Dear Shareholders,
 
 The Directors hereby present the Twenty Seventh Annual Report and the
 Audited Accounts for the year ended March 31, 2011.
 
 1.  Financial Results
 
                                          (Amount in Rs. Million) 
 
 Particulars                          March 31, 2011   March 31, 2010
 
 Gross Income                              29,606.04        22,420.91
 
 Operating Expenses                        22,535.94        16,939.56
 
 Employee Remuneration and Benefits         2,406.15         1,814.11
 
 Selling Expenses                           2,237.19         1,921.52
 
 Administrative Expenses                      943.93           821.56
 
 Finance Charges                              112.04           113.82
 
 Depreciation and Amortisation                 89.10            76.43
 
 Profit/ (Loss) before taxation             1,281.69           733.91
 
 Minimum alternative tax                      247.37            63.66
 
 Prior Period Adjustments                      22.77            55.76
 
 Profit/ (Loss) after taxation              1,011.55           614.49
 
 Explanations to various comments made by the Auditors in their Report
 to the shareholders are mentioned in the Notes to the Accounts, which
 forms part of the Balance Sheet for the year ended March 31, 2011.
 
 2.  Business
 
 The Company completed its sixth year of operations on May 23, 2011. In
 its Sixth year of operations, the Company focused on consolidating its
 operations on key routes and maintained its fleet size to twenty three
 aircraft covering 22 destinations and operating 170 flights daily.
 
 During the year ended March 2011, the Company carried 8.61 million
 passengers. Further, the average load factor of 82.5% was recorded,
 with a market share of over 13% for the month of March 2011. The
 Company also improved its average deployed fleet to 22.50 aircraft
 versus 18.82 aircraft for previous year.
 
 Your Company also focused on processes to generate ancillary revenues
 which effectively offset cost of operations. The Company has managed to
 improve the Operating revenue per ASKM to Rs.2.75 from Rs.2.49 in
 previous year.
 
 3.  Share Capital
 
 During the year under review, the paid-up share capital of the Company
 was increased by allotment of
 
 - 15,360,715 equity shares of Rs.10 each at a price of Rs.39.46 per
 equity share consequent upon conversion of 15,360,715 warrants in terms
 of approvals accorded by the shareholders and FIPB;
 
 - 147,215,040 equity shares of Rs.10 each at a price of Rs.25 per
 equity share consequent upon conversion of 798 Foreign Currency
 Convertible Bonds of US$ 100,000 each aggregating to US$ 79,800,000;
 and
 
 - 919,600 equity share consequent upon conversion of exercise of stock
 options under the Employee
 
 Stock Option Scheme 2007.
 
 In view of above capitalization the net worth of the Company has become
 positive and stands at Rs.3,211.05 million as on March 31, 2011.
 
 4.  Other Material Developments
 
 During the year under review, in terms of the Open Offer made by KAL
 Airways Private Limited and Mr.  Kalanithi Maran (collectively referred
 to as the Acquirers) through Public Announcement on June 14, 2010 and
 Corrigendum Public Announcements on October 16, 2010 under the
 Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeovers) Regulations, 1997, have acquired, in aggregate,
 156,528,305 equity shares of the Company, including 31,077,500 equity
 shares acquired from Royal Holdings Services Limited (the Erstwhile
 Promoter). On account of the above acquisition, the Acquirers have
 become Promoters of the Company holding 38.60% of the current paid-up
 capital of the Company.
 
 5.  Dividend
 
 In view of accumulated losses brought forward, your Directors do not
 recommend any dividend.
 
 6.  Directors
 
 Subsequent to the change of control of the Company on November 15,
 2010, Mr. B. S. Kansagra, Mr. Kishore Gupta, Mr. Mukkaram Jan and Mr.
 Vijay Kumar resigned from the directorship of the Company with effect
 from November 15, 2010.
 
 Further, Mr. Kalanithi Maran, Mrs. Kavery Kalanithi, Mr. S. Sridharan
 (since then resigned on August 12, 2011), Mr. J. Ravindran, Mr.
 Nicholas Martin Paul and Mr. M. K. Harinarayanan were appointed as
 additional directors on the Board of the Company on November 15, 2010
 and shall hold office upto the date of ensuing annual general meeting.
 The Company has received notice under section 257 of the Companies Act,
 1956 proposing their candidature and you are requested to consider the
 same.
 
 7.  Personnel
 
 Information as required under 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 report. However, as per
 provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the
 Report and Accounts are being sent to all the shareholders excluding
 the statement of particulars under Section 217 (2A). The Statement is
 open for inspection at the registered office of the Company during
 working hours and a copy of the same may be obtained by writing to the
 Company at its registered office.
 
 8.  Directors'' Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors,
 based on the representations received from the operating management,
 confirm:
 
 i.  that in the preparation of the accounts for the year ended March
 31, 2011, except otherwise disclosed, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 ii.  that except otherwise disclosed in the Notes to the Accounts, they
 have selected such accounting policies and applied them consistently
 and made judgments 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 review period and of the profit or loss of the Company for
 that period;
 
 iii.  that, except otherwise disclosed in the Notes to the Accounts,
 they have taken proper and sufficient care 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;
 
 iv.  that they have prepared the accounts for the year ended March 31,
 2011 on a going concern basis.
 
 9.  Employee Stock Option Scheme
 
 S. No.  Description Remark
 
 a) Options granted 5,200,000 options granted on September 11, 2007
 (''Grant 1''), 1,804,884 options granted on October 05, 2009 (''Grant 2''),
 5,422,954 options granted on December 23, 2009 (''Grant 3''); and 100,000
 options granted on April 1, 2010 (''Grant 4)
 
 b) Pricing formula Intrinsic value method for valuation has been used
 for determining the fair value of option granted under the Scheme.  The
 value per option as per this method for Grant 1, Grant 2, Grant 3 and
 Grant 4 is Rs.32.50, Rs.24.85, Rs.46.25 and Rs.27.90 respectively.
 
 c) Options vested 1,377,750
 
 d) Options exercised during the year 919,600
 
 e) Total number of shares arising as a result of exercise of options
 919,600
 
 f) Total Options lapsed 8,997,438
 
 FY 2007-08: 389,000
 
 FY 2008-09: 891,000
 
 FY 2009-10: 300,800
 
 FY 2010-11: 7,416,638
 
 
 g) Variations of terms of options Nil
 
 h) Money realised by exercise of options Rs.27,588,000
 
 i) Total number of options in force 1,969,200
 
 j) Employee wise details of options granted to:
 
 i) senior management personnel
 
 SN   Name                     Designation            Options Granted
 
 1   Samyukth Sridharan             CCO                     200,000
 
 2   Virender Pal                   CTO                      50,000
 
                               Sr. VP & Head
 
 3   Kamal Hingorani                                         50,000
 
                               Ground Services
 
 ii) any other employee who receives a grant in any one year of option
 amounting to 5% or more of option granted during that year
 
 None
 
 iii) identified employees who were granted option, during any one year,
 equal to or exceeding 1% of the is s ued capit al (excluding
 outstanding warrants and conversions) of the Company at the time of
 grant Mr. Sanjay Aggarwal (since resigned and the options have lapsed)
 
 k) Diluted earnings per share pursuant to issue of shares on exercise
 of options calculated in accordance with Accounting Standard (AS) 20
 Earning Per 2.49
 
 I) Method of calculation of employee compensation cost
 
 The employee compensation is calculated based on intrinsic value of the
 options and the difference between the employee compensation cost so
 computed and the employee compensation cost as per fair value (as per
 Black Scholes Model) of options is as under:
 
 No. of options        Intrinsic          Fair value         Difference
 granted               value
 
 100,000                27.90                34.84               6.94
 
 Had the compensation cost been determined in a manner consistent with
 the fair value method as above, the employee compensation cost would
 have been higher by Rs.0.9 million, profit after tax would have been
 lower by Rs.0.44 million and the diluted EPS would have been Rs.2.80.
 
 m)Exercise price and 
   fair value          Stock option Weighted average
                                    fair              Weighted average
                                                      exercise
   of options            (number)   value per option  price per option
 
 - granted on April 1, 
   2010                  100,000         34.84              30.00
 
 n) Option valuation methodology Black Scholes Option Valuation Model
 has been used to estimate the fair value of the options granted
 
 Assumptions                 Grant 1    Grant 2    Grant 3    Grant 4
 
 Dividend yield (%)                0          0          0          0
 
 Expected life (no of years)     2.5        1.0        2.7       2.00
 
 Risk free interest rate (%)     7.9        8.0        8.0       8.00
 
 Volatility (%)                55.00      67.86      67.86      94.17
 
 Price of the underlying 
 share in the                  57.85      34.85      56.25      57.90
 market at the time of the 
 grant (Rs)
 
 10.  Conservation of Energy & Technology Absorption
 
 Particulars as required under section 217(1) (e) of the Companies Act,
 1956, relating to conservation of energy and technology absorption are
 not applicable for the year under review, and hence not furnished.
 
 11.  Foreign Exchange Earnings & Outgo
 
 The Company had foreign exchange earnings of Rs.695.00 million while
 the outgoings were Rs.12,412.48 million during the year under review.
 
 12.  Deposits/ Borrowings
 
 The Company has not accepted any deposit under provisions of Section
 58A of the Companies Act,1956 during the year under review.
 
 13.  Auditors
 
 M/s S. R. Batliboi & Associates, Auditors of the Company will retire at
 the forth coming Annual General Meeting. The Company has received
 letter from them to the effect that their appointment, if made, would
 be within the prescribed limits under Section 224 (1-B) of the
 Companies Act, 1956. On recommendation of the Audit Committee, the
 Board in its meeting held on May 27, 2011 proposes their name for
 re-appointment. You are requested to consider their appointment.
 
 14.  Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement with the Bombay Stock
 Exchange Ltd., Management Discussion and Analysis, Corporate Governance
 Report and Practicing Company Secretary''s Certificate regarding
 Compliance with the Code of Corporate Governance are made part of the
 Annual Report.
 
 15.  Information as required under the listing agreement
 
 Shares of the company are presently listed at Bombay Stock Exchange
 Limited, P. J. Towers, Dalal Street, Mumbai and the company has paid
 listing fee upto March 31, 2012 in respect of above stock exchange.
 
 16.  Acknowledgement
 
 The Directors thank all government, regulatory bodies and shareholders
 for their consistent support in the smooth airline operations of the
 Company. We also place on record our appreciation to the contribution
 made by company''s staff at all levels, without whom the Company would
 not have attained such great heights in such a short period of its
 operations.
 
                                     For and on behalf of the Board
 
                                                               Sd/-
 
                                                    Kalanithi Maran
 
 Date: August 26, 2011                                     Chairman