an exercise price of Rs. 30/- per share. These options would vest over 3 years in the following manner:

- 60% of the options – one year from the date of grant

- 25% of the options – two years from the date of grant

- 15% of the options – three years from the date of grant

Again, the employee to whom these 100,000 options were granted in the previous year has ceased to be in employment with the Company effective January 19, 2012.

The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The summary of the movement in options is given below:

5. Gratuity - benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is unfunded.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and amounts recognised in the balance sheet for gratuity.

6. Deferred Tax Asset

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs. 1,291.28 million as at March 31, 2012 (Rs. 52.92 million as at March 31, 2011).

7. Leases

Operating lease: Company as a lessee

The Company has taken on lease aircrafts, aircraft spares, engines and premises from third parties. Lease charges for aircrafts & engines for the year ended March 31, 2012 amount to Rs. 6,019.07 million (Previous year Rs. 4,284.79 million), supplemental lease charges amount to Rs. 2,473.46 million (Previous year Rs.1,687.25 million).

8. Capital and other commitments

a. At March 31, 2012, the Company has commitments of Rs. 151,323.36 million (March 31, 2011: Rs. 157,218.19 million) relating to the acquisition of aircrafts.

b. The Company has commitments in the nature of non-cancellable operating leases. The future minimum lease payments expected to be incurred over the remaining lease term are detailed in Note 31.

c. Under certain long-term maintenance contracts for the management, maintenance, repair and overhaul of aircraft components and spares, the Company incurs an agreed power-by-the-hour cost based on aircraft / component utilization. In addition, some contracts provide for compensation upon pre-mature termination, as applicable.

d. The Company has entered into agreements with oil companies for the purchase of aviation turbine fuel. The commercial terms of these agreements are subject to the fulfillment of certain stipulated off-take commitments as specified thereunder.

9. Contingent liabilities

Claims against the Company not acknowledged as debts

S. No Particulars As at March As at March 31, 2012 31, 2011

1 Liability arising out of legal cases filed against the 24.62 22.99 Company in various Courts/ Consumer Redressal Forums, Consumer Courts, disputed by the Company.

2 Liability arising out of Arbitration proceedings on 33.32 33.32 account of cancellation of leased premises

3 Liability towards labour cases filed against the 0.48 0.48 Company in various Courts, disputed by the Company.

4 Liability towards Penalty levied by customs 82.69 82.69 department on late payments which is disputed and is pending in the Hon'ble High Court of Delhi.

5 Liability towards additional claim received from a 17.50 17.50 vendor who was already covered in the settlement scheme approved by the Hon'ble High Court of Delhi.

6 Unaccrued interest as explained in note (a) below. 74.71 74.71

7 Demand in respect of provident fund dues for 77.95 - international workers as explained in note (d) below

8 Show cause notice in respect of service tax dues 64.77 - (excluding amounts in respect of penalty as these are not yet ascertainable)

10 Assessment relating to Assessment Year 2009-10 is pending with CIT(A) in respect of certain additions made to returned loss by the Assessing Officer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil. Though there is no demand for payment of tax arising out of above assessments, the Assessing Officer ('AO') has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

a. Under a suit filed by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit ('ICD') aggregating to Rs. 50 million, the Company had deposited the amount of Rs. 50 million on November 30, 2001 with the Hon'ble Bombay High Court and the Hon'ble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Hon'ble Court at the time of the final decision of the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit with Hon'ble High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company has not accrued interest payable of Rs. 74.71 million upto the date of deposit of the amount with the Hon'ble Court on account of its defence in the court proceedings.

b. In another case, M/s Hindustan Development Corporation Limited ("HDCL") (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 million ICD to the Company, has filed a Review Petition against the Scheme of Settlement passed by the Hon'ble Delhi High Court wherein its liability was settled at Rs. 35 million. The Company had made a deposit of Rs. 35 million in accordance with approved Scheme to the Official Administrator of the Scheme. The review petition is yet to be decided. _

c. The Company is in the process of finalising the full and final settlement payable to an erstwhile key management person, in accordance with the terms of his employment agreement. Management believes that the provision made in the financial statements as at March 31, 2012 for the same is adequate.

d. The Company has received a demand notice from the Regional Provident Fund Commissioner, Gurgaon for Rs 79.91 million in respect of provident fund ("PF") dues for international workers vide Notifications GSR 706(E) dated 1st October 2008 and GSR 148 dated 3rd September 2010, for the period from November 2008 to February 2011. The Company has responded to the notice disputing the demand and, without admitting any liability towards the same, has deposited an amount of Rs 1.96 million towards the PF contributions in respect of international workers for the period from November 2008 to July 2011 under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952('PF Act'). Since August 2011, the Company has been making provident fund contributions in respect of international workers under the provisions of the PF Act. Subsequent to the year end, the Company has filed a writ petition with the Hon'ble Delhi High Court contending that the above notifications relating to international workers are unreasonable and ultra vires the PF Act. The Hon'ble Delhi High Court has issued notices to the respondents to file their reply and the next hearing is fixed on September 16, 2012. Pending disposal of the petition, the Company has not accrued for any additional liability in respect of provident fund contributions to international workers.

Based on the legal advice obtained by the management, no provision is required to be made for the above contingent liabilities.

11. Dues to Micro and Small Enterprises

There are no overdue amounts payable to Micro and Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro and Small Enterprises during the current and previous year.

12. Engine repair costs

During the year, the Company has entered into a fresh maintenance contract to manage its long-term engine maintenance costs. The Company has carried out certain additional overhauls to its existing engines to help migrate to the new arrangement resulting in an expenditure of Rs. 252.94 million, the benefit of which is expected to accrue over the duration of the contract. Such costs have been fully expensed in the current year.

13. Previous year figures

Till the previous year, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. The current year's financial statements have been prepared and presented in accordance with the requirements of the revised Schedule VI, as notified under the Companies Act, 1956 and applicable to the Company. The Company has also reclassified previous year figures in accordance with these requirements.

As per our report of even date.


Mar 31, 2011

1.1 Background

SpiceJet Limited ('SpiceJet' or the 'Company') was incorporated on February 9, 1984 as a limited company under the Companies Act, 1956 and is listed on the Bombay Stock Exchange Limited ('BSE'). The Company is engaged in the business of providing air transport services for the carriage of passengers. The Company is a low cost carrier ('LCC') operating under the brand name of 'SpiceJet' in India since May 23, 2005. The Company currently operates a fleet of 27 aircrafts across various routes in India as at March 31, 2011. SpiceJet has also obtained the permission of the Directorate General of Civil Aviation (DGCA) to operate on selected routes outside India and has commenced international operations from October 2010.

During the year, pursuant to an Open Offer made by KAL Airways Private Limited and Mr. Kalanithi Maran (collectively referred to as the 'Acquirers'), the Acquirers have acquired, in aggregate, 156,528,305 equity shares of the Company constituting 38.66% of the then paid-up capital of the Company, including 31,077,500 equity shares acquired from Royal Holdings Services Limited (the 'Erstwhile Promoter'). Consequently, the Acquirers have become the largest shareholders in the Company and the Promoters of the Company.

2.1 Conversion of Zero Coupon Foreign Currency Convertible Bonds ('FCCB's)

During the year ended May 31, 2006, the Company had issued 800 FCCBs with face value of US$ 100,000 aggregating to USD 80 million. These FCCBs were convertible into equity shares at a conversion price of Rs. 25 per equity share at a fixed exchange rate of Rs.46.12 to US$ 1 till November 11, 2010. Unless previously converted, redeemed or purchased and cancelled, such bonds were redeemable at 140.499 % of the principal amount on December 13, 2010. These FCCBs were listed on Luxemburg Stock Exchange. Out of the above, 2 FCCBs were converted into equity shares during the financial year ended March 31, 2009.

During the current year, pursuant to the exercise of the right to conversion by the holders of these instruments, the Company has issued 147,215,040 equity shares of Rs. 10/- at a price of Rs.25 per equity share against the 798 outstanding FCCBs. The difference between the amounts outstanding against such FCCBs as at the dates of conversion (including the exchange fluctuation on restatement of such FCCBs upto the conversion dates of Rs. 38.73 million) and the face value of the shares issued of Rs.2,246.96 million has been transferred to the securities premium account. Post such conversion, the Company does not have any FCCB's outstanding.

Further, on conversion of these instruments, the provision for premium on redemption of the above FCCBs created out of the securities premium account for the period from date of issue of bonds till the dates of conversion has been reversed back to the securities premium account.

2.2 Conversion of Warrants

The Company had allotted 15,360,715 warrants on December 12, 2008 to GS Investment Partners (Mauritius) I Limited. Each warrant was convertible into one equity share of the Company at a conversion / exercise price of Rs. 39.46 per resultant equity share, at any time before the expiry of 18 months from the date of allotment of the warrant. The Company had received Rs.60.61 million (i.e. 10% of the total subscription value) towards subscription of warrants, in accordance with the terms of the allotment.

During the current year, the holders of the warrants had exercised the option for conversion on June 11, 2010 and consequently, the Company has allotted 15,360,715 equity shares after receiving the balance subscription value of Rs. 545.52 million.

2.3 Stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). The option plan is summarized below:

Employee Stock Option Scheme, 2007

The shareholders at the Annual General Meeting held on September 11, 2007, approved an Employee Stock Option Scheme (ESOS) which provides for the grant of 6,016,250 options (each option convertible into 1 share) to employees. Further, at the Extraordinary General Meeting held on December 23, 2009, the shareholders had approved to extend the aggregate number of options under the scheme to 20,000,000 options.

The remuneration committee had granted 5,200,000 options to eligible employees on September 11, 2007 at an exercise price of Rs. 30 /- per share. Such options were to vest over 4 years in the following manner:

- 35% of the options - one year from the date of grant

- 25% of the options - two years from the date of grant

- 25% of the options - three years from the date of grant

- 15% of the options - four years from the date of grant

During the year ended March 31, 2010, the remuneration committee made two grants out of its Scheme, to its Chief Executive Officer, Mr. Sanjay Aggarwal at an exercise price of Rs.10 /- per share. The first grant of 1,804,884 options made on October 5, 2009 has a vesting period of 1 year from the date of grant. Vesting of the second grant of 5,422,954 options made on December 23, 2009 will happen in nine equal instalments with first vesting on December 23, 2010, second on January 20, 2011 and thereafter remaining seven at quarterly intervals. Half the options in the second grant will vest with each successive completion of employment and half of the options vests on achievement of certain performance targets defined in his employment agreement. For the purpose of accounting of these options, the management has assumed that performance targets defined in the employment agreement will be achieved and all options will vest to him accordingly. Further it may be noted that Mr. Sanjay Aggarwal ceased to be in employment with the Company effective June 30, 2010.

Further, during the year, the remuneration committee has granted 100,000 options to an employee at an exercise price of Rs. 30/- per share. These options will vest over 3 years in the following manner:

- 60% of the options - one year from the date of grant

- 25% of the options - two years from the date of grant

- 15% of the options - three years from the date of grant

2.4 Secured loans

The secured term loans from Allahabad Bank, Industrial Finance Branch, Mumbai are secured by a pledge of certain identified fixed deposits of the Company held with the same bank, the hypothecation of certain assets and the pledge of certain shares of the Promoter.

2.5 Deferred tax assets / MAT credit

The Company has recognized deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation to the extent of the deferred tax liability arising on account of the timing difference on depreciation of Rs. 52.92 million as at March 31, 2011 (Rs. 46.72 million as at March 31, 2010).

In accordance with Accounting Standard - 22 'Accounting for taxes on income' and the Guidance Note on accounting for credit available in respect of minimum alternative tax, the Company has not recognised the balance deferred tax assets arising on account of carried forward tax losses and unabsorbed depreciation and MAT credit, as subsequent realisation of such amounts is not virtually / reasonably certain, as applicable.

2.6 Segment reporting

The Company's operations predominantly relate only to air transportation services and accordingly this is the only primary reportable segment. Further, the operations of the Company are substantially limited within one geographical segment (India) and accordingly this is considered the only reportable secondary segment.

2.7 Related party transactions

1. Names of related parties

Relationship Name of the party

Party exercising significant influence Kal Airways Private Limited and Mr. Kalanithi Maran from November 11, 2010

Royal Holdings Services Limited, Nevada, USA (upto November 10, 2010)

Enterprises over which parties above or their relatives have control/significant influence ('Affiliates')

Sun TV Network Limited (from November 11, 2010) Digital Radio (Delhi) Broadcasting Limited (from November 11, 2010)

Subsidiary company Spice Enterprises Private Limited (ceased to be a related party on September 11, 2009)

Key management personnel Sanjay Aggarwal (upto June 30, 2010)

Kishore Gupta (July 1, 2010 to October 10, 2010) Neil Raymond Mills (from October 11, 2010)

2.8 Lease commitments

Operating leases

The Company has taken on lease aircrafts, aircraft spares, engines and premises from third parties. Rental expense for the year ended March 31, 2011 amounts to Rs. 4,457.41 million (Previous year Rs. 4,059.78 million), supplemental rent amounts to Rs. 1,687.25 million (Previous year Rs.1,459.01 million).

The Company has taken aircraft through dry operating lease from lessors. Under the aircraft lease agreement, the Company pays monthly rentals in the form of base and supplementary rental. Base rental payments are either based on floating or fixed interest rates. Supplemental rentals are based on aircraft utilisation and are calculated with reference to the number of hours flown or number of cycles operated during each month. Both base and supplemental lease rentals have been charged to the Profit and loss account. The lease terms vary between 3 and 10 years. There are no restrictions imposed by lease arrangements. There are no subleases. There are no initial direct costs. The future minimum lease rentals payable under non cancellable leases (except supplementary rental which are based on aircraft utilisation and calculated on number of hours flown or cycle operated) are as follows:

2.9 Gratuity benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is unfunded.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and amounts recognised in the balance sheet for gratuity.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company does not currently have any estimates of the contribution to be paid to the plan during the next year. Accordingly, the same has not been disclosed.

2.10 There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.

2.11 On account of the nature of the business of the Company, supplementary information for the profit and loss account as required to be disclosed under paragraph 3 (i) to (iii) except 3 (i) (c), (ii) (c) and paragraph 4 C of Part II to Schedule VI of the Act are not applicable and hence no disclosures have been made in this regard.

2.12 The Company has exercised the exemption granted to airline companies vide the Ministry of Corporate Affairs notification dated February 8, 2011 for non-disclosure of the information required under paragraphs 4-D (a) to (e) except (d) of Part II to Schedule VI of the Act. Accordingly, such information has not been disclosed.

Contingent liabilities

Claims against the Company not acknowledged as debts

S. No Particulars As at As at

March 31, 2011 March 31, 2010

a. Demand raised under the provisions of. Employees' - 4.12 State Insurance Act, 1948 for the period November 1996 to September 1997 inclusive of interest and penalty. (The Company has obtained stay against recovery of said demand from the Hon'ble High Court of Delhi).

b. Liability arising out of legal cases filed against the 22.99 16.17 Company in various Courts/ Consumer Redressal Forums, Consumer Courts, disputed by the Company.

c. Liability arising out of Arbitration proceedings on account 33.32 - of cancellation of leased premises

d. Liability towards labour cases filed against the Company 0.48 0.48 in various Courts, disputed by the Company.

e. Liability towards Penalty levied by customs department on 82.69 82.69 late payments which is disputed and is pending in the Hon'ble High Court of Delhi.

f. Liability towards additional claim received from a vendor 17.50 17.50 who was already covered in the settlement scheme approved by the Hon'ble High Court of Delhi.

g. Unaccrued interest as explained in Note 1 below. 74.71 74.71

h. Assessments relating to Assessment Year 2007-08 and 2008-09 are pending with CIT(A) in respect of certain additions made to returned loss by the Assessing Officer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil.

Though there is no demand for payment of tax arising out of above assessments, the Assessing Officer ('AO') has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

Legal Proceeding by and / or against the company

1. Under a suit filed by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit ('ICD') aggregating to Rs. 50 million, the Company had deposited the amount of Rs. 50 million on November 30, 2001 with the Hon'ble Bombay High Court and the Hon'ble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Hon'ble Court at the time of the final decision of the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit with Hon'ble High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company has not accrued interest payable of Rs. 74.71 million upto the date of deposit of the amount with the Hon'ble Court on account of its defence in the court proceedings.

2. In another case, M/s Hindustan Development Corporation Limited ("HDCL") (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 million ICD to the Company, filed a Review Petition against the Scheme of Settlement passed by the Hon'ble Delhi High Court wherein its liability was settled at Rs. 35 million. The Company had made a deposit of Rs. 35 million in accordance with approved Scheme to the Official Administrator of the Scheme. The review petition filed by HDCL has been dismissed by the Delhi High Court on July 16, 2010.

3. The Company has received a notice dated May 10, 2011 from the Registrar of Companies ('ROC') seeking to explain the reasons for non-compliance with section 269 of the Companies Act, 1956 relating to the requirement to have a whole time director. The Company is in the process of responding to the said notice and taking necessary actions and believes that the impact of the same is not likely to be material to the financial statements for the year ended March 31, 2011.

notice and taking necessary actions and believes that the impact of the same is not likely to be material to the financial statements for the year ended March 31, 2011.

4. The Company is in the process of finalising the full and final settlement payable to its erstwhile Chief Executive Officer, Mr. Sanjay Aggarwal, in accordance with the terms of his employment agreement. Management believes that the provision made in the financial statements as at March 31, 2011 for the same is adequate.

Based on the legal advice obtained by the management, no provision is required to be made for the above contingent liabilities.

2.13 Application of funds

During the year, the Company has used some of the short term funds that were generated from its operations to temporarily fund the pre-delivery payments for the acquisition of aircrafts. Towards the end of the year, the Company has tied up a long term funding in the form of terms loan facility of Rs. 2,500 million from a bank for the same purpose. The Company has also drawn down such loans as and when required, subsequent to the balance sheet date, to make good such temporary utilization of short term funds. Management further believes that such pre-delivery payments made towards the acquisition of certain of the aircrafts are temporary and would be recovered on finalizing the lease arrangements for such aircrafts.

2.14 Previous year comparatives

The financial statements for the previous year were audited by a firm other than S.R. Batliboi & Associates. Previous year figures have been reclassified / regrouped wherever necessary to conform to current year's classification.


Mar 31, 2010

1. Contingent Liabilities not provided for in the accounts exist in respect of:

(Rs.in Millions)

S.N. Particulars As at March As at March 31, 2010 31, 2009

Demand raised under the provisions of Employee State Insurance 4.12 4.12 Act, 1948 for the period November 1996 to September 1997 inclusive of interest and penalty. (The Company has obtained stay against recovery of said demand from the Honorable High Court of Delhi).

ii) Liability arising out of legal cases filed against the Company 16.17 11.59 in various Courts/ Consumer Redressal Forums, Consumer Courts, disputed by the Company.

iii) Liability towards labour cases filed against the Company in 0.48 0.70 various Courts, disputed by the Company.

iv) Liability towards Penalty levied by customs department on late 82.69 82.69 payments which is disputed and is pending in the Honorable High Court of Delhi.

v) Liability towards additional claim received from a vendor who 17.50 17.50 was already covered in the settlement scheme approved by the Honorable High Court of Delhi.

vi) Unaccrued interest as explained in Note 2.1 below 74.71 74.71

vii) Assessments relating to Assessment Year 2006-07 and 2007-08 are pending with CIT(A) in respect of certain additions made to returned loss by the Assessing Offi cer which resulted in taxable income, but income tax payable after adjusting the brought forward losses and depreciation was computed to be Nil.

Though there is no demand for payment of tax arising out of above assessments, the Assessing Offi cer (AO) has initiated penalty proceedings against the Company under section 271(1)(c). Penalty amount is not ascertainable as AO has not raised any demand.

2. Legal proceeding by and/ or against the Company

2.1 Under a suit fi led by Leela Capital (petitioner) for recovery of the Inter Corporate Deposit ("ICD") aggregating to Rs. 50 million, the Company had deposited the amount of Rs. 50 million on November 30, 2001 with the Bombay High Court and the Honble Bombay High Court later allowed the petitioner to withdraw the said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such part thereof, with 9% interest, to the Company, if and as directed by the Court at the time of the fi nal decision of the suit fi led by the petitioner. Accordingly, pending fi nality of the matter, both the ICD and deposit with High Court have been disclosed under the Unsecured Loans and Loans and Advances, respectively. The Company has not accrued interest payable of Rs. 74.71 million upto the date of deposit of the amount with the court on account of its defence in the court proceedings.

2.2 In another case, M/s Hindustan Development Corporation Limited ("HDCL") (now renamed as Mallanpur Steels Limited) who had lent Rs. 50 million ICD to the Company, has fi led a Review Petition against the Scheme of Settlement passed by the Delhi High Court wherein its liability was settled at Rs. 35 million. The Company had made a deposit of Rs. 35 million in accordance with approved Scheme to the Offi cial Administrator of the Scheme. The review petition is yet to be decided.

3. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs. 25,869.45 million (Previous year Rs. 36,635.18 million).

4. Settlement of litigation with S. K. Modi Group

The Company entered into a Memorandum of Settlement (MoS) on November 26, 2008 with its erstwhile promoter S K Modi Group to settle various ongoing litigations with them. This settlement was approved by the Honble High Court of Delhi on January 16, 2009.

In terms of the MoS, S. K. Modi group surrendered 8 million shares of the Company in their name, under a trust for the benefi t of the Company whereby the Company was given the right to authorize sale of shares at the most opportune time and receive sale proceeds. For this purpose, a trustee was appointed on June 9, 2009.

During the previous year ended March 31, 2009, the above mentioned right in the 8 million shares were recorded in the books under the head "Other current assets" at the rate of Rs.13.5 per share amounting to Rs.108 million.

During the year ended March 31, 2010, the Company has sold the aforesaid shares and has earned a profi t of Rs.113.49 million (net of brokerage) on this transaction. Profi t on sale of these shares is included in "Other income" in profi t and loss account.

5. The Companys accumulated losses stand at Rs.8,223.75 million which have completely eroded the net worth of the Company as at March 31, 2010. These losses are due to a variety of factors in past.

The management expects improvement in the business results in the year ended March 31, 2010 to continue in the foreseeable future primarily due to improvement in the general economic environment, stabilization of fuel prices and rationalization of capacity in the airline industry.

With improvement in results of operations, the management is of the opinion that the likelihood of the FCCB holders seeking conversion into equity shares instead of redemption and warrant holders exercis- ing their option to apply for equity shares has improved.

The financial statements have, therefore, been prepared on going concern basis.

6. Share Warrants

The Company on December 12, 2008 allotted 15,360,715 warrants, having an option to apply for and be allotted equivalent number of equity shares of Rs.10 each at a price of Rs.39.46 per share to GS Investment Partners (Mauritius) I Limited. The Company received Rs.60.61 million (i.e.10% of the total investment value) towards subscription of warrants. The above said warrants can be converted into eq- uity shares till June 11, 2010. In case of non-exercise of conversion right, the warrants shall automatically get extinguished and money paid towards subscription of warrants shall stand forfeited.

7. Secured loans

The Company has taken secured term loans from Allahabad Bank, Industrial Finance Branch, Mumbai of which total balance outstanding as at March 31, 2010 is Rs.339.89 million (Previous year Rs.300 mil- lion). These loans are secured by a pledge on fi xed deposit of Rs.300 million held with the same branch and hypothecation of assets worth Rs.39.89 million.

8. Zero Coupon Foreign Currency Convertible Bonds (FCCBs)

(a) During the year ended May 31, 2006, the Company issued 800 FCCBs with face value of USD 100,000 aggregating to USD 80 million. The FCCBs are convertible into equity shares at a conversion price of Rs.25 per equity share at a fi xed exchange rate of Rs. 46.12 to USD 1 till November 11, 2010. The conversion price is subject to certain adjustments. Unless previously converted, redeemed or purchased and cancelled, the Company will redeem these bonds at 140.499 percent of the principal amount on December 13, 2010. Also, the Company has deposited USD 500,000 with the Security Trustee for administrative purposes. These FCCBs are listed on Luxemburg Stock Exchange.

During the financial year ended March 31, 2009, 2 FCCBs were converted into equity shares.

9. Recoverability of unexpired unabsorbed depreciation and carry forward losses and Minimum Alternate Tax

a. Deferred tax

In accordance with Accounting Standard 22 "Accounting for taxes on income" of the Companies (Accounting standards) Rules, 2006, in view of substantial losses incurred by the Company during the last years and large amount of unexpired unabsorbed depreciation and carry forward losses under the Income Tax Act, 1961, deferred tax assets on carried-forward losses and unabsorbed depreciation and have not been accounted for in the books, since it is not virtually certain whether the Company will be able to utilize such losses/ depreciation.

b. Minimum Alternate Tax (MAT)

During the year ended March 31, 2010, the Company has paid tax under MAT provisions of Income Tax Act, 1961, which the Company can claim in the subsequent year(s) (upto a certain time limit) in which tax is payable under normal provision of Income tax Act, 1961. However, in view of the substantial unexpired unabsorbed losses and depreciation available to the Company, an asset for this entitlement has not been recorded in the fi nancial statements.

10. Accounting Standard 17 "Segment Reporting" of the Companies (Accounting standards) Rules, 2006 requires the Company to disclose certain information about operating segments. The Company is man- aged as a single operating unit that provides air transportation only and therefore, has only one report- able business segment. Further, the operations of the Company are limited within one geographical segment. Hence the disclosure required by this standard is presently not applicable to the Company.

11. Disclosure of details pertaining to transactions with related parties entered into during the year and balances as at March 31, 2010 in terms of Accounting Standard 18 ‘Related Party Disclosures of the Companies (Accounting standards) Rules, 2006, as identifi ed and certifi ed by the Management:

A. Related Party Relationship

Subsidiary company

Spice Enterprises Private Limited*

Entities exercising signifi cant infl uence on the Company

Royal Holdings Services Limited, Nevada, USA

Key Management Personnel

Mr.Sanjay Aggarwal – Chief Executive Officer

* Ceased to be a related party on September 11, 2009. Hence, transactions till this date have been included in the disclosures.

12. Accounting for Leases:

(a) Operating Lease Obligations

The Company has taken on lease aircrafts, aircraft spares, engines and premises from third parties. Rental expense for the year ended March 31, 2010 amounts to Rs. 4,059.78 million (Previous year Rs. 3,784.37 million).

(b) Operating Lease Income

The Company had given one aircraft (obtained on operating lease) to a party under an operating lease agreement for a period of 4 months in the previous year. Lease rental recognized in the profi t and loss account amounted to Rs. 77.17 million in the previous year 2008-09 in this regard. In the current year no aircraft has been sub-leased.

13. The Company does not use foreign currency forward contracts to hedge its risks associated with foreign currency fl uctuations relating to certain fi rm commitments and forecasted transactions.

14. Based on the information available with the Company, there are no dues outstanding in respect of Micro, Small and Medium enterprises at the balance sheet date. The above disclosure has been determined to the extent such parties have been identifi ed on the basis of information available with the Company. This has been relied upon by the auditors.

15. Previous years figures have been regrouped or reclassified wherever necessary to conform to current years classifi cation.