SpiceJet

1.  Contingent Liabilities not provided for in the accounts exist in
 respect of:
 
                                                   Rupees in Millions
 S. 
 No.  Particulars                              March 31,     March 31,
                                                   2008          2007
 
 i)   Demand raised under the provisions 
      of Employee State Insurance Act, 1948
      for the period November 1996 to
      September 1997 inclusive of
      interest and penalty. (The                   1.67          1.67
      Company has obtained stay against 
      recovery of said demand from the 
      Honorable High Court of Delhi.)
 
 ii)  Liability arising out of legal
      cases filed against the                      8.15          1.52
      Company in various Courts /
      Consumer Redressal Forums, Consumer
      Court, disputed by the Company.
 
 iii) Liability towards Penalty
      levied by customs department
      on late payments which is
      disputed and is pending in                  82.69         82.69
      the Honorable High Court of Delhi.
 
 vi)  Liability Towards additional
      claim received from a vendor who was
      already covered in the settlement           17.50         17.50
      scheme approved by the Honorable
      High Court of Delhi.
 
 v)   The Company has significant 
      legal proceeding initiated
      by and/or against the Company
      the outcome of which                       309.77        624.15
      may result into a liability or
      write of advances. These cases have 
      been explained in notes 3.1, 3.3, 3.5, 3.6
      and 3.7 below
 
 2.  Estimated amount of Contracts remaining to be executed on Capital
 Account and not provided for (net of advances) Rs.45,660.56 million
 (Previous year Rs 73,994.37 million).
 
 3.  Legal proceeding by and/ or against the Company
 
 3.1. Share Capital includes 11,624,472 equity shares of Rs. 10 each
 (issued at a premium of Rs. 30 each) originally allotted to the three
 investment companies, of S. K. Modi Group (SKM). These shares were
 partly paid and were treated as fully paid by adjusting the calls in
 arrears of Rs.  333.18 million against assignment of security deposit
 of Rs. 360 million by Agache Associates Limited (belonging to SKM) in
 favour of the said investment companies. The Security deposits of Rs.
 360 million was shown payable to Agache Associates Limited., under a
 purported lease agreement dated September 11,1995, which was to be
 effective from April 1, 1996 for a property situated at Calcutta, West
 Bengal.  Subsequently, the Delhi High Court has passed an order on July
 15, 2005 appointing Receivers to sell shares belonging to SKMs group
 companies and deposit the proceeds with the Court. The manner of
 receipt of these sale proceeds by the company shall be decided by the
 Court in the pending proceedings. The Company had also filed a criminal
 complaint in the court of Chief Metropolitan Magistrate, New Delhi
 against some of the erstwhile promoter directors and ex-employees of
 the Company for executing the above transaction.
 
 3.2.  One of the Inter Corporate Deposit (ICD) lenders, M/s Hindustan
 Development Corporation Limited (HDCL) (now renamed as Mallanpur
 Steels Limited) who had lent Rs. 50 million to the Company, had been
 settled by the Company in accordance with the Scheme of Settlement
 passed by the Delhi High Court by depositing Rs.  35 million in terms
 of the approved Scheme. HDCL has, however, filed a Review Petition
 against this order which is pending.
 
 3.3.  In respect of ICDs aggregating Rs. 100 million, the Company has
 not accrued interest payable amounting to Rs. 240.95 million upto March
 31, 2008 (previous year Rs. 222.15 million), computed based on interest
 rates as per original contract terms for reasons explained below.
 
 - ICD of Rs. 50 million in the name of Agache Associates Limited
 (affiliated to SKM) being a party to the fraudulent transactions (Refer
 Note 3.1 above).
 
 In a suit filed by one of the ICD lenders (petitioners), the Company
 had deposited a sum of Rs 50 million with the Bombay High Court and the
 Honble 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 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 High Court have
 been disclosed under the unsecured loans and loans and advances
 respectively.
 
 3.4.  The company had in the earlier years obtained an Interest Free
 Advance of Rs. 14.09 million (Previous year Rs. 14.09 million) from a
 body corporate belonging to SKM. However, no claim has yet been
 received against the same.
 
 3.5.  The Company has in its possession the bank-statement of ICICI
 Bank, New Delhi, which shows a deposit of Rs. 34.29 million on account
 of refunds from the Income Tax Department on November 6, 2000 and July
 2, 2001 and subsequent withdrawals (details of amounts appropriated not
 available with the Company) on various dates aggregating to Rs. 34.29
 million against cheques/drafts issued to several parties, including
 group companies of SKM, by erstwhile Director(s) and/or some
 ex-employees of the Company, which amounts to fraudulent preference
 under section 531 of the Companies Act, 1956, which was brought to the
 notice of the Honble Court vide CA 606 of 2003 and CA797 of 2000. The
 difference of Rs. 34.29 million between balance as per books (since no
 accounting entry has been recorded for unauthorized withdrawals) and
 that confirmed by the bankers, is being carried as recoverable under
 Loans and Advances and is pending appropriate adjustment on outcome of
 the ongoing cases and has not been provided for in the accounts.
 
 3.6.  In view of various matters pending in courts, dues of Rs. 5.90
 million (previous year Rs. 5.90 million) recoverable from some of the
 entities, in which the SKM is interested, have been retained in the
 books.
 
 3.7.  The Company has in its possession the bank statement of Standard
 Chartered Grindlays Bank, Mumbai, which shows deposits of Rs. 14.20
 million and withdrawals of Rs. 16.01 million through various
 transactions made during the period March 1999 to March 2002. However,
 in the absence of complete details of these transactions appropriate
 accounting entries could not be recorded in the books in respect of
 these transactions. The difference of Rs 1.81 million between the
 balance as per books and that confirmed by the bank, is carried as
 recoverable under Loans and Advances and is pending appropriate
 adjustment on the outcome of the ongoing litigations with SKM and
 entities in which they are interested.
 
 3.8.  There are various litigation matters filed by and against SKM.
 The outcome of the said cases may impact the business operations
 keeping in view the nature of allegations.
 
 4.  The Company does not have possession of share certificates in
 support of its investments of Rs. 12.50 million in 1,250,000 Equity
 Shares of Rs. 10 each in Modi Hoover International Limited.
 Accordingly, the Company has made provision against the same.
 
 5.  The Management and Board of Directors of the company are looking at
 various steps to improve financial performance of the company by
 rationalizing network, improve yield and lower non-fuel costs as a
 result of industry wide efforts. Steps are also being taken to evaluate
 various alternatives for raising funds for which a Merchant Banker has
 been appointed. The Board of Directors expects improvement in the
 business results in forthcoming years. Accordingly, the financial
 statements have been prepared on going concern basis.
 
 6.  Till the period ended March 31,2007, the Company valued inventory
 of aircraft spares at cost determined using the First in First out
 (FIFO) method. During the year ended March 31, 2008 the Company changed
 its accounting policy wherein the valuation method for such inventory
 was changed to weighted average basis.  Due to this change in
 accounting policy, reported loss for the current year is higher by Rs.
 1.5 million whereas Inventory is lower by the same amount.
 
 7.  In the absence of sufficient information from the parties regarding
 their status as to Micro Small and Medium Enterprises amounts due to
 such enterprises could not be ascertained and, therefore, the same has
 not been disclosed as required by MSMED Act 2006.
 
 8.  Secured loans
 
 (i) Zero Coupon Secured Foreign Currency Convertible Bonds (FCCBs):
 
 (a) During the year ended May 31, 2006, the Company issued FCCBs of the
 face value of USD 1,00,000 aggregating to USD 80 million. As per the
 original terms of the issue, the holders have an option to convert the
 FCCBs into equity shares at an initial conversion rate of Rs. 90 per
 equity share at a fixed exchange rate of Rs. 46.12 to USD 1 from
 December 7, 2005 to November 11, 2010. The conversion price of Rs. 90
 per equity share was revised to Rs. 57 per equity share during the
 period ended March 31, 2007 with all other conditions remaining
 unchanged. The conversion price will be subject to certain adjustments.
 
 Further under certain conditions the bondholder has the option for
 early redemption in whole but not in part. Unless previously converted,
 redeemed or purchased and cancelled, the company will redeem these
 bonds at 140.499 percent of the principal amount on December 13,2010.
 
 (b) Premium on redemption of Zero Coupon Secured Foreign Currency
 Convertible Bonds (FCCBs)
 
 Opening Balance                        Rs.365.15
 
 Add .Provision for the period         Rs. 242.56
 
 Closing Balance                        Rs.607.71
 
 Premium oh redemption of FCCBs has been provided from date of issue of
 bonds till March 31,2008.
 
 (c) The FCCBs are secured by assignment by way of first priority
 preferred security interest, mortgages, pledges, charges and
 hypothecation to the security trustee and a lien on all its right and
 title and interest into the collateral. The Bonds will rank senior to
 all subordinated indebtedness of the Company and senior to the extent
 of the security to all present and future unsecured indebtedness of the
 Company.
 
 (d) In view of the loss for the period ended March 31, 2008 and the
 accumulated losses, the company could not effect any transfer to the
 Bond Redemption Reserve Account as required under section 117C of the
 Companies Act 1956. Such transfers are proposed to be made when profits
 are available.
 
 (ii) The Company had taken Secured Term Loans and Overdrafts from Bank
 and Financial Institution, as mentioned below:
 
 (a) secured loan from Allahabad Bank, Industrial Finance Branch, Mumbai
 of which balance outstanding as at March 31, 2008 was Rs. 300 million
 (Previous Year Nil) is secured by a pledge on fixed deposit of Rs.  300
 million held with the same branch.
 
 (b) secured loan from SREI Infrastructure Finance Limited, Kolkata of
 which balance outstanding as at March 31, 2008 was Rs. 320 million
 (Previous Year Nil) is secured by a first exclusive charge by way of
 hypothecation in favour of SREI Infrastructure Finance Limited of all
 movable assets, both present and future, except movable assets already
 pledged / charged / hypothecated, valuing atleast 150% of the value of
 secured loan.
 
 (c) secured overdraft facility from HSBC Bank, JMD Towers, Gurgaon of
 which balance outstanding as at March 31,2008 was Rs. 1,016.74 million
 (Previous Year Nil) is secured by a pledge on fixed deposit of Rs.  900
 million held with the same branch.
 
 (d) secured overdraft facility from State Bank of Bikaner & Jaipur,
 Pashchim Vihar, Delhi of which balance outstanding as at March 31,2008
 was Rs. 29.82 million (Previous Year Nil) is secured by a pledge on
 fixed deposit of Rs. 30 million held with the same branch.
 
 9.  (i) Gratuity:
 
 During the year, the Company has adopted Accounting Standard 15
 (Revised 2005) Employees Benefits (Revised AS 15). Since the
 Company was already using the Projected Unit Credit Method and other
 assumptions as per the market, the adoption of Revised AS 15 has not
 resulted in any change in the opening liability of Gratuity.
 
 (ii) Compensated absences benefit:
 
 Liability for compensated absences is in accordance with the rules of
 the Company. The Companys plan compensated absence liability is a
 short term benefit as per Revised AS 15 and accordingly the liability
 in respect of accumulated absences has been provided based on current
 salaries of the employees. The liability accrued as at March 31,2008
 amounts to Rs. 51.37 million.
 
 10.  In accordance with Accounting Standard 22 Accounting for taxes on
 income issued by the Institute of Chartered Accountants of India
 (ICAI), in view of substantial loss incurred by the Company during
 the period ended March 31, 2008 and large amount of unexpired
 unabsorbed depreciation and carry forward losses under the Income Tax
 Act, 1961, deferred tax assets on carried-forward losses and unabsorbed
 depreciation have not been accounted for in the books, since it is not
 virtually certain whether the Company will be able to utilize such
 losses/ depreciation.
 
 11.  Accounting Standard 17 Segment Reporting as issued by ICAI
 requires the Company to disclose certain information about operating
 segments. The Company is managed as a single operating unit that
 provides air transportation only and therefore, has only one reportable
 business segment. Further, the operations of the Company are limited
 within one geographical segment. Hence the disclosure required by this
 standard is presently not applicable to the Company.
 
 Pursuant to the above Scheme, the employee will have the option to
 exercise the right within five years from the date of vesting of shares
 at Rs. 30 per share, being its exercise price. As per the Scheme, the
 Remuneration Committee has granted 5,200,000 options on September 11,
 2007 respectively. According to the Guidance Note 18 on Share based
 payments issued by ICAI, Rs. 26.01 million has been provided during
 the year as proportionate cost of these options.
 
 Share-based compensation
 
 In accordance with the guidance note -18 Share based payments the
 following information relates to the stock options granted by the
 Company.
 
 In accordance with intrinsic value approach provided under the guidance
 note, the Company has calculated the employee compensation cost using
 the Share Price quoted on BSE on the date of grant i.e. September 11,
 2007.
 
 12. Disclosure of details pertaining to transactions with related party
 entered into during the period and balances as at March 31, 2008 in
 terms of Accounting Standard 18 Related Party Disclosures issued by the
 Institute of Chartered Accountants of India, as Identified and
 certified by the Management:
 
 13.  Accounting for Leases:
 
 (a) Operating Lease Obligations
 
 The Company has taken on lease aircraft, aircraft spares maintenance
 facilities and other property and equipment from third parties. Rental
 expense for the year ended March 31,2008 amounts to Rs 2,718.62 million
 (Previous Year Rs. 1,459.31 million).
 
 (b) Operating Lease Income
 
 The Company had given two aircraft (obtained on operating lease) to a
 party under an operating lease agreement for a period of 4 months,
 (previous year 4 months) Lease rental recognized in the Profit and Loss
 Account amounts to Rs. 123.73 million (previous year Rs. 71.60 million)
 which have been netted with lease rental under operating expenses.
 
 14.  Impairment of Assets
 
 As on the Balance Sheet date the carrying amount of the assets net of
 accumulated depreciation is not less than the recoverable amount of
 those assets. Hence no impairment loss on the assets of the Company has
 been recognised.
 
 15.  Additional information pursuant to the provisions of Part II of
 Schedule VI to the Companies Act, 1956.
 
 16.  The Company had changed its accounting year end in the previous
 financial period from May 31 to March 31.  Accordingly, the previous
 period represents only 10 months of operations as against 12 months of
 operations in the current financial year and to that extent figures in
 the Profit and loss Account and related disclosures for the current
 period are not directly comparable with the corresponding figures of
 the previous year.
 
 17.  Previous years figures have been regrouped or reclassified
 wherever necessary to conform to current years classification.