1.1 Background
 
 SpiceJet Limited (''SpiceJet'' or the ''Company'') was incorporated on
 February 9, 1984 as a limited company under the Companies Act, 1956 and
 is listed on the Bombay Stock Exchange Limited (''BSE''). The Company is
 engaged in the business of providing air transport services for the
 carriage of passengers.  The Company is a low cost carrier (''LCC'')
 operating under the brand name of ''SpiceJet'' in India since May 23,
 2005. The Company currently operates a fleet of 27 aircrafts across
 various routes in India as at March 31, 2011. SpiceJet has also
 obtained the permission of the Directorate General of Civil Aviation
 (DGCA) to operate on selected routes outside India and has commenced
 international operations from October 2010.
 
 During the year, pursuant to an Open Offer made by KAL Airways Private
 Limited and Mr. Kalanithi Maran (collectively referred to as the
 ''Acquirers''), the Acquirers have acquired, in aggregate, 156,528,305
 equity shares of the Company constituting 38.66% of the then paid-up
 capital of the Company, including 31,077,500 equity shares acquired
 from Royal Holdings Services Limited (the ''Erstwhile Promoter'').
 Consequently, the Acquirers have become the largest shareholders in the
 Company and the Promoters of the Company.
 
 2.1 Conversion of Zero Coupon Foreign Currency Convertible Bonds
 (''FCCB''s)
 
 During the year ended May 31, 2006, the Company had issued 800 FCCBs
 with face value of US$ 100,000 aggregating to USD 80 million. These
 FCCBs were convertible into equity shares at a conversion price of Rs.
 25 per equity share at a fixed exchange rate of Rs.46.12 to US$ 1 till
 November 11, 2010.  Unless previously converted, redeemed or purchased
 and cancelled, such bonds were redeemable at 140.499 % of the principal
 amount on December 13, 2010. These FCCBs were listed on Luxemburg Stock
 Exchange. Out of the above, 2 FCCBs were converted into equity shares
 during the financial year ended March 31, 2009.
 
 During the current year, pursuant to the exercise of the right to
 conversion by the holders of these instruments, the Company has issued
 147,215,040 equity shares of Rs. 10/- at a price of Rs.25 per equity
 share against the 798 outstanding FCCBs. The difference between the
 amounts outstanding against such FCCBs as at the dates of conversion
 (including the exchange fluctuation on restatement of such FCCBs upto
 the conversion dates of Rs. 38.73 million) and the face value of the
 shares issued of Rs.2,246.96 million has been transferred to the
 securities premium account. Post such conversion, the Company does not
 have any FCCB''s outstanding.
 
 Further, on conversion of these instruments, the provision for premium
 on redemption of the above FCCBs created out of the securities premium
 account for the period from date of issue of bonds till the dates of
 conversion has been reversed back to the securities premium account.
 
 2.2 Conversion of Warrants
 
 The Company had allotted 15,360,715 warrants on December 12, 2008 to GS
 Investment Partners (Mauritius) I Limited. Each warrant was convertible
 into one equity share of the Company at a conversion / exercise price
 of Rs. 39.46 per resultant equity share, at any time before the expiry
 of 18 months from the date of allotment of the warrant. The Company had
 received Rs.60.61 million (i.e. 10% of the total subscription value)
 towards subscription of warrants, in accordance with the terms of the
 allotment.
 
 During the current year, the holders of the warrants had exercised the
 option for conversion on June 11, 2010 and consequently, the Company
 has allotted 15,360,715 equity shares after receiving the balance
 subscription value of Rs. 545.52 million.
 
 2.3 Stock option plans
 
 The Company has a stock option plan that provides for the granting of
 stock options to qualifying employees including Directors of the
 Company (not being promoter Directors and Executive Directors, holding
 more than 10% of the equity shares of the Company).  The option plan is
 summarized below:
 
 Employee Stock Option Scheme, 2007
 
 The shareholders at the Annual General Meeting held on September 11,
 2007, approved an Employee Stock Option Scheme (ESOS) which provides
 for the grant of 6,016,250 options (each option convertible into 1
 share) to employees. Further, at the Extraordinary General Meeting held
 on December 23, 2009, the shareholders had approved to extend the
 aggregate number of options under the scheme to 20,000,000 options.
 
 The remuneration committee had granted 5,200,000 options to eligible
 employees on September 11, 2007 at an exercise price of Rs. 30 /- per
 share. Such options were to vest over 4 years in the following manner:
 
 - 35% of the options - one year from the date of grant
 
 - 25% of the options - two years from the date of grant
 
 - 25% of the options - three years from the date of grant
 
 - 15% of the options - four years from the date of grant
 
 During the year ended March 31, 2010, the remuneration committee made
 two grants out of its Scheme, to its Chief Executive Officer, Mr.
 Sanjay Aggarwal at an exercise price of Rs.10 /- per share. The first
 grant of 1,804,884 options made on October 5, 2009 has a vesting period
 of 1 year from the date of grant. Vesting of the second grant of
 5,422,954 options made on December 23, 2009 will happen in nine equal
 instalments with first vesting on December 23, 2010, second on January
 20, 2011 and thereafter remaining seven at quarterly intervals. Half
 the options in the second grant will vest with each successive
 completion of employment and half of the options vests on achievement
 of certain performance targets defined in his employment agreement. For
 the purpose of accounting of these options, the management has assumed
 that performance targets defined in the employment agreement will be
 achieved and all options will vest to him accordingly. Further it may
 be noted that Mr. Sanjay Aggarwal ceased to be in employment with the
 Company effective June 30, 2010.
 
 Further, during the year, the remuneration committee has granted
 100,000 options to an employee at an exercise price of Rs. 30/- per
 share. These options will vest over 3 years in the following manner:
 
 - 60% of the options - one year from the date of grant
 
 - 25% of the options - two years from the date of grant
 
 - 15% of the options - three years from the date of grant
 
 2.4 Secured loans
 
 The secured term loans from Allahabad Bank, Industrial Finance Branch,
 Mumbai are secured by a pledge of certain identified fixed deposits of
 the Company held with the same bank, the hypothecation of certain
 assets and the pledge of certain shares of the Promoter.
 
 2.5 Deferred tax assets / MAT credit
 
 The Company has recognized deferred tax assets arising on account of
 carried forward tax losses and unabsorbed depreciation to the extent of
 the deferred tax liability arising on account of the timing difference
 on depreciation of Rs. 52.92 million as at March 31, 2011 (Rs. 46.72
 million as at March 31, 2010).
 
 In accordance with Accounting Standard - 22 ''Accounting for taxes on
 income'' and the Guidance Note on accounting for credit available in
 respect of minimum alternative tax, the Company has not recognised the
 balance deferred tax assets arising on account of carried forward tax
 losses and unabsorbed depreciation and MAT credit, as subsequent
 realisation of such amounts is not virtually / reasonably certain, as
 applicable.
 
 2.6 Segment reporting
 
 The Company''s operations predominantly relate only to air
 transportation services and accordingly this is the only primary
 reportable segment. Further, the operations of the Company are
 substantially limited within one geographical segment (India) and
 accordingly this is considered the only reportable secondary segment.
 
 2.7 Related party transactions
 
 1.  Names of related parties
 
 Relationship Name of the party
 
 Party exercising significant influence Kal Airways Private Limited and
 Mr. Kalanithi Maran from November 11, 2010
 
 Royal Holdings Services Limited, Nevada, USA (upto November 10, 2010)
 
 Enterprises over which parties above or their relatives have
 control/significant influence (''Affiliates'')
 
 Sun TV Network Limited (from November 11, 2010) Digital Radio (Delhi)
 Broadcasting Limited (from November 11, 2010)
 
 Subsidiary company Spice Enterprises Private Limited (ceased to be a
 related party on September 11, 2009)
 
 Key management personnel Sanjay Aggarwal (upto June 30, 2010)
 
 Kishore Gupta (July 1, 2010 to October 10, 2010) Neil Raymond Mills
 (from October 11, 2010)
 
 2.8 Lease commitments
 
 Operating leases
 
 The Company has taken on lease aircrafts, aircraft spares, engines and
 premises from third parties.  Rental expense for the year ended March
 31, 2011 amounts to Rs. 4,457.41 million (Previous year Rs.  4,059.78
 million), supplemental rent amounts to Rs. 1,687.25 million (Previous
 year Rs.1,459.01 million).
 
 The Company has taken aircraft through dry operating lease from
 lessors. Under the aircraft lease agreement, the Company pays monthly
 rentals in the form of base and supplementary rental. Base rental
 payments are either based on floating or fixed interest rates.
 Supplemental rentals are based on aircraft utilisation and are
 calculated with reference to the number of hours flown or number of
 cycles operated during each month. Both base and supplemental lease
 rentals have been charged to the Profit and loss account. The lease
 terms vary between 3 and 10 years. There are no restrictions imposed by
 lease arrangements. There are no subleases. There are no initial direct
 costs. The future minimum lease rentals payable under non cancellable
 leases (except supplementary rental which are based on aircraft
 utilisation and calculated on number of hours flown or cycle operated)
 are as follows:
 
 2.9 Gratuity benefit plans
 
 The Company has a defined benefit gratuity plan. Every employee who has
 completed five years or more of service gets a gratuity on departure at
 15 days salary (last drawn salary) for each completed year of service
 subject to a maximum of Rupees one million. The scheme is unfunded.
 
 The following tables summarise the components of net benefit expense
 recognised in the profit and loss account and amounts recognised in the
 balance sheet for gratuity.
 
 The estimates of future salary increases, considered in actuarial
 valuation, take account of inflation, seniority, promotion and other
 relevant factors, such as supply and demand in the employment market.
 
 The Company does not currently have any estimates of the contribution
 to be paid to the plan during the next year. Accordingly, the same has
 not been disclosed.
 
 2.10 There is no overdue amount payable to Micro, Small and Medium
 Enterprises as defined under the Micro, Small and Medium Enterprises
 Development Act, 2006. Further, the Company has not paid any interest
 to any Micro, Small and Medium Enterprises during the current and
 previous year.
 
 2.11 On account of the nature of the business of the Company,
 supplementary information for the profit and loss account as required
 to be disclosed under paragraph 3 (i) to (iii) except 3 (i) (c), (ii)
 (c) and paragraph 4 C of Part II to Schedule VI of the Act are not
 applicable and hence no disclosures have been made in this regard.
 
 2.12 The Company has exercised the exemption granted to airline
 companies vide the Ministry of Corporate Affairs notification dated
 February 8, 2011 for non-disclosure of the information required under
 paragraphs 4-D (a) to (e) except (d) of Part II to Schedule VI of the
 Act. Accordingly, such information has not been disclosed.
 
 Contingent liabilities
 
 Claims against the Company not acknowledged as debts
 
 S. No Particulars                               As at          As at
 
                                        March 31, 2011 March 31, 2010
 
 a.  Demand raised under the provisions 
 of. Employees''                                    -          4.12 
 State Insurance Act, 1948 for the 
 period November 1996 to September 
 1997 inclusive of interest and penalty.
 (The Company has obtained stay against 
 recovery of said demand from the
 Hon''ble High Court of Delhi).
 
 b.  Liability arising out of legal 
 cases filed against the                       22.99         16.17
 Company in various Courts/ Consumer 
 Redressal Forums, Consumer Courts, 
 disputed by the Company.
 
 c.  Liability arising out of 
 Arbitration proceedings on account            33.32             -
 of cancellation of leased premises
 
 d.  Liability towards labour cases 
 filed against the Company                      0.48          0.48
 in various Courts, disputed by the 
 Company.
 
 e.  Liability towards Penalty levied 
 by customs department on                      82.69         82.69
 late payments which is disputed and is 
 pending in the Hon''ble High Court of 
 Delhi.
 
 f.  Liability towards additional claim 
 received from a vendor                        17.50         17.50
 who was already covered in the 
 settlement scheme approved
 by the Hon''ble High Court of Delhi.
 
 g.  Unaccrued interest as explained in 
 Note 1 below.                                 74.71         74.71
 
 h.  Assessments relating to Assessment Year 2007-08 and 2008-09 are
 pending with CIT(A) in respect of certain additions made to returned
 loss by the Assessing Officer which resulted in taxable income, but
 income tax payable after adjusting the brought forward losses and
 depreciation was computed to be Nil.
 
 Though there is no demand for payment of tax arising out of above
 assessments, the Assessing Officer (''AO'') has initiated penalty
 proceedings against the Company under section 271(1)(c). Penalty amount
 is not ascertainable as AO has not raised any demand.
 
 Legal Proceeding by and / or against the company
 
 1.  Under a suit filed by Leela Capital (petitioner) for recovery of
 the Inter Corporate Deposit (''ICD'') aggregating to Rs. 50 million, the
 Company had deposited the amount of Rs. 50 million on November 30, 2001
 with the Hon''ble Bombay High Court and the Hon''ble Bombay High Court
 later allowed the petitioner to withdraw the said amount, upon
 furnishing an undertaking that the petitioner will restitute the said
 sum or such part thereof, with 9% interest, to the Company, if and as
 directed by the Hon''ble Court at the time of the final decision of the
 suit filed by the petitioner. Accordingly, pending finality of the
 matter, both the ICD and deposit with Hon''ble High Court have been
 disclosed under the Unsecured Loans and Loans and Advances,
 respectively. The Company has not accrued interest payable of Rs. 74.71
 million upto the date of deposit of the amount with the Hon''ble Court
 on account of its defence in the court proceedings.
 
 2.  In another case, M/s Hindustan Development Corporation Limited
 (HDCL) (now renamed as Mallanpur Steels Limited) who had lent Rs. 50
 million ICD to the Company, filed a Review Petition against the Scheme
 of Settlement passed by the Hon''ble Delhi High Court wherein its
 liability was settled at Rs. 35 million. The Company had made a deposit
 of Rs. 35 million in accordance with approved Scheme to the Official
 Administrator of the Scheme. The review petition filed by HDCL has been
 dismissed by the Delhi High Court on July 16, 2010.
 
 3.  The Company has received a notice dated May 10, 2011 from the
 Registrar of Companies (''ROC'') seeking to explain the reasons for
 non-compliance with section 269 of the Companies Act, 1956 relating to
 the requirement to have a whole time director. The Company is in the
 process of responding to the said notice and taking necessary actions
 and believes that the impact of the same is not likely to be material
 to the financial statements for the year ended March 31, 2011.
 
 notice and taking necessary actions and believes that the impact of the
 same is not likely to be material to the financial statements for the
 year ended March 31, 2011.
 
 4.  The Company is in the process of finalising the full and final
 settlement payable to its erstwhile Chief Executive Officer, Mr. Sanjay
 Aggarwal, in accordance with the terms of his employment agreement.
 Management believes that the provision made in the financial statements
 as at March 31, 2011 for the same is adequate.
 
 Based on the legal advice obtained by the management, no provision is
 required to be made for the above contingent liabilities.
 
 2.13 Application of funds
 
 During the year, the Company has used some of the short term funds that
 were generated from its operations to temporarily fund the pre-delivery
 payments for the acquisition of aircrafts. Towards the end of the year,
 the Company has tied up a long term funding in the form of terms loan
 facility of Rs. 2,500 million from a bank for the same purpose. The
 Company has also drawn down such loans as and when required, subsequent
 to the balance sheet date, to make good such temporary utilization of
 short term funds. Management further believes that such pre-delivery
 payments made towards the acquisition of certain of the aircrafts are
 temporary and would be recovered on finalizing the lease arrangements
 for such aircrafts.
 
 2.14 Previous year comparatives
 
 The financial statements for the previous year were audited by a firm
 other than S.R. Batliboi & Associates. Previous year figures have been
 reclassified / regrouped wherever necessary to conform to current
 year''s classification.