Dear Members,
The Directors have pleasure in presenting their Nineteenth Annual
Report together with the audited Statement of Accounts for the
financial year ended 31st March, 2011.
1. Performance highlights
The financial and operating highlights for the year under review,
compared with the previous financial year, are given below:
Financial highlights (Rs. in lakhs)
Standalone for year Consolidated for year
Particulars ended 31st March ended 31st March
2011 2010 2011 2010
GROSS REVENUE 1,295,104 1,062,292 1,472,698 1,062,292
Profit before
Interest,
Depreciation,
Exceptional Items
and Tax 181,519 141,69 7 177,362 141,697
Interest 102,836 99,301 108,584 99,301
(Loss) / Profit
before Depreciation,
Exceptional Items
and Tax 78,683 42,396 68,778 42,396
Depreciation 91,062 96,196 91,857 96,196
(Loss) / Profit
before Exceptional
Items and Tax (12,379) (53,800) (23,079) (53,800)
Exceptional Items 17,042 7,045 18,236 7,045
(Loss) / Profit before
Taxation and
Adjustments 4,663 (46,755) (4,843) (46,755)
Provision for Tax 331 9 378 9
Deferred Tax 3,363 - 3,363 -
(Loss) / Profit after
Taxation 969 (46,764) (8,584) (46,764)
Profit / (Loss)
brought forward (72,908) (26,144) (164,150) (26,144)
Amount available
for Appropriation (71,939) (72,908) (172,734) (72,908)
APPROPRIATIONS
Transfer to General
Reserve - -
Transfer to Balance
Sheet (71,939) (72,908) (172,734) (72,908)
Note: 1 lakh = 100,000 Operating highlights
Operating parameters Year ended 31st March
2011 2010
Departures (Number) 146,876 131,108
Available Seat Kilometers (ASKMs)
(Million) 34,323 29,242
Revenue Passenger Kilometers (RPKMs)
(Million) 26,972 22,640
Passenger Load Factor (%) 78.6 77.4
Revenue Passengers (Number) 14,667,466 12,039,475
Average fleet size 90.0 85.6
Average Head Count 11,927 11,328
2. Dividend
The Board of Directors has not recommended a dividend on the Equity
Shares in view of the performance of the Company for the financial year
ended 31st March, 2011 (Previous year: Nil per Equity Share).
3. Review of Operations
During the year under the review, the Company continued to have a tight
control on the costs which resulted in our unit costs (excluding
aviation turbine fuel) being lower as compared to the previous
financial year. While we may not be able to impact external factors,
our relentless focus remains on improving efficiencies and productivity
in our operations. Airlines across the world have been impacted by the
increase in the aviation turbine fuel prices and Jet Airways is no
exception. Though we would have liked to pass on more of the fuel price
increases to our customers, it was not possible to do so in the short
term.
Our focus has also been to improve our operational metrics including
the on-time performance of our flights. Our efforts in this regard have
ensured that we have been consistently bettering ourselves and have
been the industry leaders in terms of on-time performance. Also, our
International growth and seat factors continue to improve constantly
which is a testimony to the growing emergence of the airline, as the
preferred choice for guests to and from the Indian subcontinent. We
are pleased to inform you that the benefits of these measures have
translated in the Company consolidating its leadership position with a
market share of 26.1% during the year.
The Indian aviation market continued its growth during the year under
review at a steady pace. The growth of the Indian economy was a major
trigger and the aviation market has been growing at a healthy 2 times
multiple of the GDP growth. Over the next few years, we expect the
domestic aviation market to grow at around 15% per annum and this has
also been supported by various studies and analysis carried out by
independent agencies like IATA, CAPA, etc. However, we believe that
both the domestic and international markets will remain competitive
given that there is currently some over capacity in both markets.
Domestic passenger traffic for the year under review, reported a 4.2%
growth as compared to the same period last year while international
passenger traffic registered an increase of 20.1%. The Company ended
the financial year with revenues of Rs.1,062,292 lakhs, a decrease of
10% versus last year, with a system-wide seat factor of 71.6% on the
domestic and 80.4% on the international sectors.
The Company carried 146 lakhs revenue passengers on its international
and domestic services during the year under review, up from 120 lakhs
in the previous financial year.
We strengthened our presence in the low fare / low cost space and our
‘Jet Airways Konnect'' and ‘Jet Airways Konnect Select'' products have
been widely accepted by our guests. For the financial year ended 31st
March, 2011, our capacity on Jet Airways Konnect services formed 59% of
our overall domestic capacity in terms of number of seats.
The Company also benefited from the strategic expansion of its domestic
and international service network. We now serve 23 international
destinations, which include the addition of a non-stop service between
Mumbai and Johannesburg and a Delhi Milan service. The international
business has now posted several consecutive quarters of consistent
growth in terms of seat factor of above 80% and increase in the
capacity in terms of Average Seat Kilometers reflecting the growing
impact of our network synergies, major strategic international code
shares and customer centric product and service focus.
Routes
The details of the routes introduced and discontinued during the
financial year ended 31st March, 2011 are as follows:
Fleet
The Company currently operates a fleet of 97 aircraft, which includes
10 Boeing 777-300 ER aircraft, 12 Airbus A330- 200 aircraft, 55 Next
Generation Boeing 737-700/800/900 aircraft and 20 modern ATR 72-500
Turboprop aircraft. With an average age of 5.15 years, the airline has
one of the youngest aircraft fleet in the world.
Of the 10 B777-300ER aircraft, 7 aircraft have been sub-leased as
follows:
- In 2009, 4 aircraft were sub-leased to Turkish Airlines Inc. (TK)
for a period of 25 months. The lease in respect of these four aircraft
expires between the months of July and November 2011.
- In 2010, 3 aircraft were sub-leased to Thai Airways Public Company
Limited (Thai Airways) for a period of 36 months. The lease in
respect of these three aircraft expires in May 2013.
In view of the planned level of operations and the fleet size, the
Company proposes to deploy 2 of the 4 aircraft being redelivered by TK
later this year, for its own operations. The remaining 2 aircraft being
redelivered by TK are being sub (dry) leased to Thai Airways for a
period of 2 years, with an option to extend the lease by a further
period of 1 year.
Flights to 75 destinations span the length and breadth of India and
beyond, including New York (both JFK and Newark), Toronto, Brussels,
London (Heathrow), Milan, Johannesburg, Hong Kong, Singapore, Kuala
Lumpur, Colombo, Bangkok, Kathmandu, Dhaka, Kuwait, Bahrain, Muscat,
Doha, Abu Dhabi, Dubai, Jeddah, Sharjah, Riyadh and Dammam.
Jet Airways Konnect service operates on key domestic routes and is
designed to meet the needs of the low-fare segment with value-for-money
fares. Jet Airways Konnect links seven major metros - Mumbai, Delhi,
Chennai, Bengaluru, Hyderabad, Ahmedabad and Kolkata – with several
destinations across India, operating over 170 flights daily. Jet
Airways Konnect Select is a premium economy product introduced on
certain Jet Airways Konnect flights.
4. Management Discussion and Analysis
As required by Clause 49 of the Listing Agreements entered into with
the Stock Exchanges, a detailed review by the Management of the
operations, performance and future outlook of the Company and its
business, is presented in a separate section - Management Discussion
and Analysis - forming part of this Annual Report.
5. Subsidiary Company
Jet Lite (India) Limited (‘Jet Lite'') is a wholly owned subsidiary
which was acquired by the Company on 20th April, 2007.
Jet Lite is a non-material, non-listed subsidiary company as defined
under Clause 49 of the Listing Agreements entered into with the Stock
Exchanges.
Jet Lite follows the low-cost, no- frills business model. For the
financial year ended 31st March, 2011, Jet Lite posted a total income
of Rs.178,615 lakhs (2009-10: Rs.161,943 lakhs) and a Net Loss of
Rs.10,747 lakhs (2009-10: Profit of Rs.4,619 lakhs). In view of the
loss, the Board of Directors of Jet Lite has not recommended a
dividend; neither on the Equity Shares nor on the Compulsorily Fully
Convertible Non-Cumulative Preference Shares for the year ended 31st
March, 2011 (previous year : Nil). The Company continues to support the
operations of Jet Lite.
The highlights of the operating performance for the financial year
ended 31st March, 2011 are as follows:
Traffic Parameters Year ended 31st March
2011 2010
Departures (Number) 39,003 39,602
Available Seat Kilometers (ASKMs)
(Million) 5,481 5,156
Revenue Passenger Kilometers (RPKMs)
(Million) 4,340 3,866
Passenger Load Factor (%) 79.2 75
Revenue Passengers (Million) 4.33 3.61
As on 31st March, 2011, Jet Lite had a fleet of 19 aircraft, which
consists 18 Boeing 737 series and 1 Canadian Regional Jet (CRJ) 200
series. The airline flies to 27 domestic destinations and 1
international destination (Kathmandu), operating over 110 flights a
day, on an average.
Pursuant to Circular No. 2/2011 dated 8 February, 2011, issued by the
Ministry of Corporate Affairs read with the provisions of Section
212(8) of the Companies Act, 1956, the Annual Report of Jet Lite, for
the financial year ended 31s March, 2011, is not annexed to this
Report. A summary of the financial performance of Jet Lite is given in
this Annual Report. The Company will make available copies of the
Annual Accounts of Jet Lite and the related detailed information, free
of cost to Members, on request. The same are also available for
inspection at the Registered Office between 10 a.m. and 12 noon on any
working day of the Company.
6. Consolidated Financial Statements
The audited Consolidated Accounts and the Cash Flow Statement,
comprising Jet Airways (India) Limited and Jet Lite (India) Limited,
appear in this Report. The Auditors Report on the Consolidated Accounts
is also attached. The same is unqualified. The Consolidated Accounts
have been prepared in accordance with the Accounting Standards
prescribed by the Institute of Chartered Accountants of India in this
regard and the provisions of the Listing Agreements entered into with
the Stock Exchanges.
7. Conservation of energy, technology absorption and foreign exchange
earnings and outgo Particulars, as prescribed by 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
conservation of energy, technology absorption and foreign exchange
earnings and outgpo, to the extent applicable to the Company, are given
below:
Conservation of energy
The Company has embraced best industry practices and recommendations of
the aircraft manufacturers to reduce fuel burn. It is proposed to
continue with modifications to the aircraft for greater fuel
efficiency. Efforts are underway to optimise takeoff weights as well as
to improve process efficiencies.
Technology absorption
Training of Pilots
The Company provides ground training to its pilots, as well as to
pilots of other airlines at its Flight Operations Training School. The
Flight Operations Training School also designed and conducted courses
for pilots of aircraft belonging to leading corporates and to other
organisations.
Simulator training for pilots operating Boeing 737, Boeing 777 and
Airbus 330 aircraft continued to be provided at the Companys Simulator
Complex at Mumbai under the supervision of the Companys own
instructors. The Company also offered surplus simulator time to other
airlines.
T and e-Commerce initiatives
The Enterprise Resource Planning (ERP) system of the Company was
extended to the budgeting process besides accounting, purchase, human
resources and management information systems.
In addition to our successful media initiatives on social networking
sites of Facebook and Twitter, the Company has extended its engagement
with its guests by creating and managing accounts on LinkedIn, YouTube,
Flickr and Foursquare. The Company has 173,810 fans on Facebook and
7,598 followers on Twitter as on 31st March, 2011 and continues to
evolve this social media initiative across these platforms. This
initiative helps to increase the awareness of the Company on a global
level and effectively and speedily engage and collaborate with its
guests.
The Company plans to relaunch its mobile site using latest technology
to offer a booking engine as well as mobile check-in facility to
seamlessly book and pay for tickets and check-in using 2D Mobile
Barcoded Boarding Pass.
The Company continues to provide the highest quality of service through
its website www.jetairways.com which is a 360 degree platform that
allows guests to search, book and pay for various products and services
that the Company offers.
Foreign Exchange earnings and outgo
The details of Foreign Exchange earnings and outgo are given under the
Notes to Accounts.
8. Environment, Health and Safety (EHS)
The Company is mindful of its responsibilities of protecting the
environment and therefore, ensures strict adherence to the permissible
emission / pollution limits laid down by the concerned authorities.
The Company accords due importance to the health of its employees,
particularly the operational staff. EHS Awareness training is imparted
to employees on a continuing basis.
9. Fixed Deposits
The Company has not accepted any Fixed Deposits from the public during
the year ended 31st March, 2011.
10. Corporate Governance
We adhere to the principles of Corporate Governance mandated by the
Securities and Exchange Board of India and have complied with all the
mandatory requirements. The non-mandatory requirements have been
complied with to the extent practical and applicable.
A separate section on Corporate Governance and a certificate from the
Auditors confirming compliance with the Corporate Governance
requirements as stipulated in Clause 49 of the Listing Agreements
entered into with the Stock Exchanges, form part of this Annual Report.
This Certificate is being forwarded to the Stock Exchanges.
The Chief Executive Officer''s declaration regarding compliance with the
Code of Business Conduct and Ethics forms part of the Corporate
Governance Report.
11. Corporate Social Responsibility
The Company in association with Save The Children India (STCI), has
been running an in-flight collection programme called ‘Magic Box'' since
1997. This fund-raising programme for STCI is unique to the Company and
is implemented on all its flights in the domestic network, thereby
allowing its passengers to participate in this noble cause. The
significant projects run by STCI include pre-schools for the urban slum
children and a special care centre for the mentally retarded and
hearing impaired
As in previous years, the Company organized Flights of Fantasy, where
children with special needs and underprivileged children are taken on
specially organized flights and introduced to the world of aviation.
Every year our employees participate in the Standard Chartered Mumbai
Marathon, which raises funds for changing the lives of the city''s most
at-risk children. The number of employees participating has been
increasing each year.
In August 2010, the Company operated additional flights to Leh, in the
wake of the havoc and destruction caused by the flash floods in the
region.
In light of the political unrest in Libya in March 2011, the Company
operated some relief flights to aid in the urgent evacuation of Indian
citizens.
12. Employees
Your Directors gratefully acknowledge the exemplary contribution,
commitment, support and understanding of the employees at all levels.
Our industrial relations continue to be cordial.
The total number of permanent employees of the Company as on 31st
March, 2011, was 12,811 (as on 31st March, 2010: 11,328).
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with Companies (Particulars of Employees)
Rules, 1975, as amended, forms part of this Annual Report. However, as
per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956,
this Report and Accounts are being sent to all the Members of the
Company, excluding the Statement of Particulars of Employees under
Section 217(2A) of the Companies Act, 1956. Members may inspect the
said Statement at the Registered Office of the Company between 10 a.m.
and 12 noon on any working day of the Company.
13. Directors'' Responsibility Statement
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
- in the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
- appropriate accounting policies have been selected and applied
consistently and such judgments and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at 31st March, 2011 and of the profit of
the Company for the year ended on that date;
- proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- the Annual Accounts have been prepared on a going concern basis.
14. Directors
Mr. I. M. Kadri and Mr. Javed Akhtar retire by rotation at the
forthcoming Nineteenth Annual General Meeting and being eligible, have
offered themselves for re-appointment.
The re-appointments of Mr. Kadri and Mr. Akhtar form part of the Notice
of the forthcoming Nineteenth Annual General Meeting to be held on 17th
August, 2011, and the Resolutions are recommended for your approval.
The profiles of Mr. Kadri and Mr. Akhtar, as required by Clause 49 of
the Listing Agreements entered into with the Stock Exchanges, are given
along with the said Notice.
15. Auditors
The Statutory Auditors, Deloitte Haskins & Sells, Chartered
Accountants, and Chaturvedi & Shah, Chartered Accountants, retire at
the forthcoming Nineteenth Annual General Meeting and have confirmed
their eligibility and willingness to accept office, if re-appointed.
Their re-appointment as the Joint Statutory Auditors for the financial
year 2011-2012, forms part of the said Notice of the said Annual
General Meeting and the Resolution is recommended for your approval.
16. Post Balance Sheet events
Status of litigation with Sahara India Commercial Corporation Limited
The Company had acquired 100% shares of Sahara Airlines Limited (SAL)
(now known as Jet Lite (India) Limited) in April, 2007. As per the
Share Purchase Agreement (SPA) of 2005 the purchase consideration was
Rs.200,000 lakhs. This was reduced to Rs.145,000 lakhs as per the
subsequent Consent Terms and the Arbitration Award (Consent Terms).
Since the Company had already paid Rs.90,000 lakhs, the balance
purchase consideration of Rs.550,000 lakhs was to be paid by the
Company to the Selling Shareholders (SICCL) in four equal interest free
installments by 30th March, 2011. As a result of certain disputes that
arose between the parties, both the parties had filed petitions in the
Hon''ble Bombay High Court for breach of the SPA and the Consent Terms.
The Hon''ble Bombay High Court passed an order on 4th May, 2011
whereunder SICCL''s demand for restoration of original purchase
consideration to Rs.200,000 lakhs was denied and the purchase
consideration was confirmed at Rs.145,000 lakhs. However, the Hon''ble
Bombay High Court has ordered the Company to pay interest of 9% p.a. on
the sums payable to SICCL from the date of default. In view of this
Order, a sum of Rs.11,643 lakhs was payable as interest which has been
duly discharged by the Company. As a result of this discharge, the
undertaking given by the Company in April 2009 for not creating any
encumbrance or alienation of its moveable or immoveable assets and
properties in any manner other than in the normal course of the
business, stands released. Further, as regards the Company''s execution
proceedings against SICCL to recover amounts aggregating Rs.82,102
lakhs in respect of SICCL''s obligation to indemnify the Company for
income tax demands raised on Jet Lite (India) Limited for assessment
years prior to the effective date of SPA / Consent Terms, presently
stands resolved in light of Income Tax department squashing such demand
on Jet Lite (India) Limited.
Though the Company has complied with the Order of the Hon''ble Bombay
High Court by making payment of Rs.47,851 lakhs including interest of
Rs.11,643 lakhs, the Company, based on legal advice, has decided to
file an appeal with the Division Bench of Bombay High Court contesting
the levy of interest @ 9% and claiming that no interest is payable.
SICCL has in turn filed an appeal with the Division Bench of Hon''ble
Bombay High Court for restoration of the purchase consideration to
Rs.200,000 lakhs and for interest to be awarded at 18% p.a. insted of
9% awarded by the Hon''ble Bombay High Court.
Hence the interest payment of Rs.11,643 lakhs (Rs.11,305 lakhs up to
March 31, 2011) till 4 May 2011, effected by the Company on 5 May 2011
is not provided in the books of accounts as per its stand above and
will be subject to final determination by the Court.
17. Acknowledgements
Your Directors place on record their appreciation for the support
rendered by the Companys General Sales Agents, Travel Agents and other
members of the travel trade for their continued efforts in promoting
the Company.
Your Directors also take this opportunity to thank the Ministry of
Civil Aviation, Government of India, the Directorate General of Civil
Aviation, the Airports Authority of India, the Mumbai International
Airport (Private) Limited, Delhi International Airport (Private)
Limited, GMR Hyderabad International Airport Limited, Bangalore
International Airport Limited, Cochin International Airport Limited and
other airport companies for their support and co-operation. Your
Directors are also grateful to the Reserve Bank of India, the Ministry
of Finance, the Ministry of Civil Aviation, Government of India,
National Stock Exchange of India Limited, Bombay Stock Exchange
Limited, the US Exim Bank, Financial Institutions and Banks, the Boeing
Company, Avion de Transport Regionale, Airbus Industrie, General
Electric, CFM and Pratt and Whitney and the lessors of our aircraft and
engines for their support and look forward to their continued co-
operation.
On behalf of the Board of Directors
London Naresh Goyal
19th May, 2011 Chairman
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