A.  BASIS OF PREPARATION OF FINANCIAL STATEMENTS :
 
 The financial statements are prepared under the historical cost
 convention, except certain Fixed Assets which are revalued, in
 accordance with the generally accepted accounting principles in India,
 the provisions of the Companies Act, 1956 and the applicable accounting
 standards.
 
 B.  USE OF ESTIMATES :
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires estimates and assumptions to be
 made that affect the reported amount of assets and liabilities on the
 date of the financial statements and the reported amount of revenue and
 expenses during the reporting period. Differences between the actual
 results and estimates are recognised in the period in which the results
 are known / materialised.
 
 C.  REVENUE RECOGNITION :
 
 a) Passenger and Cargo income is recognised on flown basis, i.e. when
 the service is rendered.
 
 b) The sale of tickets / airway bills (sales net of refunds) are
 initially credited to the Forward Sales Account.  Income recognised as
 indicated above is reduced from the Forward Sales Account and the
 balance net of commission and discount thereon is shown under Current
 Liabilities.
 
 c) The unutilized balances in Forward Sales Account are recognized as
 income based on historical statistics, data and management estimates
 and considering Companys refund policy.
 
 d) Lease income including Variable rentals on the Aircraft given on
 operating lease is recognized in the Profit and Loss Account on an
 accrual basis over the period of lease.
 
 D.  EXPORT INCENTIVE :
 
 Export incentive available under prevalent scheme is accrued in the
 year when the right to receive credit as per the terms of the scheme is
 established in respect of exports made and are accounted to the extent
 there is no significant uncertainty about the measurability and
 ultimate utilization of such duty credit.
 
 E.  COMMISSION :
 
 As in the case of revenue, the commission paid / payable on sales
 including any over-riding commission is recognised only on flown basis.
 
 F.  EMPLOYEE BENEFITS :
 
 a) Defined Contribution plan : Companys contribution paid / payable for
 the year to defined contribution schemes are charged to Profit and Loss
 Account.
 
 b) Defined Benefit and Other Long Term Benefit plan : Companys
 liabilities towards defined benefit plans and other long term benefit
 plans are determined using the Projected Unit Credit Method. Actuarial
 valuations under the Projected Unit Credit Method are carried out at
 the balance sheet date. Actuarial gains and losses are recognised in
 the Profit and Loss Account in the period of occurrence of such gains
 and losses. Past service cost is recognised immediately to the extent
 of benefits are vested, otherwise it is amortized on straight-line
 basis over the remaining average period until the benefits become
 vested.
 
 The employee benefit obligation recognised in the balance sheet
 represents the present value of the defined benefit obligation as
 adjusted for unrecognised past service cost.
 
 c) Short Term Employee Benefits :
 
 Short-term employee benefits expected to be paid in exchange for the
 services rendered by employees are recognised undiscounted during the
 period employee renders services.
 
 G.  FIXED ASSETS :
 
 a) Tangible Assets :
 
 Owned tangible fixed assets are stated at cost and includes amount
 added on revaluation less accumulated depreciation and impairment loss,
 if any. All costs relating to acquisition and installation of fixed
 assets upto the time the assets get ready for their intended use are
 capitalised.
 
 The cost of improvements to Leased Properties as well as customs duty /
 modification cost incurred on aircraft taken on operating lease have
 been capitalised and disclosed appropriately.
 
 b) Intangible Assets :
 
 Intangible assets are recognized only if acquired and it is probable
 that the future economic benefits that are attributable to the assets
 will flow to the enterprise and the cost of assets can be measured
 reliably. The intangible assets are recorded at cost and are carried at
 cost less accumulated amortization and accumulated impairment losses,
 if any.
 
 c) Assets Taken on Lease :
 
 i) Operating Lease : Rentals are expensed with reference to the Lease
 Term and other considerations.
 
 ii) Finance Lease / Hire Purchase : The lower of the fair value of the
 assets and the present value of the minimum lease rentals is
 capitalised as Fixed Assets with corresponding amount shown as Lease
 Liability (Outstanding Hire Purchase / Finance lease Instalments). The
 principal component of the lease rentals is adjusted against the leased
 liability and interest component is charged to the Profit and Loss
 Account.
 
 H.  IMPAIRMENT OF ASSETS :
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss, if any, is charged
 to the Profit and Loss Account in the year in which an asset is
 identified as impaired. The impairment loss recognised in prior
 accounting periods is reversed if there has been a change in the
 estimate of recoverable amount.
 
 I.  DEPRECIATION / AMORTIZATION :
 
 a) Depreciation on tangible fixed assets has been provided on the
 ‘Straight Line Method'' in accordance with the provisions of Section
 205(2)(b) of the Companies Act, 1956 and in the manner and at the rates
 specified in Schedule XIV to the Companies Act, 1956. Expenditure
 incurred on improvements of assets acquired on operating lease is
 written off evenly over the balance period of the lease. Premium on
 leasehold land is amortized over the period of lease.
 
 b) On amounts added on revaluation, depreciation is charged over the
 residual life and the additional charge of depreciation is withdrawn
 from the Revaluation Reserve.
 
 c) Intangible assets are amortized on straight line basis as follows :
 
 i) Landing Rights acquired are amortized over a period not exceeding 20
 years. Amortization period exceeding 10 years is applied considering
 industry experience and expected asset usage.
 
 ii) Trademarks are amortized over 10 years.
 
 iii) Computer Software is amortized over a period not exceeding 36
 months.
 
 J.  INVESTMENTS :
 
 Current Investments are carried at lower of cost or quoted / fair
 value. Long Term Investments are stated at cost.  Provision for
 diminution in the value of long-term investments is made only if such a
 decline is other than temporary.
 
 K.  BORROWING COSTS :
 
 Borrowing costs attributable to the acquisition or construction of a
 qualifying asset are capitalised as part of the cost of such assets. A
 qualifying asset is one that necessarily takes substantial period of
 time to get ready for intended use. All other borrowing costs are
 recognised as an expense in the period in which they are incurred.
 
 L.  FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :
 
 a) Transactions in foreign currencies are recorded at the exchange
 rates prevailing on the date of transaction.  Monetary items are
 restated at the period-end rates. The exchange difference between the
 rate prevailing on the date of transaction and on settlement /
 restatement (other than those relating to long term foreign currency
 monetary items) is recognised as income or expense, as the case may be.
 
 b) Exchange differences relating to long term foreign currency monetary
 items, to the extent they are used for financing the acquisition of
 fixed assets are added to or subtracted from the cost of such fixed
 assets and in other cases accumulated in Foreign Currency Monetary Item
 Translation Difference Account and amortized over the balance term of
 the long term monetary item or 31st March, 2011 whichever is earlier.
 
 c) In case of forward exchange contracts entered into to hedge the
 foreign currency exposure in respect of monetary items, the difference
 between the exchange rate on the date of such contracts and the period
 end rate is recognized in the Profit and Loss Account. Any profit /
 loss arising on cancellation of forward exchange contract is recognized
 as income or expense of the year. Premium / discount arising on such
 forward exchange contracts is amortized as income / expense over the
 life of contract.
 
 M.  INVENTORIES :
 
 Inventories are valued at cost or Net Realisable Value (NRV) whichever
 is lower. Cost of inventories comprises of all costs of purchase and
 other incidental cost incurred in bringing them to present location and
 condition. Cost is determined using the Weighted Average formula. In
 respect of reusable items such as rotables, galley equipment and
 tooling etc., NRV takes into consideration provision for obsolescence
 and wear and tear based on the estimated useful life of the aircraft
 derived from Schedule XIV of the Companies Act, 1956 and also
 provisioning for non – moving / slow moving items.
 
 N.  AIRCRAFT MAINTENANCE AND REPAIRS COST :
 
 Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine Maintenance
 and Repair Costs are expensed on incurrence as incurred except with
 respect to Engines / APU which are covered by third party maintenance
 agreement and these are accounted in accordance with the relevant
 terms.
 
 O.  TAXES :
 
 Provision for current tax is made after taking into consideration
 benefits admissible under the provisions of the Income Tax Act, 1961.
 
 Deferred tax resulting from timing differences between book and taxable
 profit is accounted for using the tax rates and laws that have been
 enacted or substantively enacted as on the balance sheet date. The
 deferred tax asset is recognised and carried forward only to the extent
 that there is a reasonable / virtual certainty, as the case may be,
 that the asset will be realised in future.
 
 P.  SHARE ISSUE EXPENSES :
 
 Issue Expenses are adjusted against the Securities Premium Account.
 
 Q.  SALE AND LEASE BACK TRANSACTION :
 
 Profit or loss on sale and lease back arrangements resulting in
 operating leases are recognized, in case the transaction is established
 at fair value, else the excess over the fair value is deferred and
 amortized over the period for which the asset is expected to be used.
 
 R.  ACCOUNTING FOR DERIVATIVE INSTRUMENTS :
 
 Interest Rate Swaps, Currency Option, Currency Swaps and other
 products, entered into by the Company for hedging the risks of foreign
 currency exposure (including interest rate risk) are marked to market
 and losses, if any is accounted based on the principles of prudence as
 enunciated in Accounting Standard 1 (AS 1) Disclosure of Accounting
 Policies.
 
 S.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :
 
 Provisions involving a substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognised but are disclosed in the
 notes. Contingent Assets are neither recognised nor disclosed in the
 financial statements.