Accounting Policies of Jet Airways (India) Ltd. Company

Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set below have been applied consistently to all periods presented in these financial statements and in preparing the opening Ind AS Balance sheet as at 1 April 2016 for the purposes of the transition to Ind AS.

Current - non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

- it is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;

- it is held primarily for the purpose of being traded;

- it is expected to be realised within 12 months after the reporting period; or

- it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities

A liability is classified as current when it satisfies any of the following criteria:

- it is expected to be settled in the Company’s normal operating cycle;

- it is held primarily for the purpose of being traded;

- it is due to be settled within 12 months after the reporting period; or

- the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Current liabilities include the current portion of non-current financial liabilities. All other liabilities are classified as noncurrent.

Operating cycle

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Based on the nature of operations and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle a period of 12 months for the purpose of classification of assets and liabilities as current and non- current.

A. Leases

I eased assets

Leases of property, plant and equipment that transfer to the Company substantially all of the risks and rewards of ownership are classified as finance lease. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities, as appropriate. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to similar owned assets and the depreciation recognised shall be calculated in accordance with Ind AS 16 Property, Plant and Equipment and Ind AS 38 Intangible Assets. If there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. Leases in which significant portion of risks and rewards of ownership are not transferred are classified as operating leases.

Lease classification is made at the inception of the lease. Lease classification is changed only if, at any time during the lease, the parties to the lease agreement agree to revise the terms of the lease (without renewing it) in a way that it would have been classified differently, had the changed terms been in effect at inception. The revised agreement involves renegotiation of original terms and conditions and are accounted prospectively over the remaining term of the lease.

For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.

Lease payments

Minimum lease payments made under finance lease are apportioned between the finance costs and the reduction of the outstanding liability. The finance costs is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Lease payments in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with the expected general inflation to compensate the lessor’s expected inflationary cost increases.

Sale and lease back transactions

Gains and losses arising on sale and leaseback transactions resulting in an operating lease and where the sale price is at fair value, are recognised immediately in the Statement of Profit and Loss. Where the sale price is below fair value, any losses are immediately recognised in the Statement of Profit and Loss, except where the loss is compensated for by future lease payments at below market price, it is deferred and amortised in proportion to the lease payments over the initial period for which the asset is expected to be used. Where the sale price is above fair value, the excess over fair value is amortised over the initial period of the lease which coincides with the period for which the asset is expected to be used.

Any excess of sales proceeds over the carrying amount in case a sale and leaseback transaction results in a finance lease, is deferred and amortised over the expected period of use of leased asset in proportion to the depreciation of the leased asset.

B. Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, net of discounts. Revenue is recorded provided the recovery of consideration is probable and determinable.

i. Passenger revenue is recognised on flown basis i.e. when the service is rendered, net of discounts given to the passengers, applicable taxes and airport levies such as passenger service fee, user development fee, etc., if any.

ii. Cargo revenue is recognised when service is rendered i.e. goods are transported, net of airport levies and applicable taxes.

iii. The sales of tickets / airway bills (sales net of refunds) are initially credited to the “Forward Sales Account”. Income recognised as indicated above is reduced from the “Forward Sales Account” and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.

iv. The unutilised balances in “Forward Sales Account” are recognised as income based on historical statistics, data and management estimates and considering Company’s refund policy.

v. Lease income on the Aircraft given on operating lease is recognised in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realisation.

vi. Interest income on financial assets (including deposits with banks) is recognised using the effective interest rate method on a time proportionate basis.

C. Lease claim / Incentives (credit):

Claims and credits relating to reimbursement towards operational expenses such as operating lease rentals, aircraft repair and maintenance, etc. are adjusted against such expenses over the estimated period for which these reimbursements pertains. The claims and credits are netted of against related expense arising on the same transaction as it reflects the substance of transaction. Moreover, any claim or credit not related to reimbursement towards operational expenses or used for purchase of goods and services are recognised as income in the Statement of Profit and Loss when a contractual entitlement exists, the amount can be reliably measured and receipt is virtually certain.

D. Export Incentives:

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. Commission:

As the Company act as a principle, the commission paid / payable on sales including over-riding commission is recognised on flown basis as an expense in the Statement of Profit and Loss.

F. Expenditure:

Expenses are accounted for on the accrual basis and provisions are made for all known losses and liabilities.

G. Foreign currency transactions:

The functional currency of the Company has been determined on the basis of the primary economic environment in which it operates. The functional currency of the Company is Indian Rupee.

Initial Recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at the average rates that closely approximate the rate at the date of the transaction.

Conversion

Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date. Gains/ (losses) arising on account of realisation/settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the Statement of Profit and Loss. Foreign exchange gains / (losses) arising on translation of foreign currency monetary loans are presented in the Statement of Profit and Loss on net basis. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are translated using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value denominated in a foreign currency are translated using the exchange rates that existed when the values were determined.

H. Aircraft Fuel Expenses

Aircraft fuel expenses are recognised in the statement of profit and loss as uplifted and consumed, net off any discounts.

I. Aircraft Maintenance and Repair Cost:

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair Costs are expensed as incurred except with respect to engines/APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

The Company has in its fleet aircraft on operating lease. As contractually agreed under the lease contracts, the aircraft have to be redelivered to the lessors at the end of the lease term under stipulated contractual return conditions. The redelivery costs are estimated by management based on historical trends and data, and are recorded in the financial statements in proportion to the expired lease period. These are recorded at the discounted value, where effect of the time value of money is material.

J. Employee benefits

Short-term employee benefits

Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at an undiscounted amount expected to be paid when the liabilities are settled.

Post-employment benefit plans

i. Defined contribution plans

The Company pays provident fund contributions to the appropriate government authorities. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefits expense when they are due.

ii. Defined benefit plans

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Vesting occurs upon completion of five years of service. The gratuity plan of the Company is unfunded.

The liability recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated by actuary using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. This cost and other costs are included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in “other equity” in the Statement of Changes in Equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from settlement or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.

Other long-term employee benefits

Benefits under compensated absences are accounted as other long-term employee benefits. The Company’s net obligation in respect of compensated absences is the amount of benefit to be settled in future, that employees have earned in return for their service in the current and previous years. The benefit is discounted to determine its present value. The obligation is measured on the basis of an actuarial valuation using the projected unit credit method. Remeasurement are recognised in Statement of Profit and Loss in the period in which they arise.

K. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

L. Income Tax

Income tax expense comprises of current tax and deferred tax.

Current tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Current tax assets and liabilities are offset only if, the Company:

a) has a legally enforceable right to set off the recognised amounts; and

b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for unused tax losses, unused tax credits and all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they are relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

M. Inventories

Inventories primarily includes stores and spares and loose tools (other than those which meet the criteria of property, plant and equipment), fuel and in-flight inventories. Inventories are stated at the lower of cost and Net Realizable Value (NRV). Cost of inventories comprise all costs of purchase after deducting non-refundable rebates and discounts and all other costs incurred in bringing the inventories to their present location and condition. Costs of inventories are determined on weighted average basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. NRV for stores and spares, loose tools and fuel used in rendering of services are not written down below cost except in cases where the price of such materials have declined and it is estimated that the cost of rendering of services will exceed their selling price. Where necessary, due allowance is made for all damaged, obsolete and slow moving items.

N. Property, plant and equipment

Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property, plant and equipment comprises: (a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; (b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate component of property, plant and equipment. The Company has recognised major inspection costs relating to engine and airframe overhauls as separate components for owned aircraft and aircraft taken on finance lease.

Spare parts recognised as Property plant and equipment when it meets the definition of Property, plant and equipment.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease, if recognition criteria are met, have been capitalised and disclosed separately as improvement on leased aircraft / improvement on leased property.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss.

Subsequent costs are included in the asset’s carrying amount or recognised as separate assets, as appropriate, only when it is probable that the future economic benefits associated with expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to Statement of Profit and Loss at the time of incurrence.

Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as capital work-in-progress. Advance paid for acquisition of Property, plant and equipment are disclosed under other non-current assets as capital advances.

Depreciation

Depreciable amount for assets is the cost of an asset, less its estimated residual value. Depreciation is provided on a straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are depreciated over their respective remaining useful life.

Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortised over the period of lease.

Major inspection costs relating to engine and airframe overhauls are identified as separate components for owned and Leased Aircraft and are depreciated over the expected lives between major overhauls and remaining useful live of the aircraft, whichever is lower.

Depreciation has been charged based on the following useful lives:

Depreciation is calculated on a pro-rata basis for assets purchased/sold during the year.

The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.

O. Investment Property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business and that is not occupied by the Company. Investment property is measured initially at cost, including related transaction cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any. All repairs and maintenance cost are expensed when incurred.

Investment property is depreciated using straight line method over its useful life. The useful life has been considered as 60 years as prescribed in Part C of Schedule II to the Companies Act, 2013.

P. Intangible assets

Intangible assets that are recognised only if acquired and it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and the cost of assets can be measured reliably. Intangible assets are recorded at cost of acquisition including any incidental expenses. Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses if any. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Gains or losses arising from derecognition of intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the other intangible asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

Amortisation:

Intangible assets are amortised on straight line basis as follows:

i. Trademarks are amortised over 10 years.

ii. Computer software is amortised over a period not exceeding 36 months.

Q. Asset Held for Sale

Assets are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets are measured at lower of their carrying amount and fair value less cost to sell. Losses on initial classification as held for sale and subsequent gain and losses on re-measurement are recognized in profit and loss.

Once classified as held for sale, property plant and equipment are no longer depreciated.

R. Impairment of Property, plant and equipment and other intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.

S. Investment in Subsidiaries and Associate

Investment is subsidiaries and associate is carried at cost, less any impairment in the value of investment, in these separate financial statements.

T. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Financial assets

Recognition and initial measurement

All financial assets are initially recognised when the Company becomes a party to the contractual provisions of the instrument. All financial assets are initially measured at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Classification

For the purpose of subsequent measurement, the Company classifies financial assets in following categories:

- Financial assets at amortised cost

- Financial assets at fair value through other comprehensive income (FVTOCI)

- Financial assets at fair value through profit or loss (FVTPL)

A financial asset being ‘debt instrument’ is measured at the amortised cost if both of the following conditions are met:

- The financial asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

- The contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

A financial asset being ‘debt instrument’ is measured at the FVTOCI if both of the following criteria are met:

- The asset is held within the business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets, and

- The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.

Subsequent measurement

Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses, if any. Interest income and impairment are recognised in the Statement of Profit and Loss. Interest income on credit impaired financial assets is recognised on net balance.

Financial assets at FVTPI

These assets are subsequently measured at fair value. Net gains and losses, including any interest income, are recognised in the Statement of Profit and Loss.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is recognised in the Statement of Profit and Loss.

Impairment of financial assets (other than at fair value)

The Company recognizes loss allowances using the Expected Credit Loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition, in which case those financial assets are measured at lifetime ECL. The changes (incremental or reversal) in loss allowance computed using ECL model, are recognised as an impairment gain or loss in the Statement of Profit and Loss.

Originated credit impaired financial assets are treated differently because the assets are credit impaired at initial recognition. For these assets the Company recognises all changes in the life time ECL since initial recognition as a loss allowance with any changes recognised in statement of profit or loss. A favourable change of such assets create an impairment gain.

ii. Financial liabilities

Recognition and initial measurement

All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

All financial liabilities are initially measured at fair value minus, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.

Classification and subsequent measurement

Financial liabilities are classified as measured at amortised cost or FVTPL.

A financial liability is classified as FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in the Statement of Profit and Loss.

Financial liabilities other than classified as FVTPL, are subsequently measured at amortised cost using the effective interest method. Interest expense are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in the Statement of Profit and Loss.

Derecognition

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

iii. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.

iv. Embedded Derivatives

Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and if the economic characteristics and risks of embedded derivative are not closely related to the economic characteristics and risks of the host. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in statement of profit or loss.

U. Fair value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to/ by the Company.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities

- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

V. Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimated. The expense relating to a provision is presented in the statement of profit and loss.

Onerous contracts

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Contingent liabilities and assets

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.

Contingent assets are possible assets that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

w. Share capital

Issuance of ordinary shares are recognised as equity share capital in equity.

X. Cash and cash equivalents

Cash and cash equivalents includes cash at banks and on hand, cheques on hand, short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, as they are considered an integral part of the Company’s cash management.

Y. Earnings per share:

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding.

For the purpose of calculating Diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

z. Recent accounting pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28 March 2018, the Ministry of Corporate Affairs (‘the MCA’) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from 1 April 2018. The Company has evaluated the effect of this on the financial statements and impact is not material.

Ind AS 115, Revenue from Contract with Customers: On 28 March 2018, the MCA notified the Ind AS 115. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, Ind AS 115 requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimate and Errors.

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The effective date for adoption of Ind AS 115 is financial period beginning on or after 1 April 2018.

The Company is currently evaluating the impact on its financial reporting from Ind AS 115.

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Mar 31, 2017

1. SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) and complies with Accounting Standards specified under section 133 of the Companies Act, 2013 (‘the Act’) read with rule 7 of the Companies (Accountants) Rules 2014, read with Companies (Accounting Standards) Amendment Rules, 2016, applicable with effect from 1^st April, 2016 and other generally accepted accounting principles (GAAP) in India, to the extent applicable.

The financial statements are prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian rupees rounded off to the nearest rupees in lakhs.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in schedule III to the Act. Based on the nature of the services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or noncurrent classification of assets and liabilities.

B. USE OF ESTIMATES :

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets, liabilities and the disclosure of contingent liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income are recognised on flown basis, i.e. when the services are rendered.

b) The sales of tickets / airway bills (sales net of refunds) are initially credited to the “Forward Sales Account”. Income recognised as indicated above is reduced from the “Forward Sales Account” and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.

c) The unuitilised balances in “Forward Sales Account” are recognised as income based on historical statistics, data and management estimates and considering Company’s refund policy.

d) Lease income on the Aircraft given on operating lease is recognised in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realisation.

e) Interest Income is recognised on time proportionate basis taking into the account the amount outstanding.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

A defined contribution plan is a post-employment benefit plan under which entity pays specified contributions to a separate entity and has no obligation to pay any future amounts. Company’s contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company’s liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent the benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period the employee renders services. Such benefits include salaries, wages, bonus and ex-gratia.

G. FIXED ASSETS :

a) Property, Plant and Equipment :

Owned Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of property, plant and equipment upto the time the assets get ready for their intended use are capitalized.

Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are identified and accounted as separate components.

During the year, pursuant to the notification of companies (Accounting Standards) Amendment Rules 2016 and per the requirements of the revised Accounting Standard (AS) 10 ‘Property, Plant and Equipment’ (applicable effective from 1^st April, 2016), the Company has decided to adopt historical cost model for all of its class of Fixed assets (from revaluation model recognised for certain assets i.e. Aircraft and Leasehold property).

Spare parts recognised as Property plant and equipment when it meets the definition of Property, plant and equipment.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

Property plant and equipment under construction are disclosed as capital work-in-progress. Advances paid for acquisition of Property plant and equipment are disclosed under long term advances.

b) Intangible Assets :

Intangible assets are recognised only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase: The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognised directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTISATION :

a) Depreciation on Property, plant and equipment are provided on the ‘Straight Line Method’ over the useful life of assets as prescribed in Schedule II of the Companies Act, 2013. Further, Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are depreciated over their respective remaining useful life. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortised over the period of lease.

b) Intangible assets are amortised on straight line basis as follows :

i. Landing Rights acquired are amortised over a period not exceeding 20 years. Amortisation period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortised over 10 years.

iii. Computer Software is amortised over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted in line with the notifications issued by the Ministry of Corporate Affairs (MCA) dated 29^th December, 2011 and 9^th August, 2012 as under :

(i) to the extent they relate to financing the acquisition of property, plant and equipment and not regarded as interest, are added to or subtracted from the cost of such property, plant and equipment and depreciated over the balance useful life of the asset;

(ii) in other cases such differences are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) under reserves and surplus and amortised in the Statement of Profit and Loss over the balance term of the long term monetary item.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognised in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognised as income or expense of the year. Premium / Discount arising on such forward exchange contracts is amortised as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average method. Provision is made for the obsolescence and other anticipated losses whereas considered necessary. During the year, pursuant to notification G.S.R.364(E) dated 30^th March, 2016, the company has reclassified / capitalised certain eligible spare parts to Property plant and equipment from inventories.

N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income tax Act, 1961.

Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realised in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or Loss on Sale and Lease back arrangements resulting in operating leases are recognised, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortised over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) “Disclosure of Accounting Policies”.

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes when there is possible obligation arising from past events. Contingent Assets are neither recognised nor disclosed in the Financial Statements.

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Mar 31, 2016

1. SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) and complies with Accounting Standards specified under section 133 of the Companies Act, 2013 (''the Act'') read with rule 7 of the Companies (Accountants) Rules 2014, to the extent notified and applicable.

The financial statements are prepared on accrual basis under the historical cost convention, except for certain Fixed Assets which are carried at revalued amounts. The financial statements are presented in Indian rupees rounded off to the nearest rupees in lakhs.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in schedule III to the Act. Based on the nature of the services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.

B. USE OF ESTIMATES :

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets, liabilities and the disclosure of contingent liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income are recognized on flown basis, i.e. when the services are rendered.

b) The sales of tickets / airway bills (sales net of refunds) are initially credited to the "Forward Sales Account". Income recognized as indicated above is reduced from the "Forward Sales Account" and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.

c) The unutilized balances in "Forward Sales Account" are recognized as income based on historical statistics, data and management estimates and considering Company''s refund policy.

d) Lease income on the Aircraft given on operating lease is recognized in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realization.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognized only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

A defined contribution plan is a post-employment benefit plan under which entity pays specified contributions to a separate entity and has no obligation to pay any future amounts. Company''s contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company''s liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent the benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period the employee renders services. Such benefits include salaries, wages, bonus and ex-gratia.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalized.

Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are identified and accounted as separate components.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase: The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Installments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognized directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTISATION :

a) Depreciation on tangible fixed assets are provided on the ''Straight Line Method'' over the useful life of assets as prescribed in Schedule II of the Companies Act, 2013. Further, Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are depreciated over their respective remaining useful life. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortized over the period of lease.

b) Intangible assets are amortized on straight line basis as follows :

i. Landing Rights acquired are amortized over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortized over 10 years.

iii. Computer Software is amortized over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS/TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognized as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted in line with the notifications issued by the Ministry of Corporate Affairs (MCA) dated 29^th December, 2011 and 9^th August, 2012 as under:

(i) to the extent they relate to financing the acquisition of fixed assets and not regarded as interest, are added to or subtracted from the cost of such fixed assets and depreciated over the balance useful life of the asset;

(ii) in other cases such differences are accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA) under reserves and surplus and amortized in the Statement of Profit and Loss over the balance term of the long term monetary item.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / Discount arising on such forward exchange contracts is amortized as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as notables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the spares and also provisioning for non - moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income tax Act, 1961. Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realized in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or Loss on Sale and Lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes when there is possible obligation arising from past events. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

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Mar 31, 2015

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

The financial statements are prepared on accrual basis under the historical cost convention, except for certain Fixed Assets which are carried at revalued amounts. The financial statements are presented in Indian rupees rounded off to the nearest rupees in lakhs.

B. USE OF ESTIMATES :

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income are recognised on flown basis, i.e. when the services are rendered.

b) The sales of tickets / airway bills (sales net of refunds) are initially credited to the "Forward Sales Account". Income recognised as indicated above is reduced from the "Forward Sales Account" and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.

c) The unutilised balances in "Forward Sales Account" are recognised as income based on historical statistics, data and management estimates and considering Company's refund policy.

d) Lease income on the Aircraft given on operating lease is recognised in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realisation.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilisation of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

Company's contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company's liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent the benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period the employee renders services.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalized.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognised only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease : Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase : The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognised directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTISATION :

a) Depreciation on tangible fixed assets is provided on the 'Straight Line Method' over the useful life of assets as prescribed in Schedule II of the Companies Act, 2013. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortised over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortised on straight line basis as follows :

i. Landing Rights acquired are amortised over a period not exceeding 20 years. Amortisation period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortised over 10 years.

iii. Computer Software is amortised over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted as under :

(i) to the extent they relate to financing the acquisition of fixed assets and not regarded as interest, are added to or subtracted from the cost of such fixed assets and depreciated over the balance useful life of the asset;

(ii) in other cases such differences are accumulated in 'Foreign Currency Monetary Item Translation Difference Account' (FCMITDA) under reserves and surplus and amortised in the Statement of Profit and Loss over the balance term of the long term monetary item.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognised in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognised as income or expense of the year. Premium / Discount arising on such forward exchange contracts is amortised as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the spares and also provisioning for non - moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income tax Act, 1961.

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realised in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or Loss on Sale and Lease back arrangements resulting in operating leases are recognised, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortised over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the Financial Statements.

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Mar 31, 2014

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The Financial Statements are prepared under the historical cost convention, except certain Fixed Assets which are revalued, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards.

B. USE OF ESTIMATES :

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income are recognized on flown basis, i.e. when the services are rendered.

b) The sales of tickets / airway bills (sales net of refunds) are initially credited to the "Forward Sales Account". Income recognized as indicated above is reduced from the "Forward Sales Account" and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.

c) The unutilized balances in "Forward Sales Account" are recognized as income based on historical statistics, data and management estimates and considering Company''s refund policy.

d) Lease income on the Aircraft given on operating lease is recognized in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realisation.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognized only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

Company''s contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company''s liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent the benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period the employee renders services.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets up to the time the assets get ready for their intended use are capitalized.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase: The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Installments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognized directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTIZATION :

a) Depreciation on tangible fixed assets has been provided on the ''Straight Line Method'' in accordance with the provisions of Section 205(2) (b) of the Companies Act, 1956 and in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortized over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortized on straight line basis as follows :

i. Landing Rights acquired are amortized over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortized over 10 years.

iii. Computer Software is amortized over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognized as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted as under :

i. to the extent they relate to financing the acquisition of fixed assets and not regarded as interest, are added to or subtracted from the cost of such fixed assets and depreciated over the balance useful life of the asset;

ii. in other cases such differences are accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA) under reserves and surplus and amortized in the Statement of Profit and Loss over the balance term of the long term monetary item.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / Discount arising on such forward exchange contracts is amortized as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non - moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income tax Act, 1961.

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realized in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or loss on Sale and Lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

c. Terms / Rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends if any, in Indian rupees. The dividend proposed, if any, 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 any of the 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.

Security and Salient Terms:

a. Rupee Term Loans of Rs. 19,960 lakhs (Previous Year Rs. 52,079 lakhs) and Foreign Currency Term Loan of Rs. 42,850 lakhs (Previous Year Rs. 55,469 lakhs) are secured by way of a pari-passu charge on all the current and future domestic credit card realizations received into the Trust and Retention Account including interest earned thereon.

Of the above, Foreign Currency Term Loan amounting to Rs. 19,173 lakhs for which the Company is in the process of creating charge.

Interest rates are linked to respective Banks'' Prime Lending Rate / Base Rate / LIBOR plus Margin and are repayable in installments starting from May, 2011 and ending in March, 2019.

b. Foreign Currency Term Loans of Rs. 54,417 lakhs (Previous Year Rs. 69,347 lakhs) are secured by way of a pari-passu charge on all the current and future international credit card realizations, as per the Merchant Establishment agreement, received into the Trust and Retention Account (Debt Service Reserve Account) maintained with the Banks together with a First mortgage charge on the four flight simulators and on the land located at Vadgaon, Pune and at Pali, Raigad.

Interest rates are linked to LIBOR plus Margin and are repayable in monthly installments by June 2016.

c. Rupee Term Loan from a Financial Institution ofRs. Nil lakhs (Previous YearRs. 20,200 lakhs) is secured by way of a pledge of 100% of Equity Share Capital of Jet Lite (India) Limited held by the Company together with a negative lien on one of the Boeing 737 aircraft.

Interest rate is linked to institutions benchmark rate plus margin and is repayable in quarterly installment by September, 2013.

d. Foreign Currency Term Loan from a financial institution of Rs. 20,420 lakhs (Previous Year Rs. 40,954 lakhs) is secured by pari-passu charge on leasehold land situated at Bandra Kurla Complex, Mumbai along with construction thereon, present and future and first charge on Company''s entitlement under the development agreement for the aforesaid plot of land entered into with Godrej Buildcon Private Limited. The aforesaid charge is pending creation.

Interest rate is LIBOR plus Margin and is repayable on each working Day Rs. 100 lakhs starting from 4th May, 2013.

e. Foreign Currency Term Loan of Rs. 83,882 lakhs is availed against a corporate guarantee given by one of the Shareholder to the lender. Further, the Company has hypothecated one B737 Aircraft in favour of that Shareholder.

Interest rates are linked to LIBOR plus Margin and are repayable by way of a bullet repayment in March, 2019.

f. i. Finance Lease obligation for six aircraft are secured by the Corporate Guarantees given by the Subsidiary

Company of Rs. 426,829 lakhs equivalent to USD 7,124 lakhs (Previous Year Rs. 386,721 lakhs equivalent to USD 7,124 lakhs).

ii. Repayable in quarterly installments over a period of twelve years from the date of disbursement of the respective loans. Interest rate is linked with LIBOR plus margin.

Redelivery of Aircraft:

As per Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets, given below is the movement in provision for Redelivery of Aircraft.

The Company has in its fleet certain aircraft on operating lease. As per the terms of the lease agreements, the aircraft have to be redelivered to the lessors at the end of the lease term in certain stipulated technical condition. Such redelivery conditions would entail 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.

Security and Salient Terms :

a) Loans aggregating to Rs. 177,329 lakhs (Previous Year Rs. 163,352 lakhs) are secured by way of hypothecation of Inventories (excluding Aircraft fuel), Debtors / Receivables (excluding credit card receivables, receivables from aircraft subleased and claim receivables from aircraft lessors), Ground Support Vehicles / Equipment (excluding trucks, jeeps and other motor vehicles), Spares (including engines), Data Processing Equipment and other current assets and a subservient charge in relation to the aircraft owned by the Company either on Hire Purchase / Finance Lease. The Company has escrowed the entire IATA collection with the lead bank for facilitating interest servicing and regularisation in case of any irregularity.

b) i. Foreign Currency Loans amounting to Rs. Nil lakhs (Previous Year Rs. 4,460 lakhs) and Rupee Loans

amounting to Rs. Nil lakhs (Previous Year Rs. 3,600 lakhs) are secured by a second charge on five of its Boeing wide body aircraft. Further, the same is also secured by a charge on the profits of the Company after deduction of taxes, dividends, repayment installment, payment under any guarantees and / or any other dues payable and Escrow of the Thai lease rentals up to November, 2013.

ii. Rupee Loan of Rs. Nil lakhs (Previous YearRs. 3,000 lakhs) is secured by a third pari-passu charge on four of its Boeing wide body aircraft and a second pari-passu charge on one Boeing wide body aircraft. Of these, the second pari-passu charge is pending creation.

c) Rupee loan of Rs. Nil lakhs (Previous Year Rs. 3,502 lakhs) is secured by way of a second charge on two Boeing narrow body aircraft.

d) Rupee Term loan of Rs. 6,937 Lakhs (Previous Year Rs. Nil lakhs) is secured by way of pledge of 151,834,623 shares of Jet Lite.

e) Buyer''s credit ofRs. 11,506 lakhs (Previous Year Rs. 10,425 lakhs) is secured by exclusive charge over two New CFM Engines and Quick Engine Change kits.

f) The rate of interest for the loans listed in (a) to (e) above ranges from 130 base points to 750 base points over LIBOR plus Margin for Foreign Currency Loans and 12 % to 16.5 % for Rupee Loans.

a) Frequent Flyer Programme :

The Company has a Frequent Flyer Programme named ''Jet Privilege'', wherein the passengers who frequently use the services of the Airline become members of ''Jet Privilege'' and accumulate miles to their credit. Subject to certain terms and conditions of ''Jet Privilege'', the passenger is eligible to redeem such miles lying to their credit in the form of free tickets.

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Mar 31, 2013

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The Financial Statements are prepared under the historical cost convention, except certain Fixed Assets which are revalued, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards.

B. USE OF ESTIMATES :

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income are recognized on flown basis, i.e. when the services are rendered.

b) The sale of tickets / airway bills (sales net of refunds) are initially credited to the "Forward Sales Account". Income recognized as indicated above is reduced from the Forward Sales Account and the balance net of commission and discount thereon is shown under Other Current Liabilities.

c) The unutilized balances in Forward Sales Account are recognized as income based on historical statistics, data and management estimates and considering Company''s refund policy.

d) Lease income including Variable rentals on the Aircraft given on operating lease is recognized in the Statement of Profit and Loss on an accrual basis over the period of lease.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognized only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

Company''s contribution paid / payable for the year to defined contribution schemes are charged to the Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company''s liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent the benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period the employee renders services.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalized.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease : Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase : The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognized directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTIZATION :

a) Depreciation on tangible fixed assets has been provided on the ''Straight Line Method'' in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortized over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortized on straight line basis as follows :

i. Landing Rights acquired are amortized over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortized over 10 years.

iii. Computer Software is amortized over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognized as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted as under :

(i) to the extent they relate to financing the acquisition of fixed assets and not regarded as interest, are added to or subtracted from the cost of such fixed assets and depreciated over the balance useful life of the asset;

(ii) in other cases such differences are accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA) under reserves and surplus and amortized in the Statement of Profit and Loss over the balance term of the long term monetary item.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange contracts is amortized as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental costs incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non-moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :

Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realized in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTIONS :

Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

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Mar 31, 2012

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

a) The Financial Statements are prepared under the historical cost convention, except certain Fixed Assets which are revalued, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards.

b) Financial Statements for the year ended 31st March, 2012 have been prepared based on revised Schedule VI of the Companies Act, 1956. The adoption of revised Schedule VI does not impact recognition and measurement principles of individual items within this Financial Statements. However, it has significant impact on presentation and disclosures made in the Financial Statements. The Company has accordingly reclassified the previous year's figures to meet the requirements applicable for the current year.

c) The Airline Industry has been adversely affected by the general economic slowdown. This coupled with high fuel cost significantly impacted the performance and cash flows of the Company and its Subsidiary resulting in substantial erosion of the net worth. The Management has been constantly implementing initiatives to improve the operating cash flows through cost control measures, route rationalization, leasing out Aircraft etc. During the F.Y. 2011-12 although the passenger traffic improved, the impact of significant increase in the crude oil prices and weakening of rupee not matched by corresponding increase in fares resulted in the Company not being able to sustain its profitable performance. The fuel prices have subsided now and going forward, the Company expects to perform better. The Company is also exploring options of raising finances to meet its various operational and financial obligations including financial support to its Subsidiary - Jet Lite (India) Limited. These measures are expected to result in sustainable cash flows and accordingly these Financial Statements continue to be presented on a going concern basis, which contemplates realization of assets and settlement of liabilities in the normal course of business.

B. USE OF ESTIMATES :

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income is recognized on flown basis, i.e. when the services are rendered.

b) The sale of tickets / airway bills (sales net of refunds) are initially credited to the "Forward Sales Account". Income recognized as indicated above is reduced from the Forward Sales Account and the balance net of commission and discount thereon is shown under Other Current Liabilities.

c) The unutilized balances in Forward Sales Account are recognized as income based on historical statistics, data and management estimates and considering Company's refund policy.

d) Lease income including Variable rentals on the Aircraft given on operating lease is recognized in the Statement of Profit and Loss on an accrual basis over the period of lease.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognized only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan :

Company's contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.

b) Defined Benefit and Other Long Term Benefit plan :

Company's liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent of benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalized.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i. Operating Lease : Rentals are expensed with reference to the Lease Term and other considerations.

ii. Finance Lease / Hire Purchase : The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTIZATION :

a) Depreciation on tangible fixed assets has been provided on the 'Straight Line Method' in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortized over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortized on straight line basis as follows :

i. Landing Rights acquired are amortized over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii. Trademarks are amortized over 10 years.

iii. Computer Software is amortized over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognized as income or expense, as the case may be.

b) Non-monetary foreign currency items are not restated at the period-end rates.

c) Exchange differences relating to long term foreign currency monetary items are accounted as under :

(i) to the extent they relate to financing the acquisition of fixed assets and not regarded as interest, are added to or subtracted from the cost of such fixed assets and depreciated over the balance useful life of the asset;

(ii) in other cases, such differences are accumulated in 'Foreign Currency Monetary Item Translation Difference Account' (FCMITDA) and amortized in the Statement of Profit and Loss over the balance term of the long term monetary item. As at the year-end, current portion and non-current portion of the FCMITDA is disclosed as 'Other Current Asset' and 'Other Non-Current Asset', respectively.

d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange contracts is amortized as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realisable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the Aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non-moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIRS COST :

Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine Maintenance and Repair Costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realized in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2011

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The financial statements are prepared under the historical cost convention, except certain Fixed Assets which are revalued, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards.

B. USE OF ESTIMATES :

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income is recognised on flown basis, i.e. when the service is rendered.

b) The sale of tickets / airway bills (sales net of refunds) are initially credited to the Forward Sales Account. Income recognised as indicated above is reduced from the Forward Sales Account and the balance net of commission and discount thereon is shown under Current Liabilities.

c) The unutilized balances in Forward Sales Account are recognized as income based on historical statistics, data and management estimates and considering Companys refund policy.

d) Lease income including Variable rentals on the Aircraft given on operating lease is recognized in the Profit and Loss Account on an accrual basis over the period of lease.

D. EXPORT INCENTIVE :

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan : Companys contribution paid / payable for the year to defined contribution schemes are charged to Profit and Loss Account.

b) Defined Benefit and Other Long Term Benefit plan : Companys liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Profit and Loss Account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

c) Short Term Employee Benefits :

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services.

G. FIXED ASSETS :

a) Tangible Assets :

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalised.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on aircraft taken on operating lease have been capitalised and disclosed appropriately.

b) Intangible Assets :

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.

c) Assets Taken on Lease :

i) Operating Lease : Rentals are expensed with reference to the Lease Term and other considerations.

ii) Finance Lease / Hire Purchase : The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalised as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Profit and Loss Account.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTIZATION :

a) Depreciation on tangible fixed assets has been provided on the ‘Straight Line Method' in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortized over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortized on straight line basis as follows :

i) Landing Rights acquired are amortized over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii) Trademarks are amortized over 10 years.

iii) Computer Software is amortized over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

b) Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and in other cases accumulated in Foreign Currency Monetary Item Translation Difference Account and amortized over the balance term of the long term monetary item or 31st March, 2011 whichever is earlier.

c) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Profit and Loss Account. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange contracts is amortized as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non – moving / slow moving items.

N. AIRCRAFT MAINTENANCE AND REPAIRS COST :

Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine Maintenance and Repair Costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax resulting from timing differences between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realised in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Securities Premium Account.

Q. SALE AND LEASE BACK TRANSACTION :

Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) "Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

---

Mar 31, 2010

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared under the historical cost convention, except certain Fixed Assets which are revalued, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards.

B. USE OF ESTIMATES :

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.

C. REVENUE RECOGNITION :

a) Passenger and Cargo income is recognised on flown basis, i.e. when the service is rendered.

b) The sale of tickets / airway bills (sales net of refunds) are initially credited to the Forward Sales Account". Income recognised as indicated above is reduced from the Forward Sales Account and the balance net of commission and discount thereon is shown under Current Liabilities.

c) The unutilized balances in Forward Sales Account are recognized as income based on historical statistics, data and management estimates and considering Companys refund policy.

d) Lease income including Variable rentals on the Aircraft given on operating lease is recognized in the Profit and Loss account on an accrual basis over the period of lease.

D. EXPORT INCENTIVE

Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

E. COMMISSION :

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised only on flown basis.

F. EMPLOYEE BENEFITS :

a) Defined Contribution plan: Companys contribution paid / payable for the year to defined contribution schemes are charged to Profit and Loss Account.

) Defined Benefit and Other Long Term Benefit plan: Companys liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

The employee benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

c) Short Term Employee Benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services.

G. FIXED ASSETS :

a) Tangible Assets:

Owned tangible fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets get ready for their intended use are capitalised.

The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on aircraft taken on operating lease have been capitalised and disclosed appropriately.

b) Intangible Assets:

Intangible assets are recognized only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

c) Assets Taken on Lease:

i) Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations.

ii) Finance Lease / Hire Purchase: The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalised as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance lease Installments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Profit and Loss Account.

H. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

I. DEPRECIATION / AMORTISATION :

a) Depreciation on tangible fixed assets has been provided at the rates and in the manner prescribed under the schedule XIV to the Companies Act, 1956 on Written Down Value method, other than Narrow and Wide Body aircraft which are depreciated on straight line method. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortised over the period of lease.

b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn from the Revaluation Reserve.

c) Intangible assets are amortised on straight line basis as follows.

i) Landing Rights acquired are amortised over a period not exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience and expected asset usage.

ii) Trademarks are amortised over 10 years.

iii) Computer Software is amortised over a period not exceeding 36 months.

J. INVESTMENTS :

Current Investments are carried at lower of cost and quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

K. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement/restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

b) Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and in other cases accumulated in Foreign Currency Monetary Item Translation Difference Account and amortised over the balance term of the long term monetary item or 31st March, 2011 whichever is earlier.

c) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Profit and Loss Account. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange contracts is amortised as income / expense over the life of contract.

M. INVENTORIES :

Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated useful life of the aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non – moving / slow moving items.

N. AIRCRAFT MAINTENANCE & REPAIRS COST :

Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.

O. TAXES :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax resulting from timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realised in future.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Share Premium Account.

Q. SALE AND LEASE BACK TRANSACTION:

Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.

R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS:

Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any is accounted based on the principles of prudence as enunciated in Accounting Standard 1(AS - 1) Disclosure of Accounting Policies".

S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.