Jet Airways

1) Estimated amount of Contracts remaining to be executed on capital
 account net of advances, not provided for :
 
 Tangible Assets Rs.1,430,940 lac (Previous Year - Rs.1,360,679 lac)
 
 2) CONTINGENT LIABILITY :
 
 (a) Unprovided Service Tax demands which are under appeals and Others
 Rs.55,237 lac (Previous Year Rs.109 lac).
 
 (b) Unprovided Sales Tax demands which are under appeals Rs.6 lac
 (Previous Year Rs. 6 lac) and the same has been deposited with the
 authorities.
 
 (c) Unprovided claims against the Company, pending Civil and Consumer
 suits of Rs.2,780 lac (Previous Year Rs.1,056 lac).
 
 (d) Unprovided Inland Air Travel Tax demands which are under appeal
 Rs.473 lac (Previous Year Rs.473 lac) against which the amount of
 Rs.117 lac (Previous Year Rs.117 lac) is deposited with the
 Authorities.
 
 (e) Unprovided claims for Octroi amounts to Rs.2,899 lac (Previous Year
 Rs.2,899 lac).
 
 (f) Disputed claims against the company towards Ground Handling charges
 amount to Rs.5,477 lac (Previous Year Rs.4,564 lac).
 
 (g) Letters of Credit outstanding are Rs.79,133 lac (Previous Year
 Rs.57,181 lac) and Bank Guarantees outstanding are Rs.85,144 lac
 (Previous Year Rs.49,555 lac).
 
 (h) Corporate Guarantee given to Banks and Financial Institution
 against credit facilities extended to Subsidiary Company as under:
 
                                             Amount (Rs. in lac)
 
 Amount of guarantee     Outstanding Amounts against the guarantee
 
 86,720                                  71,187
 (65,120)                               (55,120)
 
 (Figures in brackets indicate 31st March, 2008 figures)
 
 (i) Claims against the Company not acknowledged as debt - Rs.63,708 lac
 (Previous Year Rs.3,708 lac) (Includes claim filed by erstwhile selling
 shareholders of Sahara Airlines Limited – Refer note no. 9 (a) for
 details).
 
 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) Aircraft Lease Rentals are stated net of sub-lease rentals of Rs.194
 lac (Previous Year Rs.1,229 lac).
 
 4) Depreciation on Narrow Body Aircraft was hitherto provided on
 Written Down Value Method. Based on the usage of such Aircraft, the
 industry practice followed in domestic and international markets, the
 Company, in order to reflect a more appropriate preparation /
 presentation of financial statements, has changed the method of
 depreciation on such Aircraft to Straight Line Method w.e.f. 1st April,
 2008 and the surplus arising from retrospective computation aggregating
 Rs. 91,587 lac (excluding adjustment to revaluation reserve) has been
 accounted and disclosed under Exceptional Item. Consequently, charge on
 account of depreciation for the year ended 31st March, 2009 is lower by
 Rs. 12,997 lac.
 
 5) Pursuant to the clarification by CBEC Vide Circular No. File
 No.137/72/2008-CX.4 dated 21-11-2008 that the accumulated CENVAT credit
 upto 31st March 2008 can be utilized by the Company for payment of
 future output service tax without any restriction of time line. The
 Company has accordingly recognized such CENVAT credit available for
 utilization as on 1st April, 2008 amounting to Rs.34,993 lac and has
 been disclosed as an exceptional item. The Company has partially
 utilized the said balance during the year for discharging its output
 service tax liability.
 
 6) In line with the notification dated 31st March, 2009 issued by The
 Ministry of Corporate Affairs, amending Accounting Standard AS11
 –‘Effects of Changes in Foreign Exchange Rates, the Company has chosen
 to exercise the option under paragraph 46 inserted in the standard by
 the notification.
 
 Accordingly, with retrospective effect from 1s April, 2007, the Company
 has adjusted the foreign currency exchange differences on amounts
 borrowed for acquisition of fixed assets, to the carrying cost of fixed
 assets, which was hitherto recognized as income/expense to the profit
 and loss account.
 
 Arising from the accounting prescribed in the above said notification,
 the Company has-
 
 (i) charged first to the opening General Reserve of Rs.8,675 lac and
 the balance to the opening balance of profit and loss account of
 Rs.6,801 lac aggregating Rs.15,476 lac (Net of Deferred Tax of Rs.7,969
 lac) which was recognised as exchange gain in the Profit and Loss
 account in previous financial year ended 31s March, 2008.
 
 (ii) added to fixed assets Rs.22,721 lac and to capital
 work-in-progress Rs.724 lac being the exchange differences on long term
 monetary items relatable to the acquisition of fixed assets.
 
 As a result of the above change in Accounting Policy the net loss
 before tax for the year is lower by Rs.239,001 lac.
 
 7) a) The Company has equity and preference investments aggregating to
 Rs.164,500 lac in Jet Lite (India) Limited, a wholly owned subsidiary,
 and an amount of Rs.62,314 lac advanced as interest free loan as on 31s
 March, 2009. The said subsidiary has continued to incur losses, which
 has resulted further increase in its negative net-worth. A reputed
 valuer have recently valued the equity interest in the subsidiary based
 on its business plans, which supports the carrying value of such
 investment and loan outstanding. The Company continues to provide
 financial support to subsidiarys operations to further such business
 plans and expects it to turnaround. Accordingly, the financial
 statements of the subsidiary company have been prepared on Going
 Concern basis and no provision is considered necessary at this stage
 in respect of its investments and loans outstanding from the said
 subsidiary company at the year end.
 
 b) (i) During the previous year, the Company acquired 100% shares of
 Sahara Airlines Limited (SAL) (Now known as Jet Lite (India) Limited)
 as per Share Purchase agreement with erstwhile shareholders of SAL (
 Selling Shareholders) and Consent Terms and Consent Award for a
 lump-sum price of Rs.146,500 lac, out of which, Rs.91,500 lac was paid
 on or before the acquisition date. The balance Rs.55,000 lac was
 payable in four interest free annual equal installments commencing on
 or before 30th March, 2008. Out of Rs.55,000 lac, two annual
 installments aggregating Rs.18,792 lac have been paid after deducting
 Rs. 8,708 lac, which the Company had paid to income tax department in
 respect of demands on SAL for periods prior to the execution of the
 Share Purchase Agreement.
 
 Balance installments payable of Rs.27,500 lac as on 31st March 2009
 have been disclosed under the separate head Deferred payment liability
 towards Investment in wholly owned subsidiary company.
 
 Aggrieved by such deduction from installment due under the Consent
 Terms and Consent Award dated 12 April 2007, the Selling Shareholders
 on 30 March 2009 filed an Execution Application for recovery of an
 amount of Rs.99,958 lac. The claim by Selling Shareholders of Rs.99,958
 lac includes acceleration of three installments each of Rs.13,750 lac
 plus deduction of Rs.3,708 lac made from 1st installment paid in March
 2008 and demanding further Rs.55,000 lac towards increase in lump-sum
 purchase consideration for the breach of the Consent Terms in payment
 of installments by the Company after deducting tax dues of earlier
 years of SAL.
 
 (ii) The Proceedings adopted by SAL are being resisted by Jet. Further,
 Jet Airways has taken execution proceedings against Selling
 Shareholders to recover amounts aggregating Rs.82,102 lac (net of
 Rs.8,708 lac deducted in (i) above) due to it pursuant to Selling
 Shareholders obligation to indemnify the Company for income tax
 demands raised on Jet Lite for the assessment years prior to the
 Effective Date of the Share Purchase Agreement/ Consent Terms and
 Consent Award by which SAL shares were acquired. In terms of the
 undertaking given by the Company to the Honorable High Court, the
 Company will not create any further encumbrance, alienate or transfer
 their movable and immovable assets and properties in any manner,
 without the consent of the court. The matter is subjudice at Honorable
 High Court of Bombay.
 
 The management, at this stage is confident that no loss will arise to
 the Company for which a provision is currently necessary.
 
 8) Employee Benefits
 
 a) Defined contribution plan
 
 The Company makes contributions at a specified percentage of payroll
 cost towards Employees Provident Fund (EPF) for qualifying employees.
 
 The Company recognised Rs.3,584 lac (Previous year Rs.2,738 lac) for
 provident fund contributions in the profit and loss account.
 
 b) Defined benefit plans
 
 The Company provides the annual contributions as a non-funded defined
 benefit plan for qualifying employees.  The gratuity scheme provides
 for payment to vested employees as under: i) On Normal retirement /
 early retirement / withdrawal / resignation:
 
 As per the provisions of Payment of Gratuity Act, 1972 with vesting
 period of 5 years of service.
 
 9) SEGMENT REPORTING :
 
 a) Primary Segment: Geographical Segment
 
 The Company, considering its higher level of international operations
 and present internal financial reporting based on geographic segment,
 has identified geographic segment as primary segment.
 
 The geographic segment consists of:
 
 i) Domestic (air transportation within India)
 
 ii) International (air transportation outside India)
 
 Revenue and expenses directly attributable to segments are reported
 based on items that are individually identifiable to that segment,
 while the remainder of the expenses are categorized as unallocated
 which are mainly employee remuneration and benefits, other selling &
 distribution expenses, other operating expenses, aircraft lease
 rentals, depreciation / amortization and interest, since these are not
 specifically allocable to specific segments as the underlying assets /
 services are used interchangeably. The company believes that it is not
 practical to provide segment disclosures relating to these revenue and
 expenses, and accordingly these expenses are separately disclosed as
 unallocated and directly charged against total revenues.
 
 The Company believes that it is not practical to identify fixed assets
 used in the companys business or liabilities contracted, to any of the
 reportable segments, as the fixed assets are used interchangeably
 between segments. Accordingly, no disclosure relating to total segment
 assets and liabilities are made.
 
 b) Secondary Segment: Business Segment
 
 The Company is operating into a single business i.e. Air Transportation
 and as such all business activities revolve around this segment. Hence,
 there is no separate secondary segment to be reported considering the
 requirement of AS 17 on Segment Reporting issued by the Institute of
 Chartered Accountants of India.
 
 10) As per (AS) 29, Provisions, Contingent Liabilities and Contingent
 Assets, given below are movements in provision for Frequent Flyer
 Programme, Redelivery of Aircraft, Aircraft Maintenance Costs and
 Engine Repairs Costs.
 
 (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.
 
 11) The Airline Industry both domestic and global have been adversely
 affected by the general economic slowdown which has significantly
 impacted the performance and cash flows of the Company and its
 subsidiary. This, coupled with the significant depreciation of the
 Indian Rupee, high fuel cost and lower load factors resulted in
 significant operating loss during the year and substantial erosion of
 the net worth. The Company is exploring various means of raising
 finances and restructuring of its debts/ contracts to overcome the fund
 requirements for meeting its various short term and long term
 obligations including financial support to its subsidiary – Jetlite.
 The management is continuously implementing initiatives directed at
 improving operating profits through cost control, route
 rationalization, leasing out aircraft etc. The Company expects that
 such measures would result in improving operational efficiencies and
 cash flows and, accordingly, is of the view that presenting these
 financial statements on a going concern basis, which contemplates the
 realisation of assets and settlement of liabilities in the normal
 course of business is appropriate.
 
 12) Balances of Sundry Debtors and Creditors are subject to
 confirmations and reconciliations and adjustments, if any.  The
 management doesnt expect any material adjustment on receipt of
 confirmations/ reconciliation of such balances.
 
 13) 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 years
 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.