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14th Annual Report 2005-06


Contents

Corporate Information ............................................................................................. 2

Notice of the 14th Annual General Meeting ............................................................ 4

Directors’ Report.................................................................................................... 14

Management Discussion and Analysis ................................................................... 24

Corporate Governance Report and Shareholder Information .................................. 34

Auditors’ Certificate on Corporate Governance Report ........................................... 50

Auditors’ Report .................................................................................................... 51

Balance Sheet ........................................................................................................ 56

Profit and Loss Account ......................................................................................... 57

Cash Flow Statement ............................................................................................. 58

Notes and Schedules forming part of Balance Sheet & Profit and Loss Account ...... 60

Balance Sheet Abstract and Company’s General Business Profile ............................ 92

2

Jet Airways (India) Limited

Board of Directors

(As on 16th

August 2006)

Mr. Naresh Goyal Chairman

Mr. Ali Ghandour

Mr. Victoriano P. Dungca

Mr. Charles A. Adams

Mr. Javed Akhtar

Mr. I. M. Kadri

Mr. P. R. S. Oberoi

Mr. Aman Mehta

Dr. Vijay L. Kelkar

Mr. S. G. Pitroda

Mr. Yash Raj Chopra

Mr. Shah Rukh Khan

Dr. Pierre J. Jeanniot

Mr. Saroj K. Datta Executive Director

Statutory Auditors

Deloitte Haskins & Sells Chaturvedi & Shah

Chartered Accountants Chartered Accountants

12, Dr. Annie Besant Road, Laxmi Towers

Opp. Shiv Sagar Estate “A” Wing, Bandra-Kurla Complex,

Worli, Mumbai - 400 018 Mumbai - 400 051

Legal Advisors

Gagrats

Nirmal, 12th Floor,

Nariman Point,

Mumbai - 400 021

Registered Office Registrar & Share Transfer Agent

S. M. Centre Karvy Computershare Private Limited

Andheri-Kurla Road, Karvy House, 46, Avenue 4,

Andheri (East), Street No. 1, Banjara Hills,

Mumbai - 400 059 Hyderabad - 500 034

Bankers to the Company

Abu Dhabi Commercial Bank Canara Bank

Corporation Bank ICICI Bank Limited

Citibank N.A. Industrial Development Bank of India Limited

Calyon Bank ING Vysya Bank Limited

DBS Bank Limited Kotak Mahindra Bank Limited

Deutsche Bank AG Standard Chartered Bank

HDFC Bank Limited State Bank of India

The Hongkong & Shanghai Banking UTI Bank Limited

Corporation Limited Dena Bank

3


Management

(As on 16th

August 2006)

Mr. Wolfgang Prock-Schauer Chief Executive Officer

Mr. Saroj K. Datta Executive Director

Mr. Dale Moss Chief Operating Officer

Mr. Garry Kingshott Chief Commercial Officer

Mr. Carl Saldanha Chief Financial Officer

Mr. Raja Parthasarathy Executive Vice President - Finance

Ms. Anita Goyal Executive Vice President - Marketing & Sales

Capt. Werner Borchert Vice President - Flight Operations

Mr. Sepp Heinrich Vice President - Technical

Mr. Sitham Nadarajah Vice President - Technical (Projects)

Capt. Ray Heiniger Vice President - Flight Operations

Capt. Gustav Baldauf Vice President - Flight Operations

Mr. B. P. Baliga Vice President - Support Services

Capt. K. Mohan Vice President - Flight Operations (Special Projects)

Mr. P. K. Sinha Vice President - Passenger Sales

Dato' K. Jeyakanthan Vice President - Engineering Services

Mr. Poh Leong Choo Vice President - Inflight & Catering Services

Mr. Prasun Sengupta Vice President - Corporate Administration

Ms. Nandini Verma Vice President - Corporate Affairs & Public Relations

Mr. N. Hariharan Vice President - Office of the Chairman

Mr. Rajesh Sharma Vice President - Controller

Mr. Ashok Barimar General Counsel & Vice President - Legal

Ms. Ragini Chopra Vice President - North India

Mr. Gaurang Shetty Vice President - Marketing

Ms. Sonu Kripalani Vice President - Passenger Sales (India)

Mr. Sarat Chandran Vice President - Human Resources & Development

Mr. Anind Datta Vice President - Purchase and Properties

Mr. V. Raja Vice President - Asia Pacific

Mr. Mike Johnson Vice President - Engineering & Maintenance

Mr. Narendra Mehra Company Secretary

4


Notice is hereby given that the Fourteenth Annual General Meeting of the Members of Jet Airways (India)

Limited will be held on Wednesday, 20th September, 2006 at 3:30 p.m. at Nehru Centre Auditorium, Discovery of

India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018 to transact the following business:-

ORDINARY BUSINESS

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2006 and the Profit and Loss

Account for the year ended on that date and the Reports of the Directors and Auditors thereon.

2. To declare a dividend on Equity Shares for the Financial Year ended 31st March, 2006.

3. To appoint a Director in place of Mr. Javed Akhtar, who retires by rotation and being eligible, offers himself

for re-appointment.

4. To appoint a Director in place of Mr. Saroj K. Datta, who retires by rotation and being eligible, offers himself

for re-appointment.

5. To appoint a Director in place of Mr. Ali Ghandour, who retires by rotation and being eligible, offers himself

for re-appointment.

6. To appoint a Director in place of Mr. Victoriano P. Dungca, who retires by rotation and being eligible, offers

himself for re-appointment.

7. To appoint Auditors to hold office from the conclusion of the 14th Annual General Meeting until the

conclusion of the 15th Annual General Meeting, and to fix their remuneration.

SPECIAL BUSINESS

8. Appointment of Mr. Yash Raj Chopra as a Director

To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as an

Ordinary Resolution:

“RESOLVED THAT Mr. Yash Raj Chopra, who had been appointed as a Director of the Company with effect

from 17th April, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the

Articles of Association, holds office of directorship up to the date of the 14th Annual General Meeting and

in respect of whom the Company has received a Notice in writing from a Member under Section 257 of the

Companies Act, 1956 signifying his intention to propose Mr. Yash Raj Chopra as a candidate for the office of

Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

9. Appointment of Mr. Shah Rukh Khan as a Director



“RESOLVED THAT Mr. Shah Rukh Khan, who had been appointed as a Director of the Company with effect

from 16th August, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the



Companies Act, 1956 signifying his intention to propose Mr. Shah Rukh Khan as a candidate for the office

of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

Notice

5


10. Appointment of Dr. Pierre J. Jeanniot as a Director



“RESOLVED THAT Dr. Pierre J. Jeanniot, who had been appointed as a Director of the Company with effect

from 16th August, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the



Companies Act, 1956 signifying his intention to propose Dr. Pierre J. Jeanniot as a candidate for the office of

Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

11. Re-appointment and remuneration of Executive Director

To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as a

Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 198, 269 read with Schedule XIII, Sections 309,

310, 311 and other applicable provisions, if any, of the Companies Act, 1956, approval of the Members of

the Company be and is hereby accorded to the re-appointment of Mr. Saroj K. Datta as Executive Director of

the Company, for the period from the conclusion of the 14th Annual General Meeting until the conclusion

of the 15th Annual General Meeting or 30th September, 2007, whichever is earlier, upon the terms and

conditions as set out in the Explanatory Statement annexed hereto, with authority to the Board of Directors

to alter and vary the terms and conditions of the said re-appointment in such manner as may be agreed to

between the Board of Directors and Mr. Saroj K. Datta.”

12. Payment of Commission to Non-executive Directors for the Financial Year 2006-07


Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 198, 309, 310 and other applicable provisions, if

any, of the Companies Act, 1956 and subject to such statutory approvals as may be necessary, the

Non-executive Directors of the Company be paid, as Commission for the Financial Year 2006-07, a sum not

exceeding 1% of the net profits of the Company calculated in accordance with provisions of Sections 198,

349, 350 and other provisions, if any, of the Companies Act, 1956, subject to a ceiling of

Rs. 6,00,000 (Rupees Six Lac Only), per Non-executive Director, in addition to the sitting fees for attending

the Meetings of the Board of Directors or any Committee thereof.”

13. Reclassification of Authorised Share Capital of the Company



“RESOLVED THAT pursuant to the provisions of Sections 13, 16, 94 and all other applicable provisions, if

any, of the Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of

appropriate authorities, departments or bodies as may be necessary, and Article 9 of the Articles of Association

of the Company, consent of the Members of the Company be and is hereby accorded to reclassify the

Company’s existing Authorised Share Capital from Rs. 2000,000,000/- (Rupees Two Thousand Million only)

divided into 130,000,000 (One Hundred and Thirty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each

6


and 70,000,000 (Seventy Million) Preference Shares of Rs. 10/- (Rupees Ten only) each, to

Rs. 2000,000,000/- (Rupees Two Thousand Million only) divided into 180,000,000 (One Hundred and

Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each and 20,000,000 (Twenty Million) Preference

Shares of Rs. 10/- (Rupees Ten only) each.”

14. Alteration of Memorandum of Association of the Company



“RESOLVED THAT pursuant to the provisions of Sections 16 and all other applicable provisions, if any, of the

Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of appropriate

authorities, departments or bodies as may be necessary, the consent of the Members of the Company be and

is hereby accorded to the alteration of the Memorandum of Association of the Company by substituting the

existing Clause V (a) in place and stead thereof by the following new Clause V(a):

V(a) The Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million

only) divided into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten

only) each and 20,000,000 (Twenty Million) Preference Shares of Rs. 10/- (Rupees Ten only) each,

capable of being increased in accordance with the Company’s regulations and provisions of the

Companies Act, 1956.”

15. Alteration of Articles of Association of the Company


Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 31 and all other applicable provisions, if any, of the

Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of appropriate

authorities, departments or bodies as may be necessary, the consent of the Members of the Company be and

is hereby accorded to the alteration of the Articles of Association of the Company by substituting the existing

Article 4(a) in place and stead thereof of the following new Article 4(a) :

4(a) The Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million

only) divided into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten

only) each and 20,000,000 (Twenty Million) Preference Shares of Rs. 10/- (Rupees Ten only) each.

By Order of the Board of Directors

NARENDRA MEHRA

Company Secretary

Dated : 16th August, 2006

Registered Office :

S. M. Centre,

Andheri-Kurla Road,

Andheri (East),

Mumbai 400 059

7


Notes

1. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of Item Nos. 8 to

15 of the Notice is annexed hereto. The relevant details of persons seeking re-appointment/appointment as

Directors under Item Nos. 3 to 10 above, as required by Clause 49 of Listing Agreement entered into with the

Stock Exchanges, are also annexed.

2. A Member entitled to attend and vote, is entitled to appoint a Proxy to attend and vote, instead

of himself and the Proxy need not be a Member of the Company. Proxies, in order to be effective,

must be duly filled, stamped, signed and deposited at the Registered Office of the Company not later than

48 hours before the commencement of the Meeting. Proxies submitted on behalf of limited companies,

societies, partnership firms, etc. must be supported by appropriate resolution/authority as applicable, issued

on behalf of the appointing organisation.

3. The Register of Members and Share Transfer Books of the Company will be closed from Saturday, 9th September,

2006 to Wednesday, 20th September, 2006, both days inclusive. The dividend, if declared, at the Meeting, will

be paid on or after Monday, 25th September, 2006 but within the statutory time limit of 30 days, to those

Members entitled thereto whose names appear on the Register of Members of the Company at the close of

business hours on Friday, 8th September, 2006. In respect of Equity Shares held in dematerialised form in the

Depository System, dividend thereon will be payable to the beneficial owners of the Equity Shares as at the close

of business hours on Friday, 8th September, 2006 as per details furnished by the Depositories for this purpose.

4. Members holding Equity Shares in dematerialised form are hereby informed that bank particulars registered

against their respective depository accounts will be used by the Company for payment of the dividend. The

Company or its Registrar and Share Transfer Agent cannot act on any request received directly from the

Members holding Equity Shares in dematerialised form, for any change of bank particulars or bank mandates.

Such changes are to be advised only to the respective Depository Participants of the Members.

5. Members holding Equity Shares in physical form are requested to advise any change of address immediately

to the Company’s Registrar and Share Transfer Agent, Karvy Computershare Private Limited. Members holding

Equity Shares in dematerialised form must send advice about change in address to their respective Depository

Participants and not to the Company.

6. All correspondence regarding Equity Shares of the Company should be addressed to the Company’s Registrar

and Share Transfer Agent, Karvy Computershare Private Limited [UNIT: Jet Airways (India) Limited] at Karvy

House, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034.

7. As per the provisions of the Companies Act, 1956, nomination facility is available to the Members, in respect

of the Equity Shares held by them. Nomination forms can be obtained from the Company’s Registrar and

Share Transfer Agent.

8. As a measure of austerity, copies of the Annual Report will not be distributed at the Annual General Meeting.

Members are requested to bring their copies of the Annual Report to the Meeting.

9. Members who wish to obtain information concerning the Accounts or Operations of the Company may send

their queries at least 7 days before the Annual General Meeting, to the Company Secretary at the Registered

Office of the Company.

10. Copies of all documents referred to in the Notice and Explanatory Statement annexed thereto are available

for inspection at the Registered Office of the Company between 11:00 a.m. to 1:00 p.m. on all working days

till the date of the Annual General Meeting.

8


EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

The following Explanatory Statements set out all material facts relating to Item Nos. 8 to 15 of the accompanying Notice:

Item No. 8

Mr. Yash Raj Chopra had been appointed as an Additional Director on the Board of Directors of the Company with

effect from 17th April, 2006. Pursuant to Section 260 of the Companies Act, 1956, Mr. Yash Raj Chopra holds

office up to the date of the 14th Annual General Meeting, and is eligible for appointment. The Company has

received a Notice from a Member along with requisite deposit, under Section 257 of the Companies Act, 1956,

signifying his intention to propose the appointment of Mr. Yash Raj Chopra as a Director of the Company. If

appointed, Mr. Yash Raj Chopra shall hold office as such, and his period of office shall be liable to determination

by retirement of Directors by rotation.

Attention of the Members is invited to the information on Mr. Yash Raj Chopra, a Director, recommended for

appointment, which is annexed hereto.

No Director, except Mr. Yash Raj Chopra, is, in any way, concerned or interested in the Resolution.

The Board of Directors recommends the Resolution for the approval of the Members.

Item No. 9

Mr. Shah Rukh Khan had been appointed as an Additional Director on the Board of Directors of the Company with

effect from 16th August, 2006. Pursuant to Section 260 of the Companies Act, 1956, Mr. Shah Rukh Khan holds



signifying his intention to propose the appointment of Mr. Shah Rukh Khan as a Director of the Company. If

appointed, Mr. Shah Rukh Khan, shall hold office as such, and his period of office shall be liable to determination


Attention of the Members is invited to the information on Mr. Shah Rukh Khan, a Director, recommended for


No Director, except Mr. Shah Rukh Khan, is, in any way, concerned or interested in the Resolution.


Item No. 10

Dr. Pierre J. Jeanniot had been appointed as an Additional Director on the Board of Directors of the Company with

effect from 16th

August, 2006. Pursuant to Section 260 of the Companies Act, 1956, Dr. Pierre J. Jeanniot holds

9




signifying his intention to propose the appointment of Dr. Pierre J. Jeanniot as a Director of the Company. If

appointed, Dr. Pierre J. Jeanniot shall hold office as such, and his period of office shall be liable to determination


Attention of the Members is invited to the information on Dr. Pierre J. Jeanniot, a Director, recommended for


No Director, except Dr. Pierre J. Jeanniot, is, in any way, concerned or interested in the Resolution.


Item No. 11

Mr. Saroj K. Datta has been a Director of the Company since March, 1993 and has been re-appointed as Executive

Director from time to time. His present term as Executive Director of the Company expires on the conclusion of the

14th Annual General Meeting.

Subject to the approval of the Members at the 14th Annual General Meeting and other statutory approvals, if

required, the Board of Directors approved of the re-appointment of Mr. Saroj K. Datta as Executive Director of the

Company for the period from the conclusion of the 14th Annual General Meeting until the conclusion of the

15th Annual General Meeting or 30th September, 2007, whichever is earlier.

Mr. Saroj K. Datta holds a Masters degree in Economics from Delhi University and has over 40 years of experience

in Civil Aviation in India and abroad. Mr. Saroj K. Datta has been involved with the Company since its inception.

Keeping in view the qualification and experience of Mr. Saroj K. Datta, the Board of Directors is of the view that his

re-appointment as Executive Director will be beneficial to the Company.

The remuneration payable to Mr. Saroj K. Datta on his re-appointment, as approved by the Remuneration &

Compensation Committee of the Board of Directors, is as follows:

i. Salary and Allowances:

Basic Salary : Rs. 2,50,000/- per month

Other Allowances : Not exceeding Rs. 1,40,000/- per month

ii. Perquisites:

In addition to the Salary and Allowances aforesaid, Mr. Saroj K. Datta shall be entitled to Perquisites (evaluated

as per Income Tax Rules, wherever applicable and at actual cost to the Company in other cases) such as free

furnished accommodation, use of Company’s car, telephone at residence, medical reimbursement, leave and

travel benefits, provident fund, gratuity and all other benefits, in accordance with the Rules of the Company.

10


iii. Minimum remuneration:

Notwithstanding anything to the contrary herein contained, where in the financial year during the tenure of

the Executive Director, the Company has no profits or its profits are inadequate, the Company will pay

remuneration by way of salary, allowances and perquisites as specified above.

In compliance with the provisions of Section 309 of the Companies Act, 1956, the terms and conditions of

re-appointment of Mr. Saroj K. Datta, as specified above, are now being placed before the Members for approval.

This statement may be treated as an abstract of the terms and conditions governing the re-appointment of and

payment of remuneration to the Executive Director pursuant to Section 302 of the Companies Act, 1956.

No Director, except Mr. Saroj K. Datta, is, in any way, concerned or interested in the Resolution.


Item No. 12

In order to remunerate the Non-executive Directors of the Company for increased responsibilities entrusted upon

them under the law, the current trends and commensurate with the time devoted and the contribution made by

them, the Board of Directors of the Company, at their Meeting held on 29th July, 2006 has approved, subject to

such statutory approvals as may be necessary, payment as commission, to be paid to the Non-executive Directors

of the Company, for the Financial Year 2006-07, a sum not exceeding 1% of the net profits of the Company,

calculated in accordance with provisions of Section 198, 349 and 350 of the Companies Act, 1956, subject to a

ceiling of Rs. 6,00,000/- (Rupees Six Lac Only) per Non-executive Director, in addition to the sitting fees for

attending the Meetings of the Board of Directors or any Committee thereof.

Section 309(4) of the Companies Act, 1956 also requires a Special Resolution to be passed by the Members of the

Company in General Meeting for payment of remuneration by way of commission to Non-executive Directors of

the Company.

All Non-executive Directors of the Company are concerned or interested in the Resolution to the extent of the

remuneration that may be received by them and their respective shareholding, if any.


Item Nos. 13, 14 and 15

Presently the Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million only)

divided into 130,000,000 (One Hundred and Thirty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each and

70,000,000 (Seventy Million) Preference Shares of Rs. 10/- (Rupees Ten only) each. The Company has an Issued,

Subscribed and Paid up Share Capital of 86,334,011 (Eighty Six Million Three Hundred and Thirty Four Thousand

and Eleven) Equity Shares aggregating to Rs. 863,340,110/- (Rupees Eight Hundred Sixty-Three Million Three

Hundred Forty Thousand and One Hundred and Ten only).

11


The Company has received the approval of the Members on 28th February, 2006 for the issuance of up to USD

800,000,000 (United States Dollars Eight Hundred Million) by way of Foreign Currency Convertible Bonds/ Global

Depository Receipts/ American Depository Receipts/ Equity Shares/ other securities as appropriate.

As the issuance of such instruments will, at a point of time, require the Company to issue additional Equity Shares,

which will lead to increase in the Equity Share Capital. Hence it is proposed to re-classify the Authorised Share

Capital of the Company into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs.10/- (Rupees Ten

Only) each and 20,000,000 (Twenty Million) Preference Shares of Rs.10/- (Rupees Ten only) each respectively.

Consequently Clause V(a) of the Memorandum of Association and Article 4(a) of the Articles of Association will

correspondingly have to reflect the changes and hence the existing Clause V(a) of the Memorandum of Association

and Article 4(a) of the Articles of Association will require substitution.

The consent of the Members is being sought in accordance with the provisions of Sections 13, 16, 31, 94 and

other applicable provisions, if any, of the Companies Act, 1956 and the Articles of Association of the Company.

All the Directors of the Company are interested in these Resolutions to the extent of their respective shareholdings

in the Company.

The Board of Directors recommends these Resolutions for the approval of the Members.

By Order of the Board of Directors

NARENDRA MEHRA

Company Secretary

Dated: 16th August, 2006

Registered Office:

S. M. Centre,

Andheri-Kurla Road,

Andheri (East),

Mumbai 400 059

12


Details of the Directors seeking re-appointment at the 14th Annual General Meeting

Expertise in specific

functional area

Qualifications

Particulars

Shareholding, if any,

in the Company

Memberships/

Chairmanships of

Committees in Public

Companies

Directorships held in

other Public

Companies (excluding

foreign and private

companies)

5990 Equity Shares

None

None

Mr. Javed Akhtar is a well-

known poet, lyricist,

screenplay and scriptwriter

and is a famous media

personality. Mr. Javed

Akhtar has won the Filmfare

Award fourteen times, and

is a five-time National Award

winner for the best lyricist.

Bachelor of Arts MBA from Cornell

University, U.S.A. and is a

Certified Public Accountant

from the U.S.A.

Date of Birth

Date of Appointment

Mr. Saroj K Datta has over

40 years of experience in civil

aviation in India and abroad.

He joined Air India in 1962

and rose to the position of

Deputy Director, Planning

and International Relations

in 1977. In 1987, he left

Air India to join in a senior

position in Kuwait Airways.

He has been involved with

the Company since its

inception and is currently

the Executive Director of the

Company.

Mr. Saroj K. Datta

3rd May, 1936

1st March, 19931st March, 1993

Mr. Javed Akhtar

17th January, 1945

Masters degree in

Economics from Delhi

University

553 Equity Shares

None

None

Mr. Ali Ghandour has over

50 years of experience in the

civil aviation industry. He was

an advisor to the late King

Hussein of Jordan and was

earlier the Chairman of the

Royal Jordanian Airlines. He

has also been associated

with the development of a

number of airlines in the

Middle East.

Mr. Ali Ghandour

28th May, 1931

19th February, 1998

Aeronautical Engineer from

New York University

None

None

None

25th January, 1999


has had a long and

distinguished career with

Philippine Airlines and retired

as its Executive Vice

President. He is currently a

financial advisor based in

California, U.S.A.

None

None

None

None


23rd April, 1936

13


Details of the Directors seeking appointment at the 14th Annual General Meeting

Expertise in specificfunctional area

Qualifications

Particulars

Shareholding, if any,in the Company

Memberships/Chairmanships ofCommittees in PublicCompanies

Directorships held inother PublicCompanies (excludingforeign and privatecompanies)

355 Equity Shares

None

None

Mr. Yash Raj Chopra is a well-knownProducer and Director from the IndianFilm Industry. Mr. Chopra has had adistinguished career spanning over fivedecades in the Indian FilmIndustry. His work has beenrecognized in India and overseas andhe has received several prestigiousawards for his outstandingcontribution to Indian Cinema. Theseinclude the National and FilmfareAwards, the BBC Asia Awards (in1998 and 2001), the Dr. DadabhaiNaoroji Millennium LifetimeAchievement Award (in 2001), theDadasaheb Phalke Award (in 2001)and the Priyadarshini Award to namea few. Mr. Chopra has also beenawarded a Certificate of Recognitionfrom the British Tourist Authority andBritish Film Commission forpromoting tourism in the U.K.through his films. In 2005, Mr. Choprawas conferred the Padma Bhushan,one of the Country’s highest civilianhonours.

Bachelor of Arts

Date of Birth

Date of Appointment

Mr. Shah Rukh Khan is a well-knownActor from the Indian Film Industry.He is the recipient of Thirteen FilmfareAwards, three National Honoursincluding Best Indian Citizen Awardin 1997, Rajiv Gandhi Award forExcellence in 2002. In 2005, Mr. Khanwas conferred the Padma Shri, one ofthe prestigious civilian honoursconferred annually by the Governmentof India. He is also recognized as acultural ambassador of India to therest of the world.

Mr. Shah Rukh Khan

2nd November, 1965

16th August, 200617th April, 2006

Mr. Yash Raj Chopra

18th September, 1932

Bachelor of Arts, Economics (Hons.)Mass Media Course from Jamia MilliaIslamia, New Delhi

Dr. Pierre J. Jeanniot is a prominent,distinguished and widelyacknowledged contemporary leader ofthe aviation industry. Dr. Jeanniot wasDirector General and CEO of theInternational Air Transport Association(IATA) from 1993 to 2002. He isnow Director General Emeritus ofIATA, in recognition of hisoutstanding contribution tointernational civil aviation. From 1984to 1990 Dr. Jeanniot held the positionof President and CEO of Air Canada.He is currently Chairman of ThalesCanada Inc. Dr. Jeanniot has servedon the Board of Directors ofvarious airlines, telecommunicationscompanies, airports, air navigationconsultancies, and publishing houses.He is also President of Jinmag Inc., amanagement and investmentcompany which he created in 1990,providing advice to variousinternational civil aviation authoritiesand companies.

Dr. Pierre J. Jeanniot

9th April, 1933

16th August, 2006

Bachelor of Science from Sir GeorgeWilliams University (now Concordia)and Business Administration at McGillUniversity and Statistical Mathematicsfrom New York University DoctoratHonoris Causa, University of QuebecHonorary, Doctorate in InternationalLaw, Concordia University and Doctorof Science, Honoris Causa, McGillUniversity

NoneNone

None

None

None

None


14

1. Your Directors have pleasure in presenting their Fourteenth Annual Report together with the Audited Statement

of Accounts for the Financial Year ended 31st March, 2006.

HIGHLIGHTS

2. The Financial Highlights for the year under review compared to the Previous Financial Year (Previous Year) are

given below:

Financial Highlights

Particulars Year ended Year ended

31st March, 2006 31st March, 2005

Rs. in lac Rs. in lac

GROSS REVENUE 613,547 442,017

Profit before Interest, Depreciation & Tax 137,027 129,282

Interest 24,160 25,369

Profit before Depreciation & Tax 112,867 103,913

Depreciation 40,641 45,700

Profit before Taxation & Adjustments 72,226 58,213

Provision for Tax 14,441 4,604

Deferred Tax 12,581 14,410

Profit after Taxation 45,204 39,199

Profit / (Loss) brought forward 14,967 (11,801)

Profit available for Appropriation 60,171 27,398

APPROPRIATIONS

Transfer to Capital Redemption Reserve – 5,558

Transfer to General Reserve 4,521 3,920

Proposed Dividend 5,180 2,590

Income Tax on Proposed Dividend 727 363

Transfer to Balance Sheet 49,743 14,967

60,171 27,398

Note: 1 lac = 100,000

Directors’ Report

To the Members,


15

DIVIDEND

3. The Board of Directors has recommended a dividend of Rs. 6 per Equity Share (Previous Year: Rs. 3 per Equity

Share). The dividend together with tax on distributed profits will absorb a sum of Rs. 5,907 lac (Previous Year:

Rs. 2,953 lac) and will be paid to those Members whose names appear on the Register of Members of the

Company as at the close of business hours on 8th September, 2006.

REVIEW OF OPERATIONS

4. The Operating Highlights are given below

Operating Parameters Year ended Year ended

Apr 05-Mar 06 Apr 04-Mar 05

Number of Departures 104,833 96,417

Available Seat Kilometers (ASKMs) Million 13,300 9,808

Revenue Passenger Kilometers (RPKMs) Million 9,576 6,992

Passenger Load Factor % 72.0% 71.3%

Revenue Passengers (Numbers) 9,556,562 8,142,739

Average fleet size during period 49.5 41.3

Average Head Count

Gross 8,285 7,082

Net 7,241 5,652

5 During the year under review, air travel in India continued to show strong growth, both domestic and

international. The Company carried 9.56 million revenue passengers, an increase of 17.4% over the Previous

Year. Revenue Passenger Kilometers (RPKms) grew by 37% to 9,576 million. Operating Revenues at

Rs. 569,373 lac were 31.2% higher than the Previous Year.

6. The Company’s performance was impacted by high costs of Aviation Turbine Fuel (ATF), caused mainly by

rising crude prices, which has affected the airline industry worldwide. Increased competition in both domestic

and international markets also impacted the yield per passenger.

7. As on 31st March, 2006, the Company operated 315 domestic flights and 14 international flights daily,

compared to 260 domestic and 4 international daily flights respectively, as on 31st March, 2005. During the

year under review, the Company added the following routes and frequencies to its scheduled operations:


16

New Routes - Domestic

Delhi-Nagpur-Delhi Bangalore-Thiruvananthapuram-Bangalore

Mumbai-Raipur-Mumbai Chennai-Thiruvananthapuram-Chennai

New Routes International

Mumbai-Singapore-Mumbai Mumbai-London (Heathrow)-Mumbai

Chennai-Kuala Lumpur-Chennai Delhi-London (Heathrow)-Delhi

Chennai-Singapore-Chennai

Additional frequencies – Domestic

Delhi-Pune-Delhi Bangalore-Delhi-Bangalore Mumbai-Coimbatore-Mumbai

Delhi-Mumbai-Delhi Bangalore-Chennai-Bangalore Chennai-Coimbatore-Chennai

Mumbai-Jaipur-Mumbai Delhi-Guwahati-Delhi Mumbai-Ahmedabad-Mumbai

Mumbai-Bangalore-Mumbai Chennai-Kolkata-Chennai Pune-Bangalore-Pune

Bangalore-Hyderabad-Bangalore Chennai-Mumbai-Chennai

New Night Flights – Domestic

Mumbai-Chennai-Mumbai Delhi-Kolkata-Delhi

Mumbai-Kolkata-Mumbai

During the year under review, the Company was privileged to introduce a charter service for the Defence

Forces on the Delhi-Thoise-Delhi sector.

8. The international flights introduced during the year have been well received. The Company’s seat factors

have been increasing steadily in these very competitive routes.

FLEET

9. During the year under review, the Company added seven Boeing 737-800s, one Boeing 737-700 and three

Airbus 340-300E aircraft to its fleet. All these aircraft are on operating leases. The fleet size as on 31st March,

2006 was 53 aircraft compared to 42 aircraft as on 31st March, 2005.

10. During the year under review, an Airbus 340-300E aircraft was wet leased by the Company to two airlines for

a short-term period in each case.


17

11. The Company has entered into Purchase Agreements for ten Boeing 737 Next Generation aircraft, Purchase

Agreements for ten Boeing 777 Extended Range and/or Long Range aircraft and Purchase Agreements for

ten Airbus 330-200 aircraft. The Boeing 737 aircraft are to be delivered between April 2006 and October

2007, the first of which has been delivered; and the Boeing 777 and the Airbus 330 aircraft are scheduled

to be delivered over Financial Years 2007-08 and 2008-09.

12. The Company has entered into a General Terms Agreement (GTA) for GE engines for the Boeing 777 and the

Airbus 330 aircraft.

SALE AND LEASEBACK OF AIRCRAFT

13. During the year under review, the Company sold and leased back five Boeing 737 aircraft (two Boeing 737-

800s and three Boeing 737-400s). These are older aircraft in the fleet, and their market value was significantly

higher than book value. The total sale proceeds were Rs. 46,225 lac and after repayment of loans generated

a cash surplus of Rs. 17,745 lac. The Company’s profit attributable to this transaction was Rs. 27,064 lac.

SAHARA AIRLINES LIMITED (PRE- AND POST-BALANCE SHEET EVENTS)

14. The Company entered into a Share Purchase Agreement (SPA) on 18th January, 2006 with Sahara Airlines

Limited (SAL) and the shareholders of SAL to acquire 100% of the paid-up share capital of SAL for a total

consideration of Rs. 200,000 lac, and subject to terms and conditions as set out in the SPA. The total

proposed consideration was kept in an escrow account. The Company also advanced a sum of Rs.18,000 lac

to SAL for its normal business operations.

15. The SPA provided, inter alia, that the acquisition would be completed by 23rd March, 2006, subject to receipt

of statutory approvals. These approvals were not received by that date and the parties entered into an

Amended Agreement whereby, inter alia, the date for completion of the sale was extended until 21st June,

2006 and an amount of Rs. 50,000 lac (out of the Rs. 200,000 lac) was paid as an advance to a shareholder

of SAL, against a pledge of 100% of the shares of SAL and a personal guarantee of Mr. Subrata Roy Sahara.

16. The Company also entered into a Consultancy Agreement with SAL with effect from 4th April, 2006, whereby

a team from the Company assisted SAL in its day-to-day operations.

17. All approvals specified in the Conditions Precedent in the SPA with SAL and its shareholders were not

received by 21st June, 2006. As per the applicable provisions, the SPA, therefore, stood terminated. The

Consultancy Agreement was also terminated. The question as to whether the SPA has automatically stood

terminated or not, and the consequences thereof, as well as the right of the Company to receive the amount


18

of consideration lying in the escrow as well as amounts partly paid, as and by way of an advance to one of the

Selling Shareholders of SAL, are presently the subject matter of legal proceedings pending in the High Court

in Mumbai, the District Court in Lucknow and the Supreme Court of India. The parties have also invoked the

Arbitration Clause contained in the SPA.

OTHER POST BALANCE SHEET EVENTS

18. As mentioned earlier, the Company took delivery of the first of the 10 Boeing 737-800 aircraft for which firm

orders have been placed in April 2006. Six more deliveries of Boeing 737-800 aircraft are scheduled during

2006-07.

19. In June 2006, the Company took delivery of one Airbus 330-200 aircraft on operating lease. A second Airbus

330-200 aircraft that has been taken on operating lease is scheduled to be delivered in January 2007.

20. The Company had entered into an agreement to wet-lease a Boeing 767 aircraft from another airline in June

2006, which subsequently stood terminated.

21. As on 16th August, 2006 the fleet size is 55 aircraft.

22. The Company has introduced a second Mumbai-London (Heathrow)-Mumbai frequency effective 10th July,

2006. The Company commenced operations on the Amritsar-London (Heathrow)-Amritsar sector on

4th August, 2006. The Company intends to commence operations on the Delhi-Singapore-Delhi sector in

September 2006.

23. The Company implemented a fuel surcharge of Rs. 300 per sector on domestic tickets in May 2006. This

surcharge was increased by Rs. 200 per sector in July 2006. A further increase of Rs. 150 has been implemented

effective 8th August, 2006. The Company has levied sector-wise fuel surcharges on tickets purchased on

international routes. The Company has begun hedging a portion of the fuel purchased outside India for its

international operations .

24. The Company proposes to sell and leaseback four Boeing 737-700s. The sale and leaseback is proposed to

be effectuated during the course of the Financial Year 2006-07.

25. Between 1st April, 2006 and 16th August, 2006 the Company has repaid Rs. 500 lac towards a long-term

loan. During this period, the Company has also drawn down long-term foreign currency loans totalling

$223.7 million.


19

INFORMATION UNDER CLAUSE 49: CHANGES IN ACCOUNTING POLICIES

26. In Previous Financial Years, credits from the Forward Sales Account for unutilized tickets, were made in cases

where claims for refund were not made for 24 months. With effect from Fiscal 2006, due to factors such as

a more complex fare structure currently in force compared to the past, the trend in utilization and the

conditions applicable to certain categories of tickets, credits from the Forward Sales Account are based on

historical statistics and data and Management’s best estimates and the Company’s refund policy.

27. In Previous Financial Years, the amounts spent towards acquiring rights with regard to certain Landing Slots

at an overseas airport were amortized over a period not exceeding 10 years. With effect from Fiscal 2006, the

Company, considering industry experience and practices, has revised the amortization period to 20 years .

RESPONSES TO COMMENTS IN THE ANNEXURE TO THE AUDITOR’S REPORT

28. Reference is drawn to points 17 and 21 of the Annexure to the Auditors’ Report and your Directors’ responses

in relation to the same are as under:

Point 17: Advances totalling Rs. 36,789 lac were required to be paid towards the end of the Financial Year in

order to comply with contractual obligations. These amounts were paid out of short-term sources as bridge

financing arrangement and will be replaced by a long-term source(s) in the Financial Year 2006-07. These

advances consist of Rs. 19,903 lac for pre-delivery payments for aircraft and Rs. 16,886 lac for property.

Point 21: Fraudulent use of credit cards occurs in on-line transactions owing to the anonymity this purchasing

method provides. In order to mitigate such incidents, an additional security feature has been built into the

Company’s web-booking engine effective 10th March, 2006.

DIRECTORS’ RESPONSIBILITY STATEMENT

29. As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

i. in the preparation of the Annual Accounts, the applicable accounting standards have been followed,

along with proper explanation relating to material departures;

ii. the Directors have selected such accounting policies and applied them consistently and made judgements

and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs

of the Company at the end of the Financial Year and of the profit of the Company for that year;


20

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records

in accordance with the provisions of the said Act for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

iv. the Directors have prepared the Annual Accounts on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

30. Particulars as prescribed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 in respect of these items are given

below:

a. Conservation of Energy:

The Company has during the year under review continued to rigorously monitor fuel consumption of

all aircraft on an on-going basis, and taken various measures to optimize consumption. The Company

has specified that all new aircraft that have been ordered are fitted with winglets, and all new aircraft

delivered during the Financial Year have been fitted with winglets. These reduce fuel consumption

significantly. The Company continues to ensure the highest levels of safety and reliability of its aircraft,

with rigorous maintenance programmes.

b. Technology Absorption

� Commissioning of hangar facility, Mumbai Airport:

The Company completed the construction of its hangar facility at Mumbai airport during the

Financial Year. The commissioning of this maintenance hangar complex at Mumbai with workshop

and allied facilities will enable the airline to carry out ‘C’ Checks, line checks, storage and minor

rectification of engines, composite structural repair and, in due course, heavy maintenance or ‘D’

Checks. This will reduce maintenance costs and enhance operational efficiency particularly in view

of requirements arising out of the fleet expansion.

� Training of Pilots:

During the year under review, the Company continued to give pilots endorsement and refresher

training for Boeing 737 aircraft at the Company’s Simulator Training Centre at Mumbai. The

training was conducted by the Company’s own instructors. The Company has ordered a second

Boeing 737 Full Flight Simulator, which is scheduled to be installed and ready for training in

December 2006. The Company’s Pilots were given endorsement and refresher training for ATR


21

aircraft at ATR’s simulator facility at Bangkok, and the training was also conducted by the Company’s

own instructors.

� IT initiatives:

The Enterprise Resource Programme (ERP) of the Company was upgraded and extended to new

areas like human resources, payroll and enhanced management information system (MIS) reporting.

The Company implemented automation of the planning and scheduling function by introducing

a state-of-the-art system that optimizes the revenue potential and usage of aircraft. The system is

automatically integrated into systems used by other operational departments and has eliminated

duplication of work. The Company’s engineering maintenance and inventory control system was

also upgraded. The Company introduced ‘web check-in’, which allows passengers who have

electronic tickets to check-in and print a boarding pass using the Internet. The Company also

enabled e-ticketing for the travel trade whereby travel agents can offer e-tickets to passengers.

c. Foreign Exchange Earnings and Outgo:

The particulars of Foreign Exchange Earnings and utilization during the year under review are given in

Note No. 14.2, 14.3 and 14.4 of Schedule ‘S’ of the Accounts. Foreign currency exposures are disclosed

in Note No. 10 (ii) of Schedule ‘S’ of the Accounts.

DIRECTORS

31. Mr. J. R. Gagrat who was a Director of the Company since 1994 passed away on 5th April, 2006. Mr. J.R. Gagrat,

one of the country’s most distinguished legal professionals, was deeply involved with and committed to the

Company and played a key role in its growth and development. His loss is deeply mourned by the Board of

Directors and Management, who place on record his invaluable contribution to the Company.

32. Mr. Javed Akhtar, Mr. Ali Ghandour, Mr. Victoriano P. Dungca, Directors, and Mr. Saroj K. Datta, Executive

Director, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for

re-appointment.

33. Pursuant to Section 260 of the Companies Act, 1956, and Article 48 of the Articles of Association of the

Company, Mr. Yash Raj Chopra was appointed as an Additional Director on the Board of Directors of the

Company with effect from 17th April, 2006. Mr. Chopra is a pre-eminent film director and a recipient of the

Padma Bhushan. Mr. Chopra holds office up to the date of the ensuing Annual General Meeting.


22


Company, Mr. Shah Rukh Khan was appointed as an Additional Director on the Board of Directors of the

Company with effect from 16th August, 2006. Mr. Shah Rukh Khan holds office up to the date of the ensuing

Annual General Meeting.


Company, Dr. Pierre J. Jeanniot was appointed as an Additional Director on the Board of Directors of the

Company with effect from 16th August, 2006. Dr. Jeanniot holds office up to the date of the ensuing Annual

General Meeting.

36. The Directors recommend the re-appointment of Mr. Saroj K. Datta as Executive Director of the Company,

whose present term expires on the conclusion of the 14th Annual General Meeting.

AUDITORS

37. The Statutory Auditors, Messieurs Deloitte Haskins & Sells and Messieurs Chaturvedi & Shah, Chartered

Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willing-

ness to accept the office, if re-appointed. At the said Meeting, Members will be requested to appoint

Statutory Auditors for the Financial Year 2006-07 and to fix their respective remuneration.

PARTICULARS OF EMPLOYEES

38. Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of

Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the

provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to

all Members excluding the Statement containing the particulars of Employees to be provided under Section

217(2A) of the Act. Any Member interested in obtaining such particulars may inspect the same at the

Registered Office of the Company between 11:00 a.m. to 1:00 p.m. on all working days till the date of the

14th Annual General Meeting.

CORPORATE GOVERNANCE

39. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement relating

to Corporate Governance, as amended from time to time. A separate section on Corporate Governance forms

part of the Annual Report and the Certificate from the Company’s Statutory Auditors on compliance with the

provisions of Corporate Governance is annexed to the Corporate Governance Report.


23

CORPORATE SOCIAL RESPONSIBILITY

40. The Company supports an in-flight collection programme viz. “The Magic Box” to support “SAVE THE

CHILDREN”, a voluntary organization wholly committed to the welfare, survival, protection, participation and

development of the underprivileged children of India. Jet Airways has also engaged the services of Shraddha

Charitable Trust - a well-known Non-Government Organization (NGO) - which trains and provides post

school vocation to the mentally challenged and autistic. The Company has chosen and placed bulk orders for

one of the Trust’s in-house products, which are used inflight.

41. As in the Previous Financial Year, the Company made available an aircraft and crew for a ‘Flight of Fantasy’ for

underprivileged children. The event was in co-operation with partner corporates and NGOs.

ACKNOWLEDGEMENTS

42. Your Directors place on record their appreciation for the contributions of the members of the Management

Team and all employees for their continued hard work, dedication and commitment to maintaining the

Company’s service standards, during the year under review.

43. Your Directors place on record their appreciation for the support rendered by the Company’s General Sales

Agents and their associates, Travel Agents and other members of the travel trade for their continued efforts

in promoting the Company.

44. Your Directors also take this opportunity to thank the Ministry of Civil Aviation, Government of India, the

Director General of Civil Aviation (DGCA), and the Airports Authority of India (AAI) for their support and

guidance. Your Directors are also grateful to the Reserve Bank of India, the Ministry of Finance, Ministry of

Company Affairs, Government of India, National Stock Exchange of India Limited, Bombay Stock Exchange

Limited, the US Ex-Im Bank, Financial Institutions and Banks, the Boeing Company, Airbus Industrie, Avion de

Transport Regionale, engine manufacturers and the lessors of our aircraft for their support, and look forward

to their continued support.

For and on behalf of the Board of Directors

NARESH GOYAL

Chairman

Date : 16th August, 2006

Place : London


24

1. Industry Structure and Developments

1.1 The Indian aviation industry showed continued growth during the Financial Year under review. Positive

economic factors – including high GDP growth, industrial performance, corporate profitability and

expansion, higher disposable incomes and growth in consumer spending – were, in combination

with the wider availability of low fares, key drivers of this growth.

1.2 The progressive environment for civil aviation has attracted new domestic carriers, and the increase in

capacity has increased competition in the domestic sector.

1.3 At the same time, the growth in international traffic has seen international carriers increase the

number of flights to and from India. More flights are now offered from cities other than Mumbai and

Delhi, which had hitherto been the principal gateways for international traffic.

1.4 The Government continued to give civil aviation priority. The Government has laid considerable emphasis

in improving infrastructure particularly with regard to addressing the increasing congestion of airports

located in major metropolitan cities. The management and modernization of Mumbai and Delhi

Airports have been handed over to private parties, which are operating these airports.

1.5 The airline industry in India, as well as overseas, was affected by the high cost of Aviation Turbine Fuel

(ATF), arising out of the continued rise in international crude prices.

2. Analysis of Operational Performance in Fiscal 2006 Compared to Fiscal 2005

Revenues

2.1 Our total revenues increased by 38.8% from Rs. 44,202 million in Fiscal 2005 to Rs. 61,355 million in

Fiscal 2006. This increase was primarily due to the increase in passenger and cargo revenues as well as

non-operational revenue from the sale and leaseback of aircraft.

Management Discussion and Analysis


25

Passenger Revenues

2.2 Passenger Revenues increased by 29.2% from Rs. 40,765 million in Fiscal 2005 to Rs. 52,663 million

in Fiscal 2006. This increase was due to a 17.4% increase in the number of revenue passengers carried

in Fiscal 2006 compared to Fiscal 2005, and higher load factors achieved, 72% in Fiscal 2006 compared

to 71.3% in Fiscal 2005. With a significantly larger fleet the available seat kilometres (ASKMs) offered

in Fiscal 2006 also went up by 35.6%. The following fare increases implemented during the year also

contributed to the increase in the revenue earnings:

� 12% on Indian Rupee fares effective April 15, 2005

� 12% on US Dollar fares effective July 15, 2005

� 10% on Indian Rupee fares effective October 14, 2005

Revenues from Excess Baggage and Courier

2.3 Excess Baggage and Courier Revenues increased by 20.9% from Rs. 421 million in Fiscal 2005 to

Rs. 509 million in Fiscal 2006. Excess baggage revenues increased by 28.1% from Rs. 146 million in

Fiscal 2005 to Rs. 187 million in Fiscal 2006, primarily due to an increase in the number of revenue

passengers. Courier revenues increased by 17.1% from Rs. 275 million in Fiscal 2005 to Rs. 322 million

in Fiscal 2006, primarily due to increased tonnage carried in Fiscal 2006.

Revenues from Cargo

2.4 Revenues from carriage of cargo increased by 65.2% from Rs. 1,856 million in Fiscal 2005 to Rs. 3,067

million in Fiscal 2006, primarily because tonnage carried increased from 98,840 tonnes in Fiscal 2005

to 115,715 tonnes in Fiscal 2006. This increase in tonnage was largely due to the commencement of

long-haul international operations to London using wide-body aircraft, which have significantly higher

cargo-carrying capacity than other aircraft in the fleet

Other Revenues

2.5 Other Revenues increased by 106.8% from Rs. 338 million in Fiscal 2005 to Rs. 699 million in Fiscal

2006. The increase was primarily on account of two factors; firstly higher cancellation charges collected

in Fiscal 2006 compared to Fiscal 2005, primarily from discounted fares and “Check Fares”; and

secondly on account of income from wet-leasing of an aircraft, for temporary periods, to other airlines

in Fiscal 2006.


26

Non-Operating Revenues

2.6 Non-Operating Revenues increased by over 400% from Rs. 822 million in Fiscal 2005 to Rs. 4,417

million in Fiscal 2006. The principal reason was the sale in March 2006 of five of the Company’s

aircraft [and which were then leased back], which resulted in a profit of Rs. 2,706 million. The increase

in other Non-Operating Revenues was driven primarily by the following:

� interest earned on bank and other deposits increased by 81% from Rs. 306 million in Fiscal 2005

to Rs. 554 million in Fiscal 2006;

� profit on sale of investments increased by 377.3% from Rs. 110 million in Fiscal 2005 to Rs. 525

million in Fiscal 2006;

� Other Income increased by 21% from Rs. 181 million in Fiscal 2005 to Rs. 219 million in Fiscal

2006; and

� write-back of provision for aircraft maintenance no longer required increased by 200% from

Rs. 120 million in Fiscal 2005 to Rs. 360 million in Fiscal 2006.

Expenses

Aircraft Fuel

2.7 Fuel costs increased by 59.6% from Rs. 10,517 million in Fiscal 2005 to Rs. 16,789 million in Fiscal

2006. This increase was due to a 19.3% increase in block hours from 153,857 hours in Fiscal 2005 to

183,543 hours in Fiscal 2006 and increases in average cost of fuel from Rs. 26.72 per litre in Fiscal

2005 to Rs. 31.84 per litre in Fiscal 2006 viz. an increase of 19.2%.

Expenditure - 2005-06 Expenditure - 2004-05


27

Other Operating Expenses

2.8 Other Operating Expenses increased by 39% from Rs. 9,433 million in Fiscal 2005 to Rs. 13,111

million in Fiscal 2006. The break up is given in the table below:

Part iculars Year Ended 31 st March, Increase/

2006 2005 (Decrease)

(Rs. Millions) (Rs. Millions) (%)

Maintenance and repairs 3,109 2,874 8.2

Variable rentals 1,241 695 78.6

Landing, navigation and other airport charges 3,505 2,388 46.8

Insurance 690 491 40.5

General and administrative 4,566 2,985 53.0

Tota l 13,111 9,433 39.0

� The increase in maintenance and repair costs was essentially due to higher block and flight

hours, as well as the increase in the size of the fleet during Fiscal 2006.

� The increase in variable rentals is essentially on account of higher block hours during Fiscal

2006. Further, the wide-bodied aircraft introduced during Fiscal 2006 have significantly higher

cost per flight hour as compared to other aircraft in the fleet.

� The increase in landing, navigation and other airport charges was primarily due to an increase in

the number of flights operated [104,833 in Fiscal 2006 compared to 96,417 in Fiscal 2005]; as

well as the expansion of international operations.

� The increase in insurance costs was due to the increase in the fleet value insured consequent to

the increase in the size of the fleet in Fiscal 2006.

� The increase in general and administrative costs is attributable to:

� increased costs of inflight and passenger amenities due to the increased number of

passengers flown,

� higher travelling expenses mainly incurred with regard to new international routes, which

commenced in Fiscal 2006.

� higher rentals for premises in Fiscal 2006 were firstly, due to the revision of rents of certain

premises where agreements had expired and were renewed; and, secondly, due to new


28

premises taken on rent to meet the requirements of the Company’s expansion programme

and of training; and thirdly because of commensurate increases in renovation, repairs and

maintenance costs and

� increased expenditure with regard to information technology and communication, to

meet operational and administrative requirements as well as the upgrade and extension

of the Company’s Enterprise Resource Programme (ERP).

Employee Remuneration and Benefits

2.9 Expenses pertaining to Employee Remuneration and Benefits increased by 51.4% from Rs. 3,747

million in Fiscal 2005 to Rs. 5,672 million in Fiscal 2006. This increase reflects increases in salaries and

benefits, as well as the increase in average headcount from 7,082 during Fiscal 2005 to 8,285 during

Fiscal 2006. To meet operational requirements in Fiscal 2006, the Company employed expatriate

pilots on short-term contracts, which also contributed to the increase in payroll and related costs.

Selling and Distribution Costs

2.10 Selling and Distribution Costs increased by 38.4% from Rs. 5,591 million in Fiscal 2005 to Rs. 7,740

million in Fiscal 2006. This increase is attributable to:

� increase of 29.7% in costs related to Computerised Reservation Systems (CRS) and Global

Distribution Systems (GDS) from Rs. 1,036 million in Fiscal 2005 to Rs. 1,344 million in Fiscal

2006 essentially due to the increase in the number of passengers;

� increase of 34.3% in commission costs paid to General Sales Agents (GSAs) and travel agents

from Rs. 4,208 million in Fiscal 2005 to Rs. 5,653 million in Fiscal 2006. This was due to the

increased passenger revenues and revised productivity-based incentives given to travel agents.

The increase was partly offset by an agreement to reduce the overriding commission paid to our

General Sales Agent (GSA) in India from 3% to 2% for passenger revenues and from 2.5% to 2%

for cargo revenues with effect from 1st April, 2005; and

� increase in advertisement expenses incurred in Fiscal 2006, which was in part due to advertising

for the launch of international operations to Singapore, London (Heathrow) and Kuala Lumpur.

Aircraft Rentals

2.11 Aircraft Rentals increased by 118.5% from Rs. 1,986 million in Fiscal 2005 to Rs. 4,340 million in Fiscal

2006, due to the induction of more leased aircraft during Fiscal 2006; including wide-bodied aircraft

for long-haul international operations. This was offset to a small extent by the reduction in lease

rentals negotiated with lessors at the time of renewal of leases of certain aircraft.


29

Depreciation

2.12 We recorded a decrease in Depreciation costs of 11.1% from Rs. 4,570 million in Fiscal 2005 to

Rs. 4,064 million in Fiscal 2006 due to the reduction in the written down value of aircraft and other

assets being depreciated. In Previous Financial Years, the amounts spent towards acquiring rights with

regard to certain Landing Slots at an overseas airport were amortized over a period not exceeding 10

years. With effect from Fiscal 2006, the Company, considering industry experience and practices, has

revised the amortization period to 20 years .

Interest Expense

2.13 Interest Expenses decreased by 4.8% from Rs. 2,537 million in Fiscal 2005 to Rs. 2,416 million in Fiscal

2006, due to a decrease in average indebtedness.

Profit before Taxation

2.14 Profit before Taxation increased by 24.1% from Rs. 5,821 million in Fiscal 2005 to Rs. 7,223 million in

Fiscal 2006.

Profit after Taxation

2.15 Profit after Taxation increased by 15.3% from Rs. 3,920 million in Fiscal 2005 to Rs. 4,520 million in

Fiscal 2006. Provision for Tax for the year increased by 42.1% from Rs. 1,901 million in Fiscal 2005 to

Rs. 2,702 million in Fiscal 2006.

3. Initiatives

Information Technology

3.1 The Company upgraded and expanded its Enterprise Resource Programme (ERP) system. This exercise

has streamlined a number of work processes and the augmented system covers a number of new

areas.

3.2 IT systems and applications in other important areas were also upgraded.

Jet Privilege

3.3 The Company, on a continuous basis, strives to improve its award-winning customer loyalty programme,

Jet Privilege. The membership base continues to grow and, as on 31st July, 2006 stood at 702,708.

Engineering and Maintenance

3.4 The construction of the hangar facility at Mumbai Airport was completed during Fiscal 2006.


30

4. Outlook

4.1 The near-term outlook for the Company remains challenging, notwithstanding the continuing growth

of domestic and international passenger traffic and the positive economic conditions prevailing. Fuel

prices remain a key variable. Domestic yields remain under pressure, with the significant increase in

industry-wide capacity. The Company is using its Yield Management System effectively to offer part of

its capacity at fares to match low fare carriers and discounted fares offered by other competing airlines

but with certain terms and conditions not applicable to higher fares, and at the same time, optimizing

the revenue per flight.

4.2 While maintaining its focus on its core domestic operations, the Company continues to drive its

international expansion. The Company is further planning, subject to approvals, flights to several

other international destinations. The Company competes and will be competing with established

larger international airlines on these routes. There is intense competition in these markets often

leading to significant discounting of fares. There is, therefore, a lead-time to establish profitability in

each new route.

5. Human Resources

5.1 Industrial relations throughout the network remained cordial during Fiscal 2006. We maintain our

endeavours to ensure that the salary structure of employees is commensurate with market conditions.

5.2 The total number of employees as on 31st March, 2006 was 8,815 compared to 7,598 as on 31st

March, 2005. Recruitment and training continues to take place to meet the future increase in fleet size

and new aircraft type(s), deliveries of which will commence in Fiscal 2008. A second Boeing 737 Next

Generation Full Flight Simulator is scheduled to be operational in December 2006. The two simulators

will meet pilot training needs of our existing and future Boeing 737 aircraft.

6. Awards

6.1 The Company continued to receive recognition for the excellence of its airline services. During the year

under review, the Company received the following awards:

� The ‘Emerging Airline Award’ of the well-known international aviation journal, Air Finance, in

April 2005.

� The ‘Industry Impact Award’, at the Annual Freddie Awards, for introduction of the ‘Dynamic

Tier Review’ in our Jet Privilege Programme in April 2005.

� The Economic Times Award for Corporate Excellence for Emerging Company of the Year

2004-05, in November 2005.


31

� TTG Travel Asia’s award as the Best Domestic Airline for 2005, in October 2005; this is the third

time the Company has won this award.

� India’s Most Customer Responsive Company for 2005 in the “Travel and Tourism: Transportation”

category, at the Avaya Global Connect Customer Responsiveness Awards presented by The

Economic Times, in December 2005.

� The Galileo Express Travel & Tourism award for the ‘Best Domestic Airline’ at the Galileo Express

Travel & Tourism Awards, 2005 in December 2005.

� The BML Munjal Award for Excellence in Learning and Development in the private sector category

awarded by Hero Mindmine, in January 2006.

� The Star of the Industry Award for the Best Domestic Airline for 2005 awarded by the ITM

Institute of Hotel Management, in February 2006.

6.2 In April 2006, at the South Asia Travel Tourist Exchange (SATTE), the Company was awarded “Indian

Domestic Airline with Spectacular Growth” and “India’s Most Popular Domestic Airline”.

6.3 In April 2006, at the Annual Freddie Awards, the Jet Privilege Programme won the Best Customer

Service Award and Best Bonus Promotion Award, among loyalty programmes offered by airlines from

Japan, Australia, Asia and Pacific regions.

7. Internal Control Systems

7.1 The Company has a proper and adequate system of internal controls commensurate with its size and

nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are

authorized, recorded and reported properly and applicable statutes, codes of conduct and corporate

policies are duly complied with.

7.2 The Internal Audit Department reviews the adequacy and efficacy of the key internal controls. The

scope of the audit activity is guided by the annual audit plan, which is approved by the Audit Committee

of the Board.

7.3 The Company’s Audit Committee comprises four Non-executive Directors: Mr. Aman Mehta (Chairman),

Dr. Vijay L. Kelkar, Mr. Victoriano P. Dungca and Mr. Javed Akhtar. One of the objectives of the Audit

Committee is to review the reports submitted by the Internal Audit Department and to monitor

follow-up and corrective action by Management.

7.4 The Company has a corporate compliance procedure to ensure that all laws, rules and regulations

applicable to our industry are complied with. Based on confirmation from all departmental heads, the


32

Chief Executive Officer places before the Board a Corporate Compliance Certificate at every Board

Meeting.

7.5 The Company Secretary is the designated Compliance Officer to ensure compliance with SEBI regulations

and with our Listing Agreement with National Stock Exchange of India Limited and Bombay Stock

Exchange Limited.

7.6 The Executive Director is the Compliance Officer with regard to the ‘Jet Airways Code of Conduct for

Prevention of Insider Trading’ and Public Spokesman for the ‘Jet Airways Code of Corporate Disclosure

Practices for Prevention of Insider Trading’.

7.7 The Company has a process of both external and internal safety audits for each area of operation. The

Company is in full compliance with all laws, rules and regulations relating to airworthiness, air safety

and other statutory operational requirements.

7.8 The Company, as part of its Risk Management strategy, reviews, on a continuous basis, its strategies,

processes, procedures and guidelines to effectively identify and mitigate risks. Further, the management

has developed a procedure to ensure adequate disclosures of key risks and mitigation initiatives to the

Audit Committee of the Board.

8. Opportunities, Risks, Concerns and Threats

8.1 We are preparing to take advantage of the continuing growth in air travel to, from and within India.

8.2 The growth in air transport (both passenger and cargo) has been found to be closely associated with

growth in Gross Domestic Product (GDP) both in India and other countries. The outlook for the Indian

economy remains favourable with the Reserve Bank of India projecting an 8% growth for Fiscal 2007.

8.3 We, therefore, expect continued growth in both business and leisure air travel. While historically,

business travelers have formed the majority of domestic air travelers, increasing income levels and the

emergence of flexible fare schemes, have encouraged and will continue to encourage leisure travelers,

particularly those who have hitherto traveled by train in premium classes.

8.4 The Indian tourism market has been growing at a significant pace over the past few years. Travel and

tourism expenditure in India is expected to achieve an annualized real growth of 8.8% over the 10-

year period from Fiscal 2004 to Fiscal 2014 (as per Tourism of India 2003 statistics, World Travel &

Tourism Council India 2004 Report). According to a recent report by the World Travel & Tourism

Council, India’s 10-year growth rate in demand for travel and tourism between 2006 and 2015 is

ranked third among 174 countries included in the forecast. This is also expected to encourage air

travel in India.


33

8.5 Our principal concern remains the volatility in crude oil prices and its impact on the price of Aviation

Turbine Fuel (ATF), which is the single largest head of our operating expenditure. Crude oil prices have

continued to rise in Fiscal 2007 and the Company has introduced fuel surcharges in Fiscal 2007 and

the Company has begun hedging a portion of the fuel purchased outside India for its international

operations . The effective cost of ATF purchased for international operations in India is lower than that

purchased for domestic operations as excise duty is not charged, and further the purchase of ATF by

designated carriers is exempt from the payment of sales taxes levied by the State Governments.

8.6 During Fiscal 2006 four new domestic carriers commenced operations, and the proposed expansion

in capacity by existing and new airlines will mean a more competitive domestic environment. As we

enter new markets overseas, we will increasingly compete with well-established airlines. We believe

pressure on yields will continue in the near term. We are continuously monitoring the market and

undertaking various revenue enhancement measures including pricing initiatives in order to respond

to competitive factors.

8.7 We will also have to compete with other airlines for access to airport facilities, parking bays for aircraft

and prime time departure slots. The expansion of existing operators and the entry of new carriers will

increase the demand for skilled personnel such as pilots, engineers and cabin crew. We continue to

give the highest priority to employee training and employee retention programmes, to meet our

future manpower needs.

8.8 The airline business is affected by economic cycles and by domestic and international political events.

We believe that the economic growth in India and the region will continue to be buoyant over the next

few years. At the same time, socio-political and natural calamities, events such as terrorism and

terrorist threats, regional conflicts, epidemics and floods can affect or disrupt our business and

financial performance. We will, therefore, continue to pursue and implement strategies to reduce unit

costs.

8.9 The Company is involved in legal cases filed by or against it in various courts of law. There are also

certain claims by or against the Company. There is no certainty as regards the likely outcome of these

cases and claims as also the period within which these may be concluded. Please refer to Note No. 2

of the Notes to Accounts and paragraphs 14 to 17 of the Directors’ Report under the heading “Sahara

Airlines Ltd. (Pre- and Post-Balance Sheet Events)”.

Certain statements in this Management Discussion and Analysis describing the Company may be ‘forward-

looking statements’ within the meaning of applicable securities laws and regulations. Actual results could differ

materially from those expressed or implied. Important factors that could make a difference to the Company’s

future operations include economic conditions affecting air travel in India and overseas, change in Government

Regulations, changes in Central and State taxation, fuel prices and other factors.


34

Corporate Governance Report

(Information given in this Report relates to the Financial Year ended 31st March, 2006)

COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Company recognizes that good Corporate Governance is essential to build and retain the confidence of its

stakeholders. To this end, the Company’s philosophy on Corporate Governance is to endeavour to ensure:

� that systems and procedures which monitor compliance with laws, rules and regulations are in place in each

area of its business

� that relevant information regarding the Company and its operations is disclosed, disseminated and easily

available to its stakeholders, and

� that the Board of Directors is kept fully informed of

� all material developments in the Company,

� the risks in its business and its operations

� the rationale for management’s decisions and recommendations

so that the Board of Directors can effectively discharge its responsibilities to our stakeholders

1. BOARD OF DIRECTORS

i. Composition

The Board of Directors of the Company consists of 12 Directors including 4 Independent Directors.

Mr. Naresh Goyal is the Chairman and Mr. Saroj K. Datta is the Executive Director. The Board of Directors

including the Independent Directors comprise of senior, competent and highly respected persons from

their respective fields.

ii. Other Directorships/Memberships

The Company has a Non-executive Chairman and the number of Independent Directors is one-third of

the total strength of the Board. The Company is in compliance with the requirements of Clause 49 of

the Listing Agreement as regards composition of the Board.


35

Name of Director Position/Category Other Directorships / Mandatory Number

Committee memberships of Shares

Directorships Committee Committeeheld

in other Chairman Member

Public Cos.

Mr. Naresh Goyal Promoter & None None None 9995

Non-executive Chairman (as a Nominee

of Tail Winds

Limited)

Mr. Ali Ghandour Non-executive Director None None None Nil

Mr. Victoriano P. Dungca Non-executive Director None None None Nil

Mr. Charles A. Adams Non-executive Director None None None Nil

Mr. J. R. Gagrat* Non-executive Director None None None Nil

Mr. Javed Akhtar Independent Director None None None 2220

Mr. I. M. Kadri Non-executive Director 2 None 1 Nil

Mr. P. R. S. Oberoi Non-executive Director 12 1 1 Nil

Mr. Aman Mehta Independent Director 3 2 4 Nil

Dr. Vijay L. Kelkar Independent Director 8 None 1 Nil

Mr. S. G. Pitroda Independent Director None None None Nil

Mr. Saroj K. Datta Executive Director None None None 553

* Expired on 5th April, 2006

iii. Attendance at the Board Meetings during the Financial Year 2005-06 and the last Annual

General Meeting

Nine Board Meetings were held during the Financial Year 2005-06. The gap between any two Board

Meetings did not exceed four months. The dates on which the Board Meetings were held are as

follows:

17th May, 2005, 20th July, 2005, 27th September, 2005, 29th October, 2005, 3rd January, 2006,

10th January, 2006, 11th January, 2006, 19th January, 2006 and 21st January, 2006.


36

Name of Director No. of Meetings Attendance at Annual General Meeting

attended held on

27th September, 2005

Mr. Naresh Goyal 8 Yes

Mr. Ali Ghandour 4 Yes

Mr. Victoriano P. Dungca 8 Yes

Mr. Charles A. Adams 4 Yes

Mr. J. R. Gagrat* 3 Yes

Mr. Javed Akhtar 7 Yes

Mr. I. M. Kadri 7 No

Mr. P. R.S. Oberoi 1 No

Mr. Aman Mehta 6 Yes

Dr. Vijay L. Kelkar 6 Yes

Mr. S. G. Pitroda Nil No

Mr. Saroj K. Datta 9 Yes


2. AUDIT COMMITTEE

In terms of the Listing Agreement executed by the Company with Stock Exchanges, and pursuant to Section

292A of the Companies Act, 1956, the Company has complied with the requirements of Clause 49 of the

Listing Agreement as regards composition of the Audit Committee.

The terms of reference of the Audit Committee are comprehensive and cover the matters specified for the

Audit Committees under the Listing Agreement with the Stock Exchanges.

i. Composition, names of Members, Chairman and attendance at Meetings during the Financial

Year 2005-06

The Company has a qualified and an Independent Audit Committee as required under Clause 49 of the

Listing Agreement. Mr. Javed Akhtar was inducted in the Audit Committee on 20th July, 2005 and

currently its constitution is as under:


37

Name of the Member Designation Category/Position

Mr. Aman Mehta Chairman Independent Director

Dr. Vijay L. Kelkar Member Independent Director

Mr. Victoriano P. Dungca Member Non-executive Director

Mr. Javed Akhtar Member Independent Director

ii. Meetings and attendance during the Financial Year 2005-06

Five Meetings of the Audit Committee were held during the Financial Year 2005-06. The dates on which

the Audit Committee Meetings were held are as follows:

5th April, 2005, 17th May, 2005, 20th July, 2005, 29th October, 2005 and 21st January, 2006.

Name of the Member No. of Meetings attended

Mr. Aman Mehta 5

Dr. Vijay L. Kelkar 4

Mr. Victoriano P. Dungca 3

Mr. Javed Akhtar 2

3. REMUNERATION & COMPENSATION COMMITTEE

i. Terms of Reference

The Remuneration & Compensation Committee shall determine the Compensation Policy and other

benefits for Executive Directors and the Senior Management.

ii. Composition, names of Members and Chairman

On 20th July, 2005, the Remuneration Committee was renamed as ‘Remuneration & Compensation

Committee’ with induction of Mr. Javed Akhtar and Mr. Aman Mehta into the Committee. At present,

the Members of the Remuneration & Compensation Committee are as under:


Dr. Vijay L. Kelkar Chairman Independent Director

Mr. Victoriano P. Dungca Member Non-executive Director

Mr. Charles A. Adams Member Non-executive Director


Mr. Aman Mehta Member Independent Director


38

iii. Meetings and attendance during the Financial Year 2005-06

During the Financial Year 2005-06, only one Meeting of the Remuneration & Compensation Committee

was held on 20th July, 2005 and all the Members were present for the same.

iv. Remuneration Policy

At present, the Non-executive Directors of the Company are entitled only to Sitting fees and commission,

which is decided by the Board of Directors and approved by the shareholders. The Remuneration

payable to the Executive Director will be determined by the Remuneration & Compensation Committee.

v. Details of remuneration of Directors for the Financial Year 2005-06

Name of the Director Basic Allowances Perquisites Retirement Sitting Commission Total

Salary Benefits Fees Payable

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Mr. Naresh Goyal Nil Nil Nil Nil 130,000 600,000 730,000

Mr. Ali Ghandour Nil Nil Nil Nil 50,000 600,000 650,000

Mr. Victoriano P. Dungca Nil Nil Nil Nil 180,000 600,000 780,000

Mr. Charles A. Adams Nil Nil Nil Nil 95,000 600,000 695,000

Mr. J. R. Gagrat* Nil Nil Nil Nil 30,000 600,000 630,000

Mr. Javed Akhtar Nil Nil Nil Nil 185,000 600,000 785,000

Mr. I. M. Kadri Nil Nil Nil Nil 155,000 600,000 755,000

Mr. P. R. S. Oberoi Nil Nil Nil Nil 5,000 600,000 605,000

Mr. Aman Mehta Nil Nil Nil Nil 185,000 600,000 785,000

Dr. Vijay L. Kelkar Nil Nil Nil Nil 155,000 600,000 755,000

Mr. S. G. Pitroda Nil Nil Nil Nil Nil 600,000 600,000

Mr. Saroj K. Datta 2,406,250 1,121,070 985,530 521,971 245,000 Nil 5,279,821


The Company paid/due and payable Rs. 22,321,285 as Professional Fees to Law Firms in which Mr. J. R.

Gagrat*, Director of the Company, was a Partner.


39

4. INVESTORS’ GRIEVANCES COMMITTEE

i. Composition, names of Members and Chairman

The Company has an Investors’ Grievances Committee to specifically look into the redressal of the

Shareholders’/Investors’ complaints. The Members of the Investors’ Grievances Committee are as

under:


Mr. I. M. Kadri Chairman Non-executive Director

Mr. Charles A. Adams Member Non-executive Director

Mr. Saroj K. Datta Member Executive Director

ii. Meetings and attendance during the Financial Year 2005-06

Three Meetings of the Investors’ Grievances Committee were held during the Financial Year 2005-06.

The dates on which the said Meetings were held are as follows:

28th June, 2005, 29th October, 2005 and 21st January, 2006.

Name of the Member No. of Meetings attended

Mr. I. M. Kadri 3

Mr. Charles A. Adams 2

Mr. Saroj K. Datta 3

iii. Name and designation of Compliance Officer

Mr. Narendra Mehra, Company Secretary is the Compliance Officer under Clause 47 of the Listing

Agreement after taking over the charge from Mr. A. R. Rajaram who had resigned from the services of

the Company on 28th February, 2006.


40

iv. Details of Shareholders’ complaint/queries

Opening Balance Received Attended To Pending

Nil 1690 1690 Nil

5. SELECTION COMMITTEE

A committee had been specifically constituted as required by the Director’s Relatives (Office or Place of Profit)

Rules, 2003 and as prescribed under Section 314 of the Companies Act, 1956, to consider the selection and

appointment of Mrs. Anita Goyal, as Executive Vice President – Marketing and Sales. The Members of the

Selection Committee were as under:



Mr. Aman Mehta Member Independent Director

The Selection Committee met once during the Financial Year 2005-06 on 12th August, 2005 and

thereafter was dissolved, as the purpose for which it was constituted had been fulfilled.

6. GENERAL BODY MEETINGS

i. Location and time for the last three Annual General Meetings:

Date Venue Time

20th September, 2003 S. M. Centre, Andheri-Kurla Road, 5:00 p.m.

Andheri (East), Mumbai 400 059

29th September, 2004 S. M. Centre, Andheri-Kurla Road, 5:00 p.m.


27th September, 2005 Nehru Centre Auditorium, 3:30 p.m.

Discovery of India Building,

Dr. Annie Besant Road, Worli, Mumbai 400 018


41

Extraordinary General Meeting:

The Company held an Extraordinary General Meeting on 28th February, 2006, which approved, inter

alia, raising of funds by the Company by the issue of Equity Shares/Global Depository Receipts (GDRs)/

American Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)/ or other Securities.

ii. Whether any special resolutions passed in the previous three Annual General Meetings:

Year Subject

20th September, 2003 None

29th September, 2004 None

27th September, 2005 • Re-appointment and remuneration of Executive Director

• Payment of sitting fees to Directors and compensation to

Non-executive Directors

• Appointment of Mrs. Anita Goyal as Executive Vice-President –

Marketing & Sales

iii. Whether special resolutions were put through postal ballot last year, details of voting pattern,

person who conducted the postal ballot exercise, proposed to be conducted through postal

ballot and procedures for postal ballot.

There was no Special Resolution which was required to be passed by the Postal Ballot. No Special

Resolution is proposed to be passed at the ensuing Annual General Meeting, by Postal Ballot.

7. DISCLOSURES

i. Disclosures on materially significant related party transactions i.e. transactions of the Company

of material nature, with its promoters, the Directors or the management, their subsidiaries or

relatives etc. that may have potential conflict with the interests of the Company at large.

None of the transactions with any of the related parties were in conflict with the interest of the

Company.


42

ii. Details of non-compliance by the Company, penalties, and strictures imposed on the Company

by Stock Exchange or SEBI or any statutory authority on any matter related to capital

markets, during the last three years.

No penalties and strictures have been imposed on the Company. It has been regular in complying with

the requirements specified by the Stock Exchanges, Securities & Exchange Board of India and other

Statutory Authorities.

iii. Code of Conduct

The Board of Directors has laid down a Code of Business Conduct and Ethics for all Members of the

Board and the Senior Management of the Company. The same has been posted on the Company’s

website. All Members of the Board and the Senior Management personnel have affirmed their

compliance with the said Code. A declaration to this effect signed by the Executive Director is given

below:

I hereby confirm that:

The Company has obtained from all the Members of the Board and the Senior Management of the

Company, affirmation that they have complied with the Code of Business Conduct and Ethics for all

Members of the Board and the Senior Management in respect of the Financial Year 2005-06.

Saroj K. Datta

Executive Director

iv. ED/CFO Certification

A Certificate from the Executive Director and the Chief Financial Officer, on the Financial Statements and

other matters of the Company for the Financial Year ended 31st March, 2006, was placed before the Board.

v. Risk Management

The Company has laid down procedures to inform Board Members about the risk assessment and

minimization procedures, which are periodically reviewed by the Board.


43

Shareholder Information

1. Date and time of Annual Wednesday, 20th September, 2006 at 3:30 p.m.

General Meeting

2. Venue Nehru Centre Auditorium, Discovery of India Building, Dr. Annie

Besant Road, Worli, Mumbai 400 018

3. Financial Year 1st April, 2005 to 31st March, 2006

4. Book Closure Date Saturday, 9th September, 2006 to Wednesday, 20th September,

2006 (both days inclusive) for AGM and payment of Dividend.

5. Dividend Payment Date The Dividend, if declared, shall be paid on or after 25th September

2006, but within the statutory time limit of 30 days.

6. Registered Office S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059

7. Compliance Officer Mr. Narendra Mehra, Company Secretary

8. Website Address www.jetairways.com

1. FINANCIAL CALENDAR

The Company has announced/expects to announce the unaudited Quarterly Results for the Financial Year

2006-07, as per the following schedule:

First Quarter : Announced on 29th July, 2006

Second Quarter : On or before 31st October, 2006

Third Quarter : On or before 31st January, 2007

The Audited Financial Results of the Company for the Financial Year 2006-07 will be announced before

30th June, 2007, which will include the Financial Results for the Fourth Quarter of the Financial Year 2006-07.

2. MEANS OF COMMUNICATION

i. Half-yearly/Yearly Report sent to the household of each shareholder

The Company publishes financial results (quarterly/half-yearly/annual) in major newspapers after the

same are approved by the Board. The financial results are also simultaneously posted on the Company’s

website. Hence, no separate quarterly or half-yearly report is mailed to the Shareholders.


44

ii. Quarterly results – which newspapers normally published in

The Quarterly Financial Results are normally, published by the Company in The Economic Times and/or

Business Standard and/or the Hindustan Times and in the Maharashtra Times and/or Navbharat Times.

iii. Any website, where quarterly results are displayed; whether it also displays official news releases

The Quarterly Financial Results and official news are posted on the Company’s website at

www.jetairways.com.

iv. The presentations made to institutional investors or to the analysts

The Company selectively makes presentations to the Institutional Investors/ Banks/ Analysts after

announcement of financial results.

v. Whether the Management Discussion and Analysis is a part of the Annual Report or not

Yes. This is provided elsewhere in the Annual Report.

3. LISTING ON STOCK EXCHANGES

The Company’s Equity Shares are listed on the following Stock Exchanges :

National Stock Exchange of India Limited (NSE)

“Exchange Plaza”

Bandra-Kurla Complex, Bandra (East),

Mumbai – 400 051

Bombay Stock Exchange Limited (BSE)

P. J. Towers

Dalal Street, Fort,

Mumbai – 400 001

Listing Fees for the Financial Year 2006-07 have been paid to both the above Stock Exchanges.


45

4. STOCK CODE

National Stock Exchange of India Limited : JETAIRWAYS

Bombay Stock Exchange Limited : 532617

ISIN Nos. in NSDL and CDSL : INE802G01018

5. MARKET PRICE DATA (HIGH, LOW DURING EACH MONTH IN LAST FINANCIAL YEAR)

Month JETAIRWAYS on BSE JETAIRWAYS on NSE

High Low Volume High Low Volume

(Rs.) (Rs.) (Nos.) (Rs.) (Rs.) (Nos.)

April 2005 1379.00 1159.70 2267692 1382.75 1159.00 6328537

May 2005 1354.40 1260.00 1312415 1349.50 1260.00 3702102

June 2005 1361.00 1228.20 1239298 1360.00 1183.90 3790290

July 2005 1344.00 1252.00 503988 1342.00 1210.10 1458587

August 2005 1277.00 1106.50 721434 1275.00 1105.95 2427074

September 2005 1200.00 1053.50 1004864 1175.80 1055.00 3033761

October 2005 1252.00 973.00 1288336 1250.00 970.55 3417680

November 2005 1247.90 1006.20 1030974 1246.90 1007.00 2833094

December 2005 1280.00 1100.00 939237 1276.90 1091.55 3375079

January 2006 1224.80 975.20 2796443 1207.00 975.10 8195777

February 2006 1015.10 891.15 3062470 1016.95 772.90 7823417

March 2006 1025.00 917.00 1599508 1013.00 914.00 4012761


46

6. PERFORMANCE OF SHARE PRICE OF THE COMPANY IN COMPARISON TO THE BSE AND NSE

INDICES

Jet Airways vs BSE Sensex

Jet Airways vs NIFTY


47

7. REGISTRAR AND TRANSFER AGENT

Karvy Computershare Private Limited

Karvy House, 46, Avenue 4,

Street No. 1, Banjara Hills,

Hyderabad 500 034

Phone : 040 2342 0818

Fax : 040 2342 0814

E-mail : [email protected]

Contact Person : Mr. M. S. Madhusudan, Asst. General Manager

8. SHARE TRANSFER SYSTEM

99.99% of the issued Equity Shares of the Company are in the dematerialized form. Transfers of these shares

are done through the depositories with no involvement of the Company or its Registrars.

As regards transfer of shares held in physical form, the transfer documents can be lodged with the Company’s

Registrars – Karvy Computershare Private Limited at the above mentioned address or at the Registered Office

of the Company.

There was no transfer of shares in physical form during the Financial Year 2005-06.

9. DEMATERIALIZATION OF SHARES AND SECRETARIAL AUDIT

The Company has arrangements with National Securities Depository Limited (NSDL) and Central Depository

Services (India) Limited (CDSL), to facilitate holding and trading of Company’s Equity Shares in electronic

form. Over 99.99% of the Company’s Equity Shares are held in electronic form. The Company’s Equity Shares

are regularly traded on NSE and BSE.

For the Financial Year ended 31st March, 2006, M/s. T. M. Khumri & Co., Company Secretaries, carried out a

Secretarial Audit to reconcile the total admitted capital with NSDL and CDSL and total issued and listed

capital. The Secretarial Audit Reports for all the quarters of the said financial year confirm that the total

issued/paid-up capital is in agreement with the total number of Equity Shares in physical form and the total

number of dematerialized Shares held with NSDL and CDSL.


48

10. DISTRIBUTION OF SHAREHOLDING AS ON 31ST MARCH, 2006

Sr. No. Category Number of % of Amount % of Amount

Shareholders Shareholders (Rs.)

From –To

1 1-5000 140333 99.67 23338970 2.70

2 5001-10000 190 0.13 1402430 0.16

3 10001-20000 97 0.07 1437000 0.17

4 20001-30000 38 0.03 959490 0.11

5 30001-40000 17 0.01 601580 0.07

6 40001-50000 13 0.01 597460 0.07

7 50001-100000 26 0.02 2079610 0.24

8 100001 & above 88 0.06 832923570 96.48

Total 140802 100.00 863340110 100.00

11. SHAREHOLDING PATTERN AS PER CLAUSE 35 OF THE LISTING AGREEMENT AS ON

31ST MARCH, 2006

Sr. No. Category No. of Shares held % of Shares

A. Promoters Holding

1. Promoters 69067205 80.00%

2. Persons acting in concert 553 0.00%

B. Non-promoters Holding

3. Institutional Investors

(a) Mutual Funds and UTI 2503189 2.90%

(b) Banks, Financial Institutions, Insurance, 1898779 2.20%

Companies (Central/ State Govt. Institutions /

Non-Governmental Institutions)

(c) FIIs 9074567 10.51%

Others

(a) Private Corporate Bodies 966268 1.12%

(b) Indian Public 2632049 3.05%

(c) NRIs/OCBs 58492 0.07%

(d) Any Other 132909 0.15%

Total 86334011 100.00%


49

12. OUTSTANDING GDRs/ ADRs/ WARRANTS OR ANY CONVERTIBLE INSTRUMENTS,

CONVERSION DATE AND LIKELY IMPACT ON EQUITY

As on 31st March, 2006, the Company did not have any outstandingGDRs/ ADRs/ Warrants or any Convert-

ible Instruments.

13. PLANT LOCATIONS

In view of the nature of the Company’s business viz., provision of scheduled air services, the Company

operates from various offices in India and abroad but does not have any manufacturing plant.

14. ADOPTION OF NON-MANDATORY REQUIREMENTS UNDER THE LISTING AGREEMENT

The Company has adopted the Non-mandatory requirement as regards provisions relating to Remuneration

Committee. The quarterly results are extensively published in the financial newspapers, posted on the

Company’s website and sent to the Shareholders on request. Adoption of other non-mandatory requirements

will be considered by the Company.

15. INVESTOR COMPLAINTS

Investor complaints are given top priority by the Company and are replied to promptly by the Investors’

Service Cell located at the Corporate Secretarial Department and also by the Registrars and Share Transfer

Agent of the Company. It is the endeavour of the Company that Investor Complaints are attended to within

48 hours of receipt. The Company has attended to all investors’ grievances/correspondences.

16. ADDRESS FOR CORRESPONDENCE

Company Secretary


S. M. Centre, Andheri-Kurla Road,


Telephone : (022) 28527744

Fax : (022) 28527745

E-mail : [email protected]

Website : www.jetairways.com


50

Auditors’ Certificate on Compliance of Conditions of Corporate

Governance

To the Members of


We have examined the compliance of conditions of corporate governance by Jet Airways (India) Limited (“the

Company”), for the year ended on 31st March, 2006, as stipulated in Clause 49 of the Listing Agreement of the

said company with stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the Company’s management. Our

examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the

compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on

the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that

the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned

Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Deloitte Haskins & Sells For Chaturvedi & Shah


R. Salivati C. D. Lala

Partner Partner

Membership No.: 34004 Membership No.: 35671

Place : Mumbai

Date : 29th July, 2006


51

Auditors’ Report

The Members of Jet Airways (India) Limited

We have audited the attached Balance Sheet of Jet Airways (India) Limited (“the Company”) as at March 31, 2006, and the Profit

and Loss Account and Cash Flow Statement for the year ended on that date both annexed thereto. These financial statements are

the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based

on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

2. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report ) (Amendment)

Order 2004 (together the ‘Order’), issued by the Central Government of India in terms of Section 227(4A) of the Act , and

on the basis of such checks as we considered appropriate, and according to the information and explanations given to us,

we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent

applicable to the Company.

3. Further, to our comments in the Annexure referred to in paragraph 2 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from

our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with

the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report

comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act 1956;

(e) On the basis of written representations received from the directors, as on March 31, 2006, and taken on the record

by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2006

from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act

1956;


52

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts

read together with the Significant Accounting Policies and notes thereon give the information required by the

Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting

principles generally accepted in India;

(i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006;

(ii) in so far as it relates to the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in so far as it relates to the Cash Flow Statement, of the cash flows for the year ended on that date.

FOR DELOITTE HASKINS & SELLS FOR CHATURVEDI & SHAH


R. SALIVATI C.D. LALA

Partner Partner

M. No. 34004 M. No. 35671

Mumbai

Dated : 29th April, 2006


53

Annexure to the Auditors’ Report

(Referred to in paragraph 2 of our report of even date)

1) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of

fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased

periodic manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its

assets. The company is in the process of reconciling assets physically verified during the year with the book records.

c) A substantial part of the fixed assets has not been disposed off during the year; accordingly provisions of clause 4

(i) (c) of Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

2) a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of

verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification

of inventories followed by the management were reasonable and adequate in relation to the size of the Company

and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper

records of its inventories and no material discrepancies were noticed on physical verification.

3) According to the information and explanations given to us the Company has not granted/taken loans, secured or unsecured,

to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act

1956. Therefore, the provisions of clause 4(iii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the

company.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures

commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and

with regard to rendering of services. There is no sale of goods. During the course of our audit, we have not observed any

continuing failure to correct major weaknesses in internal controls.

5) In respect of contracts or arrangements referred to in section 301 of the Companies Act 1956, to the best of our knowledge

and belief and according to the information and explanations given to us:

a) The particulars of contracts or arrangements have been entered in the register maintained under that section.

b) Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable

having regard to prevailing market prices at the relevant time.

6) According to information and explanations given to us, the Company has not accepted deposits from the public. Therefore

the provisions of clause 4(vi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

7) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its

business.


54

8) Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub section (1) of

section 209 of the Companies Act, 1956. Therefore the provisions of clause 4(viii) of the Companies (Auditor’s Report)

Order, 2003 are not applicable to the company

9) In respect of Statutory dues :

a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues, including

Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth

Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues.

b) According to the information and explanation given to us, no undisputed amounts, payable in respect of income

tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears, as at March 31, 2006 for a

period of more than six months from the date they become payable.

c) According to the information and explanations given to us, there are no dues of sales tax, income tax, service tax,

custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute other than

the following:

Name of statute Nature of the dues Amount Period to Forum where

(Rs. lac) which the dispute is

amount relates pending

IATT Rules, 1989 IATT Interest & Penalty 426 2003-04 Commissioner of Customs (Appeals),

New Delhi

IATT Rules, 1989 IATT Interest & Penalty 47 2001-02 Commissioner of Customs (Appeals), New

Delhi

B.M.C. Act, 1988 Octroi Dues 2,899 2000-01 Mumbai High Court

10) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses

during the financial year covered by the audit and the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the company has not defaulted in the

repayment of dues to financial institutions and banks. There were no debentures issued during the year or outstanding at

the beginning of the year.

12) We are of the opinion that the company has maintained adequate records where the company has granted loans and

advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause

4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

14) The Company has not dealt, other than in units, or traded in shares, securities, debentures or other investments during the

year. In our opinion and according to information and explanations given to us the Company has dealt in units of Mutual

Funds for which the Company has maintained proper records of transactions and contracts. All the investments have been

held by the company in its own name.


55

15) In our opinion and according to information and explanations given to us, the Company has not given guarantees for loans

taken by others from banks or financial institutions. Therefore, the provisions of clause 4(xv) of the Companies (Auditor’s

Report) Order, 2003 are not applicable to the company.

16) In our opinion, and according to the information and explanations given to us, the term loans have been applied for the

purpose for which they were raised.

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the

company, we report that funds raised on short-term basis have not been used for long-term investment except Rs.36,789

lac utilized for extending certain capital advances.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to

parties and companies covered in the register maintained under Section 301 of the Companies Act 1956. Therefore, the

provisions of clause 4(xviii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

19) According to the information and explanations given to us, during the period covered by our audit report, the Company

has not issued any debentures and no debentures were outstanding at the beginning of the year. Therefore, the provisions

of clause 4(xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

20) We have verified the end use of money raised by public issue and the same has been disclosed in the notes to the financial

statements.

21) According to the information and explanations given to us and on the basis of examination of the records, no fraud on or

by the Company was noticed or reported during the year except fraudulent use of credit cards for booking of tickets

amounting to Rs.372 lac.

FOR DELOITTE HASKINS & SELLS FOR CHATURVEDI & SHAH


R. SALIVATI C.D. LALA

Partner Partner

M. No. 34004 M. No. 35671

Mumbai



56

Balance Sheet as at March 31, 2006

As at As at

Schedule March 31, 2006 March 31, 2005

No. Rs. in lac Rs. in lac

I. SOURCES OF FUNDS

1. Shareholders’ Funds :

a) Share Capital

Equity A 8,633 8,633

8,633 8,633

b) Reserves and Surplus B 221,955 192,383

230,588 201,016

2. Subordinated Debt - 33,411

3. Loan Funds :

a) Secured Loans C 20,602 6,000

b) Unsecured Loans D 468,958 257,073

489,560 263,073

4. Deferred Tax Liability (Ref. Note 19 of Schedule S) 32,066 19,485

Total 752,214 516,985

II. APPLICATION OF FUNDS

1. Fixed Assets : E

a) Gross Block 437,206 520,209

b) Less : Depreciation 224,958 259,346

c) Net Block 212,248 260,863

d) Capital Work-in-progress 266,567 3,202

478,815 264,065

2. Investments F 18,723 159,573

3. Current Assets, Loans and Advances :

a) Inventories G 40,525 33,252

b) Sundry Debtors H 43,315 25,231

c) Cash and Bank Balances I 210,425 122,424

d) Loans and Advances J 113,488 23,533

407,753 204,440

Less : Current Liabilities and Provisions

a) Current Liabilities K 106,562 77,317

b) Provisions L 46,515 33,776

153,077 111,093

Net Current Assets 254,676 93,347

Total 752,214 516,985

Significant Accounting Policies and Notes to Accounts S

As per our attached report of even date For and on behalf of the Board

For DELOITTE HASKINS & SELLS For CHATURVEDI & SHAH

Chartered Accountants Chartered Accountants Javed Akhtar

Director

R. SALIVATI C.D. LALA Saroj K. Datta

Partner Partner Executive Director

Narendra Mehra

Company Secretary

Place : Mumbai



57

Profit and Loss Account for the year ended March 31, 2006

For the For the

Year ended Year ended

Schedule March 31, 2006 March 31, 2005

No. Rs. in lac Rs. in lac Rs. in lac

INCOME :

Operating Revenues M 569,373 433,801

Non - Operating Revenues N 44,174 8,216

Total 613,547 442,017

EXPENDITURE :

Employees Remuneration and Benefits O 56,715 37,474

Aircraft Fuel Expenses 167,893 105,173

Selling & Distribution Expenses P 77,402 55,906

Other Operating Expenses Q 131,111 94,325

(including Maintenance, Airport Charges, etc)

Aircraft Lease Rentals (Refer Note 4 of Schedule S) 43,399 19,857

Depreciation/ Amortisation 47,482 54,721

Less : Depreciation on amount added on Revaluation

charged to Revaluation Reserve 6,841 9,021

40,641 45,700

Interest R 24,160 25,369

Total 541,321 383,804

PROFIT BEFORE TAXATION 72,226 58,213

Income Tax Expenses

Current Tax ( including provision for Wealth Tax 13,406 4,604

Rs.7 lac, Previous Year Rs.4 lac)

Deferred Tax 12,581 14,410

Fringe Benefit Tax 1,035 -

PROFIT AFTER TAXATION 45,204 39,199

Balance Brought Forward 14,967 (11,801)

PROFIT AVAILABLE FOR APPROPRIATION 60,171 27,398

Less : Appropriations

Transferred to Capital Redemption Reserve - 5,558

Transferred to General Reserve 4,521 3,920

4,521 9,478

PROFIT AVAILABLE FOR DISTRIBUTION 55,650 17,920


Income Tax on Dividend 727 363

BALANCE CARRIED TO BALANCE SHEET 49,743 14,967

Earnings per share of Rs 10 each (Ref. Note 18 of Schedule S)

Basic (in Rupees) 52.36 52.29

Diluted (in Rupees) 32.04 8.72

Significant Accounting Policies and Notes to Accounts S




Director



Narendra Mehra

Company Secretary

Place : Mumbai



58

Statement of Cash Flow for the year ended March 31, 2006

For the Year ended For the Year ended

March 31, 2006 March 31, 2005


A. Cash Flow from Operating Activities

Net Profit before tax 72,226 58,213

Adjustments for :

Depreciation /Amortisation & Stock Obsolescence 42,589 47,527

(Profit)/Loss on sale of Fixed Assets (Net) (27,037) 345

(Profit) on sale of Investments / Dividend on Investments (5,253) (1,380)

Interest expense 24,160 25,369

Interest on Bank & Other Deposits (5,542) (3,064)

Excess Provision no longer required (4,101) (1,882)

Provision for doubtful debts no longer required (20) (6)

Provision for Leave Encashment & Gratuity 2,627 735

Exchange difference on translation (Net) (1,468) (822)

Provision for doubtful debts 247 281

Bad Debts written off 14 -

Inventory scrapped during the year 2,325 3,446

Operating profit before working capital changes 100,767 128,762

Changes in Inventories (11,546) (3,781)

Changes in Sundry Debtors (18,427) (1,272)

Changes in Loans & Advances (26,513) (853)

Changes in Current Liabilities and Provisions 29,863 17,317

Cash generated from operations 74,144 140,173

Income tax refunded/paid (13,392) (4,666)

Wealth tax paid (4) (3)

Net cash from operating activities 60,748 135,504

B. Cash Flow from Investing Activities

Capital Expenditure - Aircraft & Others (279,457) (9,871)

Proceeds from sale of fixed assets 46,282 52

Purchase of Investments (545,424) (508,116)

Changes in Fixed Deposits with Banks (Refer Note No. 2 below) 34,549 (35,917)

Interest Received on Bank & Other Deposits 5,367 2,596

Deposit in Escrow Account (Refer Note No. 3 below) (150,000) -

Advance paid as per Share Purchase Agreement (50,000) -

(Refer Note No 11 of Schedule S)

Sale of Investments 691,527 372,985

Dividend Received - 280

Net cash used for investing activities (247,156) (177,992)

carried forward (247,156) (177,992)


59

For the Year ended For the Year ended

March 31, 2006 March 31, 2005


brought forward (247,156) (177,992)

C. Cash flows from Financing Activities

Proceeds from issue of Share Capital - 156,696

Preference Shares repayment - (6,983)

Premium on Redemption of Preference Shares - (5,852)

Share Issue Expenses paid - (2,103)

Increase / (Decrease) in Term Loans & subordinated Debt 191,738 (27,558)

Interest paid (30,005) (22,668)

Dividend paid (including Tax on Dividend) (2,950) -

Net cash from financing activities 158,783 91,533

Net change in cash (A+B+C) (27,625) 49,045

Cash and cash equivalents at beginning of the year 50,401 1,356

Cash and cash equivalents at end of the year 22,776 50,401

(Refer Note No. 1 & 3 below)

Note :

1) Cash and Cash equivalents for the period ended March 31, 2006 includes unrealised loss of Rs.2 lac (Previous Year

unrealised loss of Rs. 83 lac) on account of translation of foreign currency bank balances.

2) Fixed Deposits with banks with maturity period of more than three months including interest accrued thereon and

Fixed Deposits under lien are not included in Cash and Cash equivalents.

3) Cash & Cash Equivalents at the end of the year excludes Rs. 150,000 lac being balance in Escrow Account as per the

terms of the Share Purchase Agreement (SPA) entered into for the acquisition of Sahara Airlines Limited. (Refer Note

No.11 of Schedule S) .




Director



Narendra Mehra

Company Secretary

Place : Mumbai


Statement of Cash Flow for the year ended March 31, 2006


60

Schedules to the Balance Sheet as at March 31, 2006

As at As at

March 31, 2006 March 31, 2005


SCHEDULE A :

SHARE CAPITAL

Authorized

130,000,000 (Previous Year 130,000,000) Equity Shares of Rs.10/- each 13,000 13,000

70,000,000 (Previous Year 70,000,000) Preference Shares of Rs 10/- each 7,000 7,000

20,000 20,000

Issued, Subscribed and Paid up

Equity:

86,334,011 Equity Shares (Previous Year - 86,334,011)

of Rs.10/- each fully paid up 8,633 8,633

(69,067,205 Shares held by the holding company,Tail Winds Limited

& its nominee. Previous Year 69,067,205 Shares)

(Of the above, 9,402,900 shares are allotted as fully paid

bonus shares by Capitalization of Profit, Previous Year 9,402,900 Shares)

Total 8,633 8,633


61


As at As at

March 31, 2006 March 31, 2005

Rs. in lac Rs. in lac Rs. in lac

SCHEDULE B :

RESERVES and SURPLUS

Capital Reserve

Balance as per Last Balance Sheet * *

Nominal Value of investments in SITA received free of cost

(See Note 1 of Schedule ‘F’ - Investments)

(*Rs. 2/-, Previous year Rs.2/-) - *

* *

Capital Redemption Reserve

Balance as per Last Balance Sheet 5,558 -

Transferred from Profit & Loss Account - 5,558

5,558 5,558

Share Premium


Received on Issue of Equity Shares - 155,272

Less : Adjustments

a) Premium on redemption of Cumulative Convertible

Redeemable Preference Shares - 5,852

b) Share Issue Expenses - 8,002

141,418 141,418

Revaluation Reserve

Balance as per Last Balance Sheet 25,927 38,757

Less : Adjustment /Reversal during the year 2,884 3,809

Less : Depreciation for the year on amount added on Revaluation

transferred to Profit & Loss Account 6,841 9,021

16,202 25,927

Contingency Reserve

Balance as per Last Balance Sheet - 593

Less: Transferred to General Reserve - 593

- -

General Reserve


Add: Transferred from Contingency Reserve - 593

Add: Transferred from Profit & Loss Account 4,521 3,920

9,034 4,513

Surplus Balance in Profit and Loss Account 49,743 14,967

Total 221,955 192,383


62


As at As at

March 31, 2006 March 31, 2005


SCHEDULE C :

SECURED LOANS

From Banks 16,602 -

(Loans from Banks are secured by hypothecation of Stocks,

Debtors & Movable Fixed Assets other than Aircraft and/or

by lien on Bank Deposits)

From Financial Institutions 4,000 6,000

(Secured by hypothecation of Simulator & other accessories thereto)

Total 20,602 6,000

SCHEDULE D :

UNSECURED LOANS

Short Term Loans:

From Banks 59,478 -

Other Loans:

From Banks 169,282 -

From Financial Institutions 43,500 -

From Others

Outstanding Hire Purchase/Finance Lease Instalments 196,698 257,073

[Instalments due within one year Rs. 20,791 lac

(Previous Year - Rs.27,841 lac)]

409,480 257,073

Total 468,958 257,073


63

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inclu

de A

ircra

ft t

aken o

n O

pera

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ircra

ft a

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again

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net)

during t

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ccount

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ount

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:

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are

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Landin

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hts

-upto

20 y

ears

(Refe

r N

ote

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of

Schedule

S)

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ark

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ule

s t

o t

he B

ala

nce S

heet a

s a

t M

arch

31,

2006


64


As at As at

March 31, 2006 March 31, 2005


SCHEDULE F :

INVESTMENTS

Long Term

18 Shares (Previous Year 18 Shares) held with Societe Internationale de

Telecommunications Aeronautiques * *

(S.I.T.A S.C) * (Rs. 2/-, Previous year Rs.2/-)

NOTES :

1. These investments have been received free of cost from

SITA SC for participation in their Computer Reservation System

and have been accounted at a nominal value of Rs. 2/- (Previous Year Rs. 2/-) by

crediting to Capital Reserve.

2. The transfer of this investment is restricted to other Depository Certificate

holders for e.g. Air Transport members, etc.

Current

Investments in Mutual Funds - Traded (Debt Schemes)

Schemes As at As at Face As at As at

March 31, March 31, Value/ March 31, March 31,

2006 2005 Unit 2006 2005

(Rs.)

No. of No. of Rs. in Rs. in

Units Units lac lac

# #

Growth Plan

Kotak Mahindra Mutual Fund 35,370,418 207,022,919 10.00 4,159 22,781

JM Mutual Fund 29,835,170 140,313,757 10.00 3,000 14,397

Prudential ICICI Mutual Fund 4,752,607 92,085,659 10.00 564 11,507

DSP Merrill Lynch Mutual Fund 294,923 1,000.00 3,000 -

DSP Merrill Lynch Mutual Fund 94,181,923 10.00 15,250

UTI Mutual Fund 20,466,744 49,406,208 10.00 4,000 5,281

LIC Mutual Fund 31,741,245 - 10.00 4,000 -

Principal Mutual Fund 43,857,512 10.00 4,500

Deutsche Mutual Fund 38,637,264 10.00 4,000

HDFC Mutual Fund 96,790,620 10.00 10,601

Birla Sun Life Mutual Fund 79,452,234 10.00 8,311

HSBC Mutual Fund 222,040,554 10.00 22,701

Reliance Mutual Fund 53,530,385 10.00 5,501

Tata Mutual Fund 167,463,629 10.00 17,153

Tata Mutual Fund 533 1,000.00 6

ING Vysya Mutual Fund 61,851,076 10.00 6,375

Standard Chartered Mutual Fund 107,210,671 10.00 11,209

18,723 159,573


65

Market Value As at As at

31-March- 31-March-

2006 2005


Growth Plan

Kotak Mahindra Mutual Fund 4,205 22,959

JM Mutual Fund 3,185 14,484

Prudential ICICI Mutual Fund 564 11,537

DSP Merrill Lynch Mutual Fund 3,014 15,266

UTI Mutual Fund 4,019 5,333

LIC Mutual Fund 4,019 -

Principal Mutual Fund - 4,511

Deutsche Mutual Fund - 4,010

HDFC Mutual Fund - 10,664

Birla Sun Life Mutual Fund - 8,339

HSBC Mutual Fund - 22,841

Reliance Mutual Fund - 5,512

Tata Mutual Fund - 17,258

ING Vysya Mutual Fund - 6,410

Standard Chartered Mutual Fund - 11,244

Total 19,006 160,368

Note : The market price is based on the repurchase price declared by the respective funds

# Refer Note No. 3 of Schedule S

Total 18,723 159,573


As at As at

March 31, 2006 March 31, 2005



66


As at As at

March 31, 2006 March 31, 2005


SCHEDULE G :

INVENTORIES (At Lower of Cost or Net Realisable Value)

i) Rotables, Consumable stores and tools 44,623 38,953

Less : Provision for Obsolescence /Slow & Non-Moving items

(Refer Note 1 (L) of Schedule S) 8,223 7,016

36,400 31,937

ii) Fuel 115 61

iii) Other Stores Items 4,010 1,254

Total 40,525 33,252

SCHEDULE H :

SUNDRY DEBTORS

(Unsecured)

a) Debts (Outstanding for a period exceeding six months) 1,059 828

b) Other Debts 43,030 24,950

44,089 25,778

Less : Provision for Doubtful Debts 774 547

43,315 25,231

As at As at

NOTE : 31-03-2006 31-03-2005

1) Considered good 43,315 25,231

Considered doubtful 774 547

44,089 25,778

2) Debtors include Rs. 73 lac (Previous Year Rs 68 lac) due from

private company in which the Company’s Director is a

director/member.

Total 43,315 25,231


67


As at As at

March 31, 2006 March 31, 2005


SCHEDULE I :

CASH AND BANK BALANCES

Cash on hand (includes cheques on hand Rs. 312 lac 331 570

Previous Year Rs. 553 lac)

Balance with Scheduled banks :

a) In Current Account 1,620 1,609

b) In Escrow Account (Refer Note No. 11 of Schedule S) 150,000 -

c) In Fixed Deposit Account* 57,153 116,705

[including margin deposit Rs.12,693 lac and Rs 13,963 lac

given as collateral for overdraft and other loans

(Previous Year Rs.Nil and Rs.7,396 lac respectively)]

Add : Interest accrued 788 812

209,892 119,696

Balance with other banks :

In Current Account :

a) Citibank N.A, Johannesberg South Africa

Maximum balance outstanding during the year

Rs.93 lac (Previous Year Rs.294 Lac) 16 31

b) National Bank of Kuwait


Rs. 28 lac (Previous Year Rs.29 lac) 1 -

c) Barclays Business Premium GBP Account, UK


Rs. 6,477 lac (Previous Year N.A.) 87 -

d) Barclays Bank - PLC - USD


Rupees 149 (Previous Year Rs.10 Lac) - -

e) HSBC CCF - Paris - Euro


Rs.831 lac (Previous Year Rs.671 Lac) - 670

f) Deutsche Bank AG - Frankfurt - Euro


Rs. 816 lac (Previous Year Rs.498 Lac) 124 498

g) Barclays Bank - PLC - GBP


Rs. 2,185 lac (Previous Year Rs.1,522 lac) - 1,522

h) DBS Bank Ltd. - Singapore - SGD


Rs.1,030 lac (Previous Year N.A.) 246 -

i) DBS Bank Ltd -Disbursement, Singapore - SGD


Rs.78 lac (Previous Year N.A.) - -

j) HSBC Bank - Brussels -


Rs.32 lac (Previous Year N.A.) 25 -

k) Barclays GBP Intetrest Account, UK



l) Barclays Bank - PLC - Euro Account


Rs.13 lac (Previous Year Rs.7 lac) 13 7

m) ICICI Bank UK Ltd., UK



n) Bank of America - USD A/c, USA


Rs.22 lac (Previous Year N.A.) 21 -

533 2,728

* Refer Note No.3 of Schedule S

Total 210,425 122,424


68


As at As at

March 31, 2006 March 31, 2005


SCHEDULE J :

LOANS and ADVANCES

(Unsecured unless otherwise stated and Considered Good )

Loans (Refer Note No.11 of Schedule S) 10,000 -

Advances Recoverable in Cash or in kind or for value to be Received 69,295 7,541

(Includes Secured to the extent of Rs. 50,000 lac -

Refer Note No.11 of Schedule S)

Deposits with Airport Authorities & others 13,545 8,736

(Including margin deposit Rs 2,587 lac (Previous Year Rs. 3,827 lac)

Balances with Customs Authorities 6 6

Advance Tax & Tax deducted at Source 20,642 7,250

Total 113,488 23,533

Note : Deposits & Advances include Rs. 603 lac (Previous Year

Rs 618 lac ) placed with private limited companies in which the

company’s director is a director / member.

SCHEDULE K :

CURRENT LIABILITIES

Sundry Creditors

Outstanding dues to small scale industries - -

Others 25,152 23,479

25,152 23,479

Other Current Liabilities 33,404 22,336

Interest Accrued but not due on loans 962 3,242

Forward Sales (net) (Passenger/Cargo) 35,129 21,885

Balance with Scheduled Banks in Current Account

overdrawn as per books 11,847 6,375

Balance with Other Banks in Current Account

overdrawn as per books 61 -

Unclaimed Dividend * 3 -

Unclaimed Share Application Money * 4 -

* Note : These figures do not include any amounts due and

outstanding to be credited to the Investor Education

& Protection Fund

Total 106,562 77,317

SCHEDULE L :

PROVISIONS

Wealth Tax 12 9

Income Tax 20,291 6,892

Fringe Benefit Tax 1,035 -


Income Tax on Dividend 727 363

Gratuity 2,690 1,378

Leave Encashment 596 541

Others 15,984 22,003

Total 46,515 33,776


69

Schedules to the Profit and Loss Account for the year ended March 31, 2006

For the For the


March 31, 2006 March 31, 2005


SCHEDULE M :

OPERATING REVENUE

Passenger 526,629 407,649

Excess Baggage 5,089 4,213

Cargo 32,738 19,642

Less: Service Tax 2,072 1,083

30,666 18,559

Other Revenue 6,989 3,380

Total 569,373 433,801

SCHEDULE N :

NON-OPERATING REVENUE

Interest on Bank & Other Deposits 5,542 3,064

[Tax Deducted at Source Rs.1,226 lac (Previous Year Rs 472 lac)]

Exchange difference (Net) - 71

Profit on Sale and Lease back of Aircraft 27,064 -

Profit on Sale of Current Investments (Net) 5,253 1,100

Dividend on Current Investments - 280

Provision for aircraft maintenance no longer required 3,600 1,197

Excess Provision written back 501 685

Provision for Doubtful Debts no longer required 20 6

Other Income (including Interest on Income Tax Refund of 2,194 1,813

Rs.2 lac, Previous Year Rs. 50 lac )

Total 44,174 8,216

SCHEDULE O :

EMPLOYEES REMUNERATION AND BENEFITS (Net)

Salaries, Wages, Bonus & Allowances 49,039 34,273

Contribution to Provident Fund & ESIC 1,344 1,011

Provision for Gratuity 1,441 386

Provision for Leave Encashment 1,186 349

Staff Welfare Expenses 3,705 1,455

Total 56,715 37,474


70


For the For the


March 31, 2006 March 31, 2005


SCHEDULE P :

SELLING & DISTRIBUTION EXPENSES

Computerised Reservation System Cost (Net) 13,437 10,355

Commission 56,526 42,081

Others 7,439 3,470

Total 77,402 55,906

SCHEDULE Q :

OTHER OPERATING EXPENSES

Aircraft Variable Rentals 12,408 6,952

Aircraft Insurance & Other Insurance 6,896 4,908

Landing, Navigation & Other Airport Charges 35,046 23,878

Aircraft Maintenance (including Customs Duty and

Freight, where applicable)

Component Repairs, Recertification, Exchange,

Consignment Fees and Aircraft Overhaul 21,269 18,809

Lease of Aircraft Spares incl. Engine 1,565 905

Consumption of Stores & Spares (net) 6,312 7,196

(including items scrapped / written off Rs. 2,325 lac,

Previous Year Rs. 3,446 lac)

Provision for Spares Obsolescence 1,948 1,827

31,094 28,737

Inflight & Other Pax Amenities 21,452 14,370

Communication Cost (Net) 1,803 1,424

Travelling & Subsistence 7,109 3,590

Rent 3,221 2,744

Rates & Taxes 60 174

Repairs & Maintenance

Leased Premises 186 102

Others 2,644 1,989

2,830 2,091

Electricity 928 740

Commission to Directors (Refer Note No. 13 of Schedule S) 66 -

Directors’ Sitting Fees 14 1

Miscellaneous Expenses (Including Printing & Stationery,

Bank Charges etc.) 6,492 4,090

Provision for Bad & Doubtful Debts 247 281

Bad Debts Written off 14 -

Exchange difference (Net) 1,404 -

Loss on scrapping of Fixed Asset - 306

Loss on sale of Fixed Assets other than Aircraft (Net) 27 39

Total 131,111 94,325


71

SCHEDULE R :

INTEREST

Hire Purchase - Finance Charges 22,422 20,754

Interest on Subordinated Debt 455 4,021

Interest on Fixed Loan from Banks and Financial Institutions 3,074 540

Interest on Bank overdraft 292 12

Interest on Short Term Loans from Banks 1,482 43

27,725 25,369

Less : Capitalised during the Year 3,565 -

24,160 25,369

Total 24,160 25,369


For the For the


March 31, 2006 March 31, 2005


SCHEDULE ‘S’

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

I. SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The financial statements have been prepared on an accrual basis under the historical cost convention with the

exception of certain aircraft which have been revalued and comply with the generally accepted accounting principles

in India including the mandatory accounting standards issued by the Institute of Chartered Accountants of India and

the provisions of the Companies Act, 1956.

B. USE OF ESTIMATES :

The presentation of financial statements in conformity with generally accepted accounting principles requires esti-

mates 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 result and estimates are recognised in the period in which the results are known / materialised.

C. REVENUE RECOGNITION :

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

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 is shown under Current

Liabilities.

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.


72

D. COMMISSION :

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

only on flown basis.

E. EMPLOYEE RETIREMENT BENEFITS :

The company makes regular contribution to Provident Fund and this contribution is charged to Profit and Loss

Account. Provisions for Gratuity and Leave Encashment Benefit are made on the basis of actuarial valuation and

charged to Profit and Loss Account.

F. FIXED ASSETS :

a ) 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 :

1. Landing Rights acquired from other airlines are recognised at cost and amortised over a period not

exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience

and expected asset usage. The company performs annual impairment test in such cases.

2. Trademarks are amortised over 10 years.

3. Computer Software is amortised over 36 months.

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.

G. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss 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.

H. DEPRECIATION/AMORTISATION :

Depreciation has been provided on Written Down Value method at the rates and in the manner prescribed under the

schedule XIV to the Companies Act, 1956 on fixed assets, other than expenditure incurred on improvements of assets

acquired on operating lease, which are written off evenly over the balance period of the lease.


73

On revalued assets, depreciation is charged over the residual life and the additional charge of depreciation is with-

drawn from the Revaluation reserve.

Intangible assets are amortised on straight line basis.

I. 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

in the opinion of the management.

J. BORROWING COSTS :

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost

of the asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

K. FOREIGN EXCHANGE TRANSACTIONS :

(a) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the

time of the transaction.

(b) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of

monetary items which are covered by forward exchange contracts, the difference between the year end rate

and rate on the date of the contract is recognized as exchange difference and the premium paid on forward

contracts has been recognized over the life of the contract.

(c) Any income or expense on account of exchange difference either on settlement or on translation is recognized

in the Profit and Loss Account except in cases where they relate to acquisition of fixed assets in which case they

are adjusted to the carrying cost of such assets.

L. INVENTORIES :

Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. 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.

M. AIRCRAFT MAINTENANCE & REPAIRS COST :

Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed as incurred

except where such overhaul cost in respect of Engines/ APU are covered by third party maintenance agreement and

these are accounted in accordance therewith.

N. TAXATION :

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 that the asset will be

realised in future.


74

O. 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.

P. SHARE ISSUE EXPENSES :

Issue Expenses are adjusted against the Share Premium Account.

Q. ACCOUNTING FOR FINANCIAL DERIVATIVES

The company uses derivative instruments to hedge its exposure to movements in interest rates. The objective of these

derivative instruments is to reduce the risk or cost to the company and is not intended for trading or speculation

purposes.

Financial Derivative instruments are considered as off-balance sheet items and cash flows arising therefrom are

recognized in the books of account as and when the settlements take place in accordance with the terms of the

respective contracts over the tenor thereof. The gain/loss accrued on unsettled financial derivative instruments is

taken to the Profit & Loss account on the reporting date.

II. NOTES TO ACCOUNTS

1. Estimated amount of Contracts remaining to be executed on capital account net of advances, not provided for :

Amount (Rs. in lac)

Tangible Assets 963,614 (Previous Year - Rs. 295,815 lac)

Intangible Assets Nil (Previous Year - Rs. 5,200 lac)

2. CONTINGENT LIABILITY :

(a) Unprovided Income Tax demands which are under appeals Rs. 375 lac (Previous Year Rs.375 lac).

(b) Unprovided claims against the Company, pending Civil and Consumer suits of Rs. 1,044 lac (Previous Year Rs. 844

lac).

(c) Unprovided Inland Air Travel Tax demands which are under appeal Rs. 473 lac (Previous Year Rs. Nil)

(d) Unprovided claims for Octroi amounts to Rs. 2,899 lac (Previous Year Rs. 2,899 lac).

(e) Disputed claims against the company towards Landing & Navigation Charges amounts to Rs.2,009 lac. (Previous

Year Rs.1,951 lac).

(f) Disputed claims against the company towards Ground Handling charges amounts to Rs. 3,226 lac (Previous Year

Rs.2,622 lac).

(g) Letters of Credit outstanding are Rs. 31,727 lac (Previous Year Rs. 14,638 lac) and Bank Guarantees outstanding

are Rs. 5,975 lac (Previous Year Rs. 6,511 lac).


75

The Company is a party to various legal proceedings in the normal course of business and does not expect the

outcome of these proceedings to have any adverse effect on its financial conditions, results of operations or cash

flows.

3. The Company has raised Rs. 156,696 lac through a public issue of shares during the year 2004-2005 the proceeds of

which have been utilised as follows :-

Amount (Rs. in lac)

Particulars 31-Mar-2006 31-Mar-2005

Balance as per last Balance Sheet 144,285 Nil

Gross proceeds of the Fresh Issue Nil 156,696

Less: Share Issue Expenses adjusted against Share Premium (Net) (8,002) Nil

Sub Total (A) 136,283 156,696

Utilization of proceeds

Repayment of debts and redemption of CCRPS 66,799 12,411

Capital Expenditure 33,897 Nil

General Corporate Expenses 12,805 Nil

Total Out Flow (B) 113,501 12,411

Unutilized Balance (A – B) 22,782 144,285

Unutilized balance deployed in

Investment in Mutual Funds 18,159 105,829

Fixed Deposit with Bank 4,623 38,456

The Company has reclassified the utilisation of funds during the year.

4. Aircraft Lease Rentals are stated net of sub-lease rentals of Rs. 1,646 lac (Previous Year Rs. 1,567 lac).

5. Hitherto, credits were taken from Forward Sales Account for unutilized ticket, where a claim for refund has not been

made for the past two years. From the current year for the tickets sold on or after 1st April 2004, due to various

factors including complex pricing structure, trend of utilization, ticketing conditions and in line with industry practice,

credit for unutilized tickets have been taken from Forward Sales Account based on the historical statistics, data and

Management estimates and the Company’s refund policy. Accordingly, during the current year credit has been taken

for Rs. 6,330 lac from Forward Sales Account. Consequently credit on account of said write back for the year ending

31st March, 2006 is higher by Rs.4,279 lac and profit before tax for the year is higher by the same amount.

6. During the year , the Company has by way of assignment from Jet Enterprises Pvt. Ltd. acquired the absolute right,

title and interest in the ‘Jet Airways’ trademark /other variations thereof and certain other related trademarks. Pursu-

ant thereto assignment deeds and requisite forms have been filed with the Trademark Registries in India and overseas

jurisdictions.


76

7. Hitherto, the acquisition cost of Landing Rights were amortised over a period not exceeding 10 years. The Company

has since reviewed the amortization period in respect of certain Landing Rights acquired at overseas airport for an

infinite period; considering industry experience and has changed the same to 20 years. As a result of this change, the

amortization for the year is lower by Rs. 121 lac and the profit before tax is higher by the same amount.

8. During the year the Company purchased and sold Current Investments in Debt Schemes of various Mutual Funds as

detailed below :

MUTUAL FUND NO. OF UNITS COST OF UNITS

(In lac) (In lac)

Birla Mutual Fund 2,527 27,485

DB Mutual Fund 3,662 40,302

DSP ML Mutual Fund 1,340 15,420

HDFC Mutual Fund 2,355 28,941

HSBC Mutual Fund 4,204 44,727

ING Vysya Mutual Fund 3,346 34,931

JM Mutual Fund 2,641 28,696

Kotak Mutual Fund 3,444 41,649

LIC Mutual Fund 4,346 50,630

Principal Mutual Fund 4,095 43,706

Prudential Mutual Fund 5,362 68,131

Reliance Mutual Fund 994 12,100

Standard Chartered Mutual Fund 4,408 48,215

Tata Mutual Fund 1,455 25,960

Templeton Mutual Fund 83 1,000

UTI Mutual Fund 800 14,808

9. (a) Prior Period credits included in the determination of the net profit are towards Inventory Obsolescence Rs. 166

lac (Previous Year Rs. Nil) and Other Expenses Rs. 104 lac (Previous Year Rs. Nil).

(b) Prior period debits included in the determination of the net profit for the year are towards Interest on Rupee

loans Rs. Nil (Previous Year Rs. 41 lac), and provision for disputed damage charges levied by Statutory Authority

amounting to Rs. Nil.(Previous Year Rs. 244 lac).


77

10. Disclosure on Derivatives

(i) The Company has entered into the following derivative instruments :

(a) Forward Exchange Contracts which are not intended for trading or speculative purposes, but for hedge

purposes, entered into by the company as on 31st March, 2006 are as follows:

Currency Amount Amount Buy/Sell Cross Currency

(USD in lac) (Rs. in lac)

US Dollar 32 1,431 Buy Rupees

(b) Interest Rate Swaps to hedge against fluctuations in interest rate changes:

No. of Contracts: 14

Notional Principal: Rs. 233, 918 lac

(ii) The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as on 31st

March, 2006 are as follows:

Particulars Amount

(Rs. in lac)

Assets (Receivables) 27,250

Liability ( Payable) 32,713

Long Term Loans for purchase of Aircraft* 112,772

*Includes Loans payable after 5 years Rs. 11,153 lac

The payables and receivables shown above offer a natural hedge to the Company against movement of foreign

exchange currency rates.

The above disclosures have been made consequent to an announcement by the Institute of Chartered

Accountants of India in December, 2005, which is applicable to the financial periods ending on or after 31st

March, 2006. Therefore, figures for the previous year have not been disclosed.

11. Jet Airways (India) Limited, Sahara Airlines Limited (SAL) and the current Shareholders of SAL executed a Share

Purchase Agreement (SPA) on 18th January, 2006, whereby the Company would acquire 100% of the fully Paid-up

Share Capital of SAL, for cash, at a total consideration of Rs. 200,000 lac from the current Shareholders of SAL,

subject to the requisite regulatory approvals. In accordance with the terms of the SPA, the Company had established

an Escrow Account with ICICI Bank Limited and deposited a sum of Rs.200,000 lac towards the agreed consideration

for the purchase.

In addition, the Company also provided a loan of Rs. 10,000 lac to SAL for its normal business operations.

The SPA provided, inter alia, that the Closing of the acquisition transaction would have to be achieved within 65 days

from the date of the SPA. However, since the regulatory approvals were not received, the Company, SAL and its

Shareholders agreed to extend the deadline by an additional 90 days i.e. until 21st June, 2006 under an amendment

agreement.


78

As per this amendment agreement, the Company has, out of the agreed consideration of Rs. 200,000 lac, extended

Rs. 50,000 lac to the Shareholders of SAL, as an advance out of the agreed consideration against 100% pledge of

SAL’s shares.

The SPA also provides that in an event, the transaction is not consummated by 21st June,, 2006 (the new Closing Date),

due to non-receipt of regulatory approvals (or for any other reason), the advance (without interest) will be returned

to the Company.

12. PAYMENT TO AUDITORS :

Amount (Rs. in lac)


(a) As Audit Fees 110 110

As Tax Audit Fees 6 6

(b) As Advisor or in any other capacity in respect of: :

Company Law Nil 20

Tax Matters 50 52

(c) In any other manner

For Prospectus related reports/ certificates

Concerning Initial Public Offer Nil 198

Other Certification, etc 35 3

(d) For reimbursement of expenses 2 9

Total 203 398

Payments for services other than audit include Rs. 5 lac (Previous Year Rs. 25 lac) to a firm where partners of one of

the Statutory Auditors are partners

13. MANAGERIAL REMUNERATION :

(i) Details of Managerial Remuneration :

Amount (Rs. in lac)


(i) Salary and Allowances 35 32

(ii) Contribution to Provident Fund and Provision for Gratuity 5 4

(iii) Perquisites 10 10

(iv) Commission to Non-Executive Directors 66 Nil

(v) Sitting Fees 14 1

Total 130 46


79

(ii) Computation of Profit under Section 349 of the Companies Act, 1956

Amount (Rs. in lac)

Particulars 31-Mar-06

Profit before taxation as per Profit and Loss Account 72,226

Add :

Managerial Remuneration 130

Provision for Doubtful Debts 247 377

72,603

Less :

Profit on sale of Investments 5,253

Provision for Doubtful Debts no longer required 20 5,273

Profit for the purpose of Director’s Commission 67,330

Commission to Non-Executive Directors subject to a ceiling of 1% of

Profits as computed above 673

Commission payable as per Shareholders’ approval 66

No Commission was paid to any of the Directors during the previous year and therefore the computation ofProfits u/s 349 of the Companies Act 1956 have not been disclosed

14. Additional information pursuant to paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956.

14.1 Value of imports calculated on CIF Basis :

Amount (Rs. in lac)

Particulars 2005-06 2004-05

Components & Spares 13,141 8,160

Capital Goods 1,064 2,872

14.2 Earnings in Foreign Exchange :

Amount (Rs. in lac)


Passenger & Cargo Revenue 88,953 60,420

Sale of Aircraft 46,225 Nil

Sub Lease Income 1,758 Nil

Interest on Bank Account 152 Nil

Other Income 178 162


80

14.3 Expenditure in Foreign Currency :

Amount (Rs. in lac)


Aircraft Lease Rentals (Net) 54,189 27,250

Communication (Gross) 17,040 13,285

Aircraft Overhaul, Maintenance &

Component Support Services 20,987 15,455

Commission 13,081 7,294

Fuel Cost 10,555 699

Landing Rights (Intangible Assets) 9,799 2,402

Landing & Navigation Charges 7,141 1,029

Inflight Passenger Amenities 5,242 107

Travelling 1,860 187

Hire Purchase Finance Charges 3,066 3,508

Payroll Costs 6,016 153

Advertisement & Sales Promotion 1,249 168

Ground and Cargo Handling 1,059 10

Professional/Consultancy 996 247

Insurance 306 4,496

Premium on redemption of Preference Shares Nil 5,852

Share Issue Expenses Nil 1,108

Others 1,432 965

14.4 Remittance in foreign currency on account of dividend :

Amount (Rs. in lac)

Particulars 2005-06

Number of Non Resident Shareholders to whom remittance was made 1

Number of Equity Shares held by them 69,057,205

Amount of Dividend paid 2,072

Year to which dividend relates 2004-05

No Dividend was declared/paid for the financial year 2003-04 and therefore the same has not been disclosed.


81

14.5 Value of Components & Spare Parts Consumed :

Amount (Rs. in lac)

2005-06 % 2004-05 %

Imported 5,611 89 6,696 93

Indigenous 701 11 500 7

Total 6,312 100 7,196 100

15. SEGMENT REPORTING :

The Company is operating in a single business segment i.e. Air Transportation and as such all business activities revolve

around this segment. Hence, there is no separate primary reportable segment as required by AS - 17 on ‘Segment

Reporting’ issued by the ICAI.

Secondary segmental reporting is performed on the basis of the geographical segments as under

Amount (Rs. in lac)

Geographical Segment 2005-06

(i) Segment Revenue

- Within India 503,225

- Outside India 66,148

Total Revenue 569,373

(ii) Carrying cost of Segment Assets* -

(iii) Expenditure incurred on Tangible & Intangible Segment Assets * -

* Fixed Assets & other Assets used in the company’s business cannot be identified to any of the reportable segments,

as they are used interchangeably between segments.

The proportion of international operations revenue to the total revenue was insignificant during the Previous Year and

therefore has not been reported separately.

16. RELATED PARTY TRANSACTIONS :

As per Accounting Standard - 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of

India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below:


82

(i) List of Related Parties with whom transactions have taken place and Relationships :

Sr. No. Name of the related party Nature of relationship

(1) Tailwinds Ltd. Holding Company

(2) Naresh Goyal Controlling Shareholder of Holding Company

(3) Anita Goyal Relative of controlling shareholder of Holding Company

(4) Saroj K. Datta Key Managerial Personnel

(5) Jetair Private Ltd. Associate Companies

(6) Jet Enterprises Private Ltd

(7) Jet Airways LLC

(8) Jet Airways of India Inc.

(9) Jetair Tours Private Ltd.

(10) Vimpal Holding Private Ltd.

(11) International Cargo Carriers Private Ltd.

(12) Jetair Worldwide AG

(13) National Travel Services Associate Partnership firm

(ii) Transactions during the year ended 31st March, 2006 and balances with related parties :

Amount (Rs. in lac)

Sr. No. Nature of Holding Relative of controlling Controlling Key Associate

Transactions Co. shareholder of Shareholder of Managerial Companies

Holding Company Holding Company Personnel

(A) Remuneration 52 50(0.40) (46)

(B) Sitting Fees 1.3 2.45

(0.15) (0.20)

(C) Commission paid 6to Directors (Nil)

(D) Agency 13,255Commission (12,669)

(E) Rent paid 142(104)

(F) Expenses -5,915

Reimbursed (net) (-6,061)

(Staff Costs /

Communication

Costs, Rent)


83

Amount (Rs. in lac)

Sr. No. Nature of Holding Relative of controlling Controlling Key Associate

Transactions Co. shareholder of Shareholder of Managerial Companies

Holding Company Holding Company Personnel

(G) Trademark Fees Nil(635)

(H) Purchase of Assets 33(10)

(I) Deposits & 620Advance for (618)Leased Premises

(J) Sundry Creditors 1,138(219)

(K) Sundry Debtors 73(68)

(L) Share Capital 6,907 1 0.06

(Equity (6,907) (1) (0.06)

Contribution)

(M) Purchase of 3,045Trademark (Nil)

(N) Dividend Paid 2,072 0.30 0.02

(Nil) (Nil) (Nil)

(Figures in brackets indicate 31st March, 2005 figures)


84

(iii) Statement of Material Transactions

Amount (Rs. in lac)

Associate Companies

Jetair Pvt. Ltd.

- Agency Commission 10,080(10,914)

- Rent Paid 44(44)

- Expenses Reimbursed (net) -5,920(Staff Costs/ Communication Costs, Rent) (-6,061)

- Purchase of Assets Nil(10)

- Deposits & Advance for Leased Premises 268(268)

- Sundry Creditors 580(6)

- Sundry Debtors 73(68)

Amount (Rs. in lac)

Associate Companies

Jet Airways LLC

- Agency Commission 2,473(1,282)




85

Amount (Rs. in lac)

Associate Companies

Jet Airways of India Inc.

- Agency Commission 702(473)

- Rent Paid 38(Nil)

- Expenses Reimbursed 5(Staff Costs/ Communication Costs, Rent) (Nil)

- Deposits & Advances for Leased Premises 17(Nil)

- Assets Purchased 33(Nil)


Amount (Rs. in lac)

Associate Companies

Jet Enterprises Pvt. Ltd.

- Rent Paid 60(60)

- Trademark Fees Nil(635)

- Advance given and returned back during the year 2,500(Nil)

- Deposits for Leased Premises 335(350)

- Trademark Purchase 3,045(Nil)




86

17. The Company has entered into Finance and Operating Lease agreements. As required under the Accounting Standard

19 on ‘Leases’ issued by the Institute of Chartered Accountants of India, the future minimum lease payments on

account of each type of lease are as follows: -

(A) Finance Leases/Hire Purchase

Amount (Rs. in lac)

Particulars Future Minimum Present Value of Finance Charges

Lease Payments Future Minimum

Lease Payment

As at As at

31

st March ‘06 31

st March ‘06

Aircraft

Less than 1 year 36,974 20,791 16,183

(46,346) (27,841) (18,505)

Between 1 and 5 years 158,561 113,304 45,257

(173,354) (117,691) (55,663)

More than 5 years 71,297 62,603 8,694

(126,924) (111,541) (15,383)

Total 266,832 196,698 70,134

(346,624) (257,073) (89,551)

(Figures in brackets indicates 31st March, 2005 figures)

The salient features of a Hire Purchase/ Finance Lease Agreement are :

� Option to purchase the aircraft either during the term of the Hire Purchase on payment of the outstand-

ing Principal amount or at the end of the Hire Purchase term on payment of a nominal option price.

� In the event of default, the Hirer/ Lessee is responsible for payment of all costs of the Owner including the

financing cost, and other associated costs. Further a right of repossession is available to the Owner/

Lessor.

� The Hirer/ Lessee is responsible for maintaining the aircraft as well as insuring the same.

� In the case of Hire Purchase/Finance Lease the property passes to the Hirer/Lessee, on the payment of a

nominal option price at the end of the term.

(B) Operating Leases

(1) The Company has taken various residential / commercial premises under cancellable operating leases.

These lease agreements are normally renewed on expiry.

(2) The Company has taken on operating lease aircraft & spare engines the future minimum lease payments

in respect of which, as at 31st March, 2006 are as follows :


87

Amount (Rs. in lac)

Particulars Total Lease Payments

Aircraft & Spare Engines

Less than 1 year 58,650(23,505)

Between 1 and 5 years 94,994(43,038)

More than 5 years 18,347(7,082)

Grand Total 171,991(73,625)

Aircraft given on sub – lease

Less than 1 year -1,718(-1,633)

Between 1 and 5 years -2,282(-3,922)

More than 5 years NIL(NIL)

Grand Total -4,000(-5,555)


The Salient features of an Operating Lease agreement are :

� Monthly rentals paid in form of fixed and variable rental. Variable Lease Rentals are payable on a pre

determined rate payable on the basis of actual flying hours. Additionally, the predetermined rates of

Variable Rentals are subject to the annual escalation as stipulated in the respective leases.

� The Company does not have an option to buyback nor does it generally have an option to renew the

leases.

� In case of delayed payments, penal charges are payable as stipulated.

� In case of default, in addition to repossession of the aircraft, damages including liquidated damages as

stipulated are payable.

� The Lessee is responsible for maintaining the aircraft as well as insuring the same. The Lessee is eligible to

claim reimbursement of costs as per the terms of the lease agreement.

� The leases are non-cancellable.

(3) The lease rental expense recognised: Rs. 60,815 lac (Previous Year Rs. 30,607 lac), it includes Rs. 74 lac

(Previous Year Rs. Nil) recognised as lease rental expenses on account of sale and lease back of aircraft.


88

18. EARNINGS PER SHARE (EPS) :

The earnings per Equity Share, computed as per the requirements of Accounting Standard 20 “Earnings Per Share”

issued by the Institute of Chartered Accountants of India, is as under:

Amount (Rs. in lac)

2005-2006 2004-2005

Net Profit after tax 45,204 39,199

Less : Annualised return on Cumulative Preference Shares Nil 1,037

Balance Profit attributable to Equity Shareholders (A) 45,204 38,162

Add : Return on Preference Shares (See above) Nil 1,037

Add : Interest (net) on Institutional Loan with Convertibility clause 302 3,706

Adjusted Net Profit for Diluted Earnings per Share (B) 45,506 42,905

Weighted no. of Equity Shares outstanding during the year (C) 86,334,011 72,986,537

No of Equity Shares resulting from the potential conversion of

Institutional Loan 55,685,000 323,839,626

No of Equity Shares resulting from the conversion of CCRPS Nil 95,169,498

Weighted no. of Diluted Equity Shares outstanding

during the year (Nos.) (D) 142,019,011 491,995,661

Nominal Value of Equity Shares (Rs.) 10 10

Basic EPS (Rs.) (E = A/C) 52.36 52.29

Diluted EPS (Rs.) (F = B/D) 32.04 8.72

19. The Deferred Tax Liability as at 31st March 2006 comprises of the following:

Amount (Rs. in lac)


Deferred Tax Liability

Related to Fixed Assets 33,444 30,672

Deferred Tax Asset

Unabsorbed Depreciation Nil 10,345

Other Disallowances under Income Tax Act, 1961 1,378 842

Provision for Deferred Tax Liability (Net) 32,066 19,485

20. As per Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of

Chartered Accountants of India, given below are movements in provision for Frequent Flyer Programme, Redelivery

of Aircraft, Aircraft Maintenance Costs and Engine Repairs Costs.


89

(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.

The cost of allowing free travel to members as contractually agreed under the Frequent Flyer Programme is

accounted considering the members’ accumulated mileage on an incremental cost basis. The movement in the

provision during the year is as under: -

Amount (Rs. in lac)


Opening Balance 1,321 1,184

Add: - Additional Provisions during the year 928 631

Less: - Amounts used during the year 614 494

Less: - Unused Amounts reversed during the year - -

Closing Balance 1,635 1,321

(b) Redelivery of Aircraft :

The company has in its fleet aircraft on operating lease. As contractually agreed under the lease agreements, the

aircraft have to be redelivered to the lessors at the end of the lease term in the 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 under the lease

agreement.

The company therefore provides for such redelivery expenses, as contractually agreed, in proportion to the

expired lease period.

Amount (Rs. in lac)



Add:- Additional Provisions during the year 471 201

Less:- Amounts used during the year - -

Less:- Unused Amounts reversed during the year - 272



90

The cash outflow out of the above provisions as per the current terms under the lease agreements are as under: -

Year Aircraft Amount (Rs. in lac)

2006-07 3 388

2007-08 14 1,091

2008-09 6 323

2009-10 2 1

2011-12 2 33

2012-13 7 98

Total 1,934

(c) Aircraft Maintenance Costs :

Certain heavy maintenance checks including overhaul of Auxiliary Power Units need to be performed at specified

intervals as enforced by the Director General of Civil Aviation in accordance with the Maintenance Program

Document laid down by the manufacturers. The movements in the provisions for such costs are as under: -

Amount (Rs. in lac)



Add:- Additional Provisions during the year * 482 162

Less: - Amounts used during the year 2,773 978

Less: - Unused Amounts reversed during the year 3,092 1,060


* Additions are on account of Exchange fluctuation.

(d) Engine Repairs Cost :

The aircraft engines have to undergo shop visits for overhaul and maintenance at specified intervals as per the

Maintenance Program Document. The same was provided for on the basis of hours flown at a pre-determined

rate.

Amount (Rs. in lac)



Add:- Additional Provisions during the year * 214 55

Less: - Amounts used during the year 1,288 381

Less: - Unused Amounts reversed during the year 346 60


* Additions are on account of Exchange fluctuation.


91

21. Pending resolution of representation made by the Board of Airline Representatives in India “BAR (I)” to the statutory

authorities regarding non levy of Fringe Benefit Tax on free/ concessional tickets issued by the airline companies, no

provision for the same is made in the books of accounts amounting to Rs. 284 lac.

22. Comparative financial information (i.e. amounts and other disclosures for the previous year presented above as

corresponding figures), is included as an integral part of the current year’s financial statements, and is to be read in

relation to the amounts and other disclosures relating to the current year. Figures of the previous year have been

regrouped/reclassified wherever necessary to correspond to figures of the current year.

Signatures to Schedules ‘A’ to ‘S’




Director



Narendra Mehra

Company Secretary

Place : Mumbai



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Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details

Registration No. State Code

Balance Sheet Date

6 6 2 1 3

2 0 0 63 1 0 3

1 1

II. Capital raised during the year (Amount in Rs. Thousands)

Date Month Year

Public Issue

N I L

( 1 4 2 4 5 1 )

Rights Issue

N I L

( N I L )

Bonus Issue

N I L

( N I L )

Private Placement

N I L

( N I L )

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities

7 5 2 2 1 4 0 5

( 5 1 6 9 8 5 4 0 )

Total Assets

7 5 2 2 1 4 0 5

( 5 1 6 9 8 5 4 0 )

Sources of Funds

Paid-up Capital

8 6 3 3 4 0

( 8 6 3 3 4 0 )

Reserves & Surplus

2 2 1 9 5 5 0 8

( 1 9 2 3 8 3 0 0 )

Subordinated Debt

N I L

( 3 3 4 1 1 0 0 )

Secured Loans

2 0 6 0 2 1 2

( 6 0 0 0 0 0 0 )

Unsecured Loans

4 6 8 9 5 7 8 1

( 2 5 7 0 7 3 4 8 )

Application of Funds

Net Fixed Assets

4 7 8 8 1 4 9 2

( 2 6 4 0 6 5 3 9 )

Investments

1 8 7 2 3 1 8

( 1 5 5 9 7 3 0 1 )

Net Current Assets

2 5 4 6 7 5 9 5

( 9 3 3 4 7 0 0 )

Miscellaneous Expenditure

N I L

( N I L )

Accumulated Losses

N I L

( N I L )

Deferred Tax Liability

3 2 0 6 5 6 4

( 1 9 4 8 4 5 2 )


93

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover

6 1 3 5 4 6 6 0

( 4 4 2 0 1 7 0 0 )

Total Expenditure

5 4 1 3 2 1 0 2

( 3 8 3 8 0 4 7 8 )

Profit/Loss Before Tax

7 2 2 2 5 5 8

( 5 8 2 1 2 2 2 )

Profit/Loss After Tax

4 5 2 0 3 9 6

( 3 9 1 9 9 0 0 )

Earnings per Share in (Rs.)

5 2 . 3 6

( 5 2 . 2 9 )

Dividend Rate @ %

6 0

Equity

( 3 0 )

( – )

Preference

( – )


V. Generic Names of Three Principal Products of Company (as per Monetary terms)

Item Code No. (ITC Code) N O T A P P L I C A B L E

6 0

For and on behalf of the Board

Javed Akhtar

Director

Saroj K. Datta

Executive Director

Narendra Mehra

Company Secretary

Place : Mumbai


I am/We are a registered shareholder/proxy for the registered shareholder of the Company and hereby record my/our

presence at the Fourteenth Annual General Meeting of the Company held on Wednesday, 20th September, 2006 at

3:30 p.m. at Nehru Centre Auditorium, Discovery of India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018.

JET AIRWAYS (INDIA) LIMITED

Regd. Office: S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059.

ATTENDANCE SLIP

14th Annual General Meeting

PLEASE FILL THE ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL.

Joint shareholders may obtain additional slip on request.

DP ID No. : ___________________ Regd. Folio/Client ID No.: ___________________

I/We ........................................................................of .............................................................................

in the district of ..................................................................................................being a Member/Members of

Jet Airways (India) Limited, Mumbai, hereby appoint ..............................of.....................................in the district

of.....................................or failing him/her, .........................of.............................................in the district of

.............................as my/our proxy to attend and vote for me/us and on my/our behalf at the Fourteenth Annual

General Meeting of the Company to be held on Wednesday, 20th September, 2006 at 3:30 p.m. at Nehru Centre

Auditorium, Discovery of India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018.

Signed this....................................day of............................2006.

Regd. Folio/Client ID No. :

DP ID No. :

No. of Shares :

Signature

Note: The Proxy completed in all respects must be deposited at the Registered Office of the Company not less than 48

hours before the time of holding of the Meeting.

NAME OF THE SHAREHOLDER/PROXY (IN BLOCK LETTERS) SIGNATURE OF THE SHAREHOLDER/PROXY

Note: Shareholder/Proxy Holder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and

handover the same at the entrance, duly signed.

JET AIRWAYS (INDIA) LIMITED

Regd. Office: S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059.

PROXY

14th Annual General Meeting

�

Affix

Revenue

Stamp of

Rs. 1.00

JJetAirways 067 1133 AR2k5-6Ord C1 1etAirways 067 1133 ... · 14th Annual Report 2005-06 ... DBS...

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